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trends & insights ISSUE 01 | 2016 THE RESIDENTIAL MARKET IS LIVENING UP People always need somewhere to live, the only question is, where? While efficiencies were still sneered at just a few years ago, small, self-contained flats and short-let concepts are now making a comeback. The formula couldn’t be simpler: moving into the cities plus a growing range of different lifestyles minus space and properties equals new ways of living. Translated into real projects, this means for example microflats, boarding houses or service apartments. The layouts are intelligently optimised, with the emphasis on functions over floorspace. Everything you need for living is there, and there is virtually no empty space, like hallways etc. A kitchen area is sufficient, since people either cook together in the shared commercial-standard kitchen or meet friends and colleagues in one of the local restaurants and cafes. People who live in microflats want to live life to the full, but still need an affordable flat, which is why they happily do without unnecessary features. Meanwhile, boarding houses are increasingly replacing the classic hotel. We are seeing new lifestyles here, new housing options emerging, asset classes which have just recently begun to establish themselves. First, we need to distinguish between three major concepts: microflats, service flats and boarding houses. There are still any number of terms for these, but es- sentially they come down to these three categories. Microflats are furnished or unfurnished small flats which can be compared as a classic real estate investment with the purchase of an investment property with a surface area of around 30-60 sq. m. They can be modest, offering cheap accommodation as an efficiency, or a cool and modern home to a new generation which rates a high-speed WLAN above a letterbox by the front door. “Service flats by contrast are primarily one and two room flats services and managed by a management company,” architect Josef Weichenberger explains, going on to say that a boarding house is comparable with a service flat, in that both offer short-term accommodation and are commercially operated. Small, highly efficient short-term lets are an alternative to a hotel, rented or purchased by major companies for transient staff and expats, or offer a transitional solution after a divorce, between removals or when changing careers. They are centrally located, with good public transport and road connections. “The quality of links with supraregional transport – motorway, rail and airports – is a strategic factor,” Weichenberger notes, going on to distinguish further: “Legally, the microflat is more like the classic condo, while the two other types come more under the category of commercial accommodation.” With all these models it is essential to comply with the provisions of the building and commercial codes, as well as the guidelines on accommodation, which can vary from one federal state to another. All of them are subject in Austria to the definitions of their categories which are specific to the individual federal states. Other provisions, such as those on fire protection, are uniform across the country, and available in e.g. the OIB Guidelines. As far as size is concerned, there are certain values which have proved helpful in practice, with a range between 25 and 60 sq. m. of usable floor space. If the property is exclusively for residential use, this is defined as at least 30 sq. m. in Vienna, for example. Minimum sizes for rooms for accommodation are again set by the individual federal states. Foreword PETER ULM, BOARD CHAIRMAN OF 6B47 REAL ESTATE INVESTORS AG One of the biggest ways the ‘New World of Work’ is making itself felt is in housing, rather than office buildings. The office market in Austria is currently at the lower end of the curve: there has never been so little new floor space coming on the market, and in 2018 there will actually be an excess of supply. While the market trend here is still following classic cyclical models, this is not the case in the residential segment, where the combination of the inflow of population and the change in lifestyles is having very specific effects on the product design of buildings. The target group for short-term lets is growing steadily. Companies want to increase their flexibility in assigning staff to different locations, housing them in a combination of hotel and flat. Career entrants, new arrivals in the city, weekend commuters or people who want the convenience of a concierge service are all looking for new ways of living. This is why we’ve pulled together the most important new trends in living for you in this issue of Trends & Insights. I hope you enjoy it! 1 trend and countertrend Let‘s be quite clear: short-term lets and microflats aren’t the be-all and end-all, they’re one of many ways of living for the future. We can say that demand for more specific concepts for living is rising. However, the general public is strikingly conservative, as the the report „Real Estate Trends” that‘s just appeared from EY consultants explains: “Owner-occupied beats rented, smart home isn’t an issue just now. The so-called digital occupiers, who are allegedly unlike their parents in rating meaningfulness and happiness above money and status, are still virtually identical with their parents when it comes to their dream