Buwog CEO Daniel Riedl

“Residential market is still a tender plant”

Daniel Riedl in conversation with Krone deputy editor-in-chief Rainer Nowak.

(Bild: Jöchl Martin)

The Buwog Group is investing heavily in the crisis. In an interview with "Krone", CEO Daniel Riedl is annoyed about complicated conditions in the Austrian capital and sees a pet trend in residential buildings.

"Krone" : Construction is finally underway again: Buwog is focusing on condominiums on the Alvorada land south of Vienna. Is the crisis on the real estate market over?
Daniel Riedl: We were the first to stop building because it was no longer commercially viable. Then our focus in the Group was on debt reduction. That phase is now more or less over, we have paid off a lot of debt. Now it still makes sense to start building anti-cyclically. With the capital strength of the Vonovia Group behind us, we can manage this. We are now starting with 1,000 apartments, of which around 600 are in Vienna and 400 in Salzburg. The condominium market is still a very tender plant.

We are seeing a real housing shortage, so everyone should be building now?
Many developers are struggling to survive. We are deliberately building anti-cyclically - in the knowledge that the demand is there.

Many are fighting for survival. We are deliberately building anti-cyclically - in the knowledge that the demand is there.

Buwog-CEO Daniel Riedl

Will it be the same in Vienna or other Austrian cities as in Munich or Berlin, with 200 people queuing up to view a new rental apartment?
That is not desirable. But too little is being built. Our central problem is not the availability of capital. It's very difficult to obtain permits. Rezoning takes an extremely long time. Planning permission is difficult. All the neighbor issues we have are delaying a lot of things.

A rezoning tax was debated in coalition negotiations. Does it make sense?
Here in Vienna, we have the obligation to actually offer two thirds of the apartments for subsidized use when they are rezoned. That is sometimes difficult from a commercial point of view. We also sign urban development contracts in order to make our contribution to infrastructure costs, to various things. This is nothing other than a reallocation tax.

Will the housing shortage problem get worse?
The influx into Vienna will continue. The city must therefore also digest the growth in the housing stock. This is currently happening at a disproportionately low rate. If the city says we want two-thirds subsidized apartments, but at the same time we want an urban development contract for the infrastructure and then a rezoning tax on top of that: At some point, there will be nothing left and it will no longer pay off.

What will the apartment of the future look like? During the coronavirus pandemic, green or outdoor spaces and a study were added as requirements. Is that possible for everyone?
Yes, the first thing is outdoor space in some form, a balcony, terrace or garden area. The second is that we have to think about working from home in some form. You don't need an extra room for it. Your niche is enough. That's the third point: infrastructure in the house. Floor plans are becoming more efficient. A party room in the building, in a larger project perhaps five or six niches in the general rooms where you can actually hold a video conference or something. We built a project in the 19th district. There's a home theater there.

And that is also used?
Yes, that is also used. Other luxuries are disappearing: Some indoor swimming pools still exist from the 70s. Sooner or later, these will be closed down due to the operating costs. Pets also play a role, for example, as I have observed in America. Pet-friendliness in residential complexes for rental apartments is a real issue. There are some themed buildings where there is a small fountain at the reception where the dog can drink. Or there is a so-called dog walking station at the high-rise building, for example. This is a green area with artificial grass and an irrigation system. Then there are some dog washing stations, which are small baths where you can wash your dog.