Interview with Porr boss

“There will definitely be a housing shortage”

Karl-Heinz Strauss: "Many people would like to buy an apartment, but can't get a loan."

(Bild: Zwefo)

In this interview, Porr CEO Karl-Heinz Strauss analyzes why rental prices in Austria are likely to rise significantly once again, where the real problems lie with the KIM regulation and why Austria generally needs a ten-year plan.

"Krone": According to your balance sheet, Porr is doing well - probably also because of civil engineering. You are not a politician, but a CEO. So you are probably telling the truth these days: will there be a housing shortage in Austria?
Karl-Heinz Strauss: There definitely will be. Instead of 62,000 apartments, only 42,000 apartments will be built in 2024 and 2025. However, demand will be significantly higher. Rents will rise because there are not enough apartments available. Many people would like to buy and thus boost the property development business, but many cannot get a loan because of the KIM regulation. It's not the equity that is the big problem here, which has been increased from 20 to 30 percent, you can still get that together: The banks are very creative here. But an availability limit of 40 percent of income sounds very reasonable at first, of course, but is a complete aberration. Very few people can simply manage that.

Why or how not?
For many people, especially young people, income is also supported by savings from grandparents, parents or families. However, this does not count because banks are only allowed to measure the income of those who are borrowers. The regulation exists in order to avoid the alleged formation of bubbles at banks. No Austrian bank has ever had a problem with housing finance or housing loans, especially in the private sector.

No Austrian bank has ever had a problem with housing finance or housing loans, especially in the private sector.

Karl-Heinz Strauss

Housing construction and housing associations are slowly getting back on track. The other positive news is that civil engineering has never weakened?
The infrastructure is still working. In some countries, such as Germany, there is an enormous backlog. Starting in the 1990s, the infrastructure in the east of the country was raised to a very modern level, but the west was forgotten in the process. There is an enormous amount of infrastructure work to be done there. What is happening or should be happening in western Germany is of course still too little.

The fact that this has happened in Germany is actually completely absurd.
You stand and watch in amazement. Permits are often missing, for example, and everything takes forever. The reconstruction of the East began rapidly in the 1990s. At that time, the deadlines for appeals were drastically shortened. Decisions had to be made in order to manage this enormous volume of construction in the best possible way. That's not happening today. So the pressure remains enormous. Look at the railroads.

This year and next year, only 42,000 apartments will be built instead of 62,000. The demand is significantly higher.

Karl-Heinz Strauss

We're only talking about Germany?
Austria is exemplary here because ÖBB, for example, has always managed to maintain its status in terms of investment. An additional 21 billion euros will be invested in infrastructure expansion over the next six years.

Are you afraid that a new federal government, regardless of which party it comes from, will have to decide on an austerity package or cost measures after a cash crunch and that one or two major infrastructure projects will be put on the back burner?
I don't think so, I hope not. The construction industry will function well over the next few years. Don't forget the big EU funding pots, the Cohesion Fund, the Recovery and Resilience Fund - especially in countries like Poland, Romania, the Czech Republic and Slovakia, of course, to get the infrastructure there up to scratch. The next point is all the megatrends worldwide: urbanization is continuing, 80 percent of people will live in larger and bigger cities by 2050. Then we will need affordable living space, but we will also need modern living space. The old housing stock will have to be retrofitted in terms of energy technology so that it is better equipped to cope with the heat in summer rather than just the cold in winter. But the buildings also need to be equipped in such a way that there is liveable living in the cities, enough parks, enough areas, they need to be shaded. The next point in all the countries, especially where Porr is active, is of course the entire health infrastructure. During Corona, we have seen that a large part of the infrastructure, the health infrastructure, is no longer fit for purpose, no longer "state of the art". There is a lot of investment going on at the moment and this is also being heavily subsidized by the EU. You can see hospital buildings in Poland, the Czech Republic and Romania at the same level as Austria.

What do you expect the next federal government to do? What should it not do?
I would like to see two things for us in Austria. Firstly, that Germany picks up speed again. But I would like to see a ten-year plan for Austria: Where are we today? Where do we want to go? We need to clarify and decide this together across party lines.