Hidden Gems of Austrian Real Estate: Why Invest in Salzburg

Vienna dominates the Austrian property market, attracting foreign buyers with its top ranking as the world's most livable city. However, focusing only on Vienna means missing out on the potential of other cities. Non-capital cities offer unique benefits and often better deals for various types of real estate investors.

This article begins a series on the top three Austrian cities for real estate investment outside Vienna: Salzburg, Linz, and Graz. We will explore growth drivers, key infrastructure developments, and the advantages of investing in these locations. Whether you are a seasoned investor or new to the Austrian property market, this guide aims to provide valuable insights for informed decisions. Let's start with the beautiful city of Salzburg, Mozart's birthplace.

Salzburg: The Jewel in Astria’s Real Estate Market

Salzburg is not just a picturesque alpine city known for its rich cultural heritage and baroque architecture. It is the fourth biggest city in Austria. With its strategic location close to the Bavarian border, stable urban economy, and strong tourism sector, Salzburg has something to offer to certain kinds of investors.

Salzburg Market Overview

According to Properstar , 2021 and 2024 the average price per square meter for apartments in the city has fluctuated. At the beginning of 2021, the price was €5,050 per sq/m. Following, there was a period of price appreciation up to around €6,400 per sq/m, only to come back down to €5,166 per square meter in June 2024. Numbeo gives more information about the current purchase prices - the price per sq/m in the city center is about €6,595, and approximately €5,240 outside the center. Furthermore, the average monthly rent for a one-bedroom apartment in the inner city is around €1,075 per month, while outside the center, it’s approximately €890 monthly.

The average gross rental yield in the city center is around 3.32%, while in the outskirts, it’s slightly higher at 3.50%. Comparing the city’s yield rate with the one in Vienna, which is around 3.60%, it can be said that overall, a real estate investment in Salzburg is relatively more expensive than in Vienna. Or stated otherwise, the current return on the investment expected in Salzburg is slightly lower than in Vienna. But what’s special about Salzburg?

Growth Prospects

Salzburg has a robust economy driven by sectors like tourism, technology, trade and transportation. The city has a strong industrial base, with companies like Red Bull and Porsche having significant operations here. The presence of these multinational corporations not only provides employment but also drives demand for residential properties. Moreover, the city attracts millions of tourists annually. The influx of visitors boosts the local economy and creates an extra demand for rentals via the short-term rental​ vacation channel. That ultimately contributes to additional real estate market appreciation.

Demographic and Economic Metrics

As of 2024, Salzburg's population is estimated at 152,200, showing a steady growth and healthy trend over the past few decades​ (World Population Review)​​. The city has a balanced age distribution with a significant portion of its population in the working-age group (18-64 years), supporting a stable and active housing market. The foreign-born population in Salzburg, including people from the EU, EEA, and other countries, constitutes about 28% of the total population​ (World Population Review)​​. One of the reasons why Salzburg is relatively more expensive can be found in the fact that the city tends to be a nest for wealthy individuals. An available statistic from 2022 shows that the GDP per capita in Salzburg was 58,900 euros - the highest in Austria. As a reference, the GDP per capita in Vienna was 56,600 euros.

Infrastructure Developments

Recent infrastructure developments in Salzburg further enhance the region’s attractiveness to investors. The city’s transport network is continually improving, with ongoing renovations to the Salzburg Airport, and advancements of the local rail connections​. Additionally, sustainable urban development projects like the Science City Itzling are transforming parts of the city and driving up property values in surrounding areas​​.

Investment Benefits

  • Demand: Salzburg’s strong tourism sector, alongside trade, transportation and metal industry, ensures a steady demand for the real estate market in the city.
  • Economy: The city’s economic stability and diverse industrial base mean property values should be more resilient to exogenous shocks compared to other cities, offering a higher level of long-term security.
  • Quality of Life: With excellent healthcare, education, and recreational facilities, Salzburg attracts both local and international residents, ensuring continuous housing demand​.

In sum, buying property in Salzburg is ideal for those planning to make it their long-term home due to its rich culture, economic stability, and high quality of life. However, for investors prioritizing the return on the investment, Salzburg's current rental market may not offer the best yields compared to other markets. The city can provide high-quality and premium investments, but potential buyers should weigh the high property prices against the modest rental yields.

In the next article, we'll be delving into the investment prospects of Linz.

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