home. The only current trend which is really finding favour relates to the sustainability of the housing in question. Otherwise, traditional ideas dominate. From the point of view of the real estate industry (and the economy generally), the result is entirely positive, particularly with regard to the desire to own your home. The real estate share is likely to continue to rise. The survey included INVESTMENT “Real estate investments are increasingly valued on the yield-risk profile, which can be minimised for the types of use of the properties, their industry focus, the location, the individual tenants and the term structure of the leases. If these factors are right, the investments retain their appeal, which is why there is a constant stream of new asset classes for real estate investments. These are special properties designed for precisely defined uses,” according to Ernst Hubert von Michaelis of PROMOS consult, writing in the trade paper The Property Post, who sees private investors and closed funds as the main investors for this segment. Whether these are flats with our without service, for limited lets or open – the increased supply shows one thing: traditional forms of living are increasingly being supplemented by new ideas. This is also apparent in other trends, such as the increased appearance of housing groups who act autonomously to make their interests become reality as real estate. Michael Ludwig, Vienna Executive City Councillor for Housing, Housing Construction and Urban Renewal, neatly 2 some 1,650 students and employed persons with an average age of 27. They currently live in 85 sq. m. in an average 2-3 person household.” A survey carried out by Meinungsraum market research in Austria in 2015 also shows the conventional desires of young people. In 25 years, 64% want to live in their own home, with only 31% wanting to rent. Over half the respondents want to live in the country, 37% in the city. The survey shows an apparent contrast with current urbanisation, which all future researchers see as a decisive megatrend. While the trend towards urbanisation is less threatening at home than in the emerging nations, everybody is seeing a move to the cities. Wherever Austrians finally end up, they currently spend around 22% of household income on housing, according to another study by the Österreichischen Verbandes der Immobilienwirtschaft (Austrian Real Estate Industry Association – ÖVI). Currently, 43% of respondents live in rented housing, 40% are owner-occupiers (house or flat). described the trend towards designing flats which are small but functional as “smart apartments” years ago. Internationally, there are marvellous examples of efficient – or, more accurately, sufficient – construction. ers earning less than the equivalent of EUR 90,000. The same goes for a resale. The user also has to work in the city district where the flat is located, or had to live there before buying. The project is also financed through crowdfunding. The innovative company Pocket Living builds mini-flats in good London locations designed for young people at the start of their career. The layout and details are brilliantly conceived to seem positively spacious at 38 sq. m. A builtin closet in the hallway that even holds a bicycle, living room, bedroom, hall, bath – everything is unobtrusive, there are no tight spots anywhere, and the ceilings are actually higher than usual in London. In addition there is underfloor heating, fulllength windows, a shower instead of a bath, and no underground car park. “We have to find ways of making more efficient use of existing space. A flat that’s 30 sq. m. can give you sufficient space if every corner is cleverly used,” explains architect Van Bo Le-Mentzel in the periodical Business Punk. He created such a flat in Berlin without partition walls, where functions like living and sleeping are separated by mezzanine levels on pillars, which also create storage space. “Our buildings are rigid, inflexible. Currently, they’re primarily made of reinforced concrete. This means they’re very complicated to manufacture, then they’re inflexible if we want to change or modernise them, so that it‘s better to tear them down and build from scratch,” says Le-Mentzel in the periodical. The idea is to provide flats for the target group of people who work, but don’t spend their leisure at home, who get out, meet friends, experience life in the city. Demand for the flats is enormous, in 2015 there were 21,000 applicants on the waiting list. What does it cost? Between EUR 200,000 and EUR 300,000. Purchasers are limited to first-time own- One factor which will have a stronger effect on how we live in future is the changing world of work. Instead of colourful couches and table football in the office, the focus now is on increasing mobility. A resourceful Viennese management consulting firm, for example, has moved its accounts department to a district capital in Lower Austria. Most of the employees lived there anyway, as they were recruited from the local commercial college. A few years later, most of them want to start a family, and didn’t necessarily want to commute to Vienna every day. The firm accordingly rented an economical office building in the town, the data flashes securely to head office in Vienna First District through the optical fibre infrastructure, and once a week everyone gets together in Vienna. Win-win for everybody. BUSINESS COMMUNITY AS LIFESTYLE Others clearly want to combine work and private life even more closely. The concept is called co-living, where innovative knowledge workers want to work on projects together or alone, and also live together. “Ideas spark faster between muesli and toast and marmalade than the coffee brews,” is the slogan on the website of Coliving Hamburg. The idea was pioneered by combinations of living, think- ing, leisure and working in the start-up scene in Silicon Valley and San Francisco, such as Rainbow Mansion, The Glint or The Embassy. Here, it‘s no longer a question of rooms but of the mind-set of the community members, good mood, sharing ideas and helping each other. The American co-working giant Wework is currently testing the concept in Wall Street, and if it succeeds a global rollout is planned. In Europe there‘s already a co-living community established in Stockholm, called Nest. Zoku is a hotel in Amsterdam which offers casual community rooms for coworking instead of anonymous rooms, with a strikingly wide choice of sleeping accommodation, from rooms with multiple beds to a loft which has a king-size bed, full kitchen and regular bathroom, despite having only 24 sq. m. of floor space. Sliding doors and a stairway which vanishes into a cupboard when it‘s not needed save space. One thing most of these projects have in common is that they’re ideal concepts for repurposing old office buildings, barracks, dilapidated properties which would otherwise stay empty. An opportunity, in fact, to create new urban quality of living through innovation. Everything you need in just 24 sq. m.: at the Zoku loft in Amsterdam, the stairs vanish into the cupboards. Interview Anett Gregorius In 1999 Annett Gregorius formed Boardinghouse Consulting. She estimates that there are around 480 buildings in Germany currently which are operated on the service flats concept, or around 24,000 units. Just over 10% of the flats are operated by international brands. Are boarding houses or service flats cheaper than a hotel? Gregorius: This alternative is primarily attractive for companies, as they can save up to 30% of the cost of extended stays. So this form is primarily interesting for business travellers? Gregorius: Yes. The share of corporate customers in the industry has been constant for years at around 70%. But thanks to their increased familiarity, service apartments are becoming more and more attractive for private travellers as well. What‘s the difference between a boarding house and an apartment hotel? Gregorius: The key distinction is the level of service. A classic boarding house has a limited range of services tailored specifically for long-stay guests. Apartment hotels on the other hand offer many more services, depending on the concept, such as breakfast service, a (small) fitness and wellness area, and the reception desk is generally staffed round the clock. 3 PARK FLATS 23 LIVING BY THE LIESING ALTHAN NEw DIVERSITY IN VIENNA The flair of this residential block lies in the variety of individual types of housing, ranging from cleverly laid-out two-room flats to three-story terrace houses with gardens. Overall, this is creating around 11,000 sq. m. of privately-financed living space in the desirable Liesing district, grouped around a landscaped inner courtyard. The ground floor houses an entertainment centre, the underground car park has enough spaces, public transport users are just a few steps along the Liesing from the railway station, which also has connections with local services etc. The parklike area in front of Park Flats 23 creates an oasis of greenery directly in front of the doors. Selling has already started for the flats by the Liesing. Urban metamorphosis in Vienna’s Ninth District. The Althan project is an impressive demonstration of how to turn old buildings into cool, intelligent and sustainable living space. The basic parameters are naturally sound (optimal infrastructure, transportation links, inner city location etc), the unusual architecture and elevated site offer impressive views over Vienna. There is a range of living formats, from loft studios through single flats to family housing – all notable for their intelligent floor plans and high-quality fittings, such as underfloor heating, parquet flooring and floor-to-ceiling windows. Marketing of the flats has already started, and they will probably be ready for occupation at end-2017. THE 6B47 GERMANY GMBH MANAGEMENT TRIo Fred Schelenz (COO) and Anton Thomas Schöpkens (CFO) joined the management team of 6B47 Germany GmbH at the start of 2016. The Düsseldorf real estate development firm also has a new CEO, project development and real estate management specialist Kai-Uwe Ludwig. An MBA, Ludwig started his professional career with PWC in Munich, before going to the Schörghuber group of companies, where he rose to the position of MD at Bayerischer Hausbau. Architect and real estate economist Fred Schelenz is responsible for operating business. CFO Thomas Schöpkens joined management in November 2015, after coordinating the sale of the Vitus Group to Deutsche Annington (among other projects). Fred Schelenz, Kai-Uwe Ludwig, Anton Thomas Schöpkens (from left to right) 6B47 Real Estate Investors AG Heiligenstädter Lände 29/4 • 1190 Vienna Tel: +43-1-350 10 10-0 • Fax: +43-1-350 10 10-50 E-Mail: [email protected] • www.6B47.com Handelsgericht Wien • FN 337678 k • UID: ATU68629512 4