1. Do you have to enter into a form of agreement with the local au­thor­ity/mu­ni­cip­al­ity when applying for consent for a data centre in your jurisdiction? In Austria there are no specific requirements to...

Environmental, social, and ethical criteria will define the future of Austria’s real estate sector

De­veloper­In­vestorOwn­er De­veloper/Con­struct­or 1. What are the currently applicable emission reduction goals and relevant  provisions for green real estate developments? Buildings produced 8.1M tons...

Press release - 11.09.2023 Total investment across the European real estate market fell by around 14% in 2022 compared to the previous year, coming in at EUR 248 billion, according to global law firm CMS’ latest European Real Estate Deal Point Study. During the first six months of 2022, the markets rebounded from the Covid-19 pandemic, resulting in a flourish of transactions and total investment for the period – matching the record levels seen in 2020. In the second half of 2022, however, the sharp increase in financing costs prompted cautious investment behaviour, leading to a decline in overall investment levels across the continent. The decline was particularly pronounced in the fourth quarter of 2022, with investments plummeting by 57% compared to the same period in 2021, reaching approximately €47 billion. The report noted that investment trends varied widely across countries, with Italy (+25%), Spain (+29%) and Belgium (+177%) experiencing greater investment volumes in 2022. France (+1%) maintained investment levels similar to the previous year, whilst Germany (-16%) and the UK (-19%) witnessed a de­cline. Jo­hannes Hysek, a partner in the Real Estate department at CMS Austria, said: “The volatility in the European real estate investment market during 2022 emphasises the need for investors to remain vigilant and adaptable in the face of ever-changing economic conditions. The ongoing uncertainty in the market has nevertheless created a favourable environment for buyers, enabling them to negotiate high discounts when purchasing properties. The decrease in real estate investment has continued this year. In the first half of 2023, a clear reluctance on the part of investors could be observed. One of the main reasons for this is the constantly increasing interest rate environment. So far, there are no indications of a trend reversal, so further development remains to be seen.”“European real estate markets experienced quite diverse developments last year, opening up some attractive investment opportunities on the buyer side. We saw revived interest especially in office and residential properties in prime locations,” says Nikolaus Weselik, a partner at CMS Vienna and an expert on construction and real estate law, summarising the study’s res­ults.“In­ter­na­tion­al investors accounted for the majority of real estate investment in 2022, with a share of 54 per cent,” adds Gregor Famira, a partner at CMS Vienna and co-head of the regional Real Estate Practice Area Group. “They held an even stronger position than in other countries in Eastern Europe, where almost two thirds (63 per cent) of all transactions advised by CMS featured a foreign investor on the buyer side. Our study – now on its 13th edition – highlights current standards and margins for transactions, which is why many players in the market like to refer to it in negotiations.” CMS’ analysis of the real estate market in 2022 revealed the following key trends: Demand for office property is on the rise again. Following the record low of 2021 (19%), investor interest in this segment revived. Its percentage share rose to 24%, making office real estate the most sought-after asset class in Europe alongside residential property. Investment in residential properties accounted for a 24% share of the market. That made them the most sought-after asset class with regard to the transactions on which CMS advised. The main reason for the popularity of residential properties is the stable income that they generate, which is particularly attractive to investors during uncertain times. International investors accounted for the majority of real estate investments. At 54%, their share was almost the same as in the previous year (55%). National buyers, whose investments accounted for 46%, dominated the market as recently as 2020 due to the Covid-19 pandemic. This trend has now reversed slightly in favour of international investors, following the lifting of pandemic-related travel re­stric­tions. Sus­tained a strong desire for security on the part of sellers. The proportion of transactions in which steps were taken to ensure the buyer met its financial obligations remained at the record high level of 70% seen in the previous year (2021). Buyers were frequently able to negotiate favourable terms with regard to contractual provisions on limitation periods. On the one hand, the parties agreed to the buyer-friendly statutory limitation rules more often than before. On the other, limitation periods of more than 24 months were often agreed in 2022, whilst there was a slight fall in the proportion of short limitation periods of up to 18 months. Notable increase in seller-friendly limits on liability. De minimis and basket clauses were agreed significantly more often in 2022 (52% and 42%, respectively), thus setting the market standard even in more buyer-friendly times. This represented an 8% increase in de minimis clauses and a 10% increase in basket clauses in transactions carried out by CMS last year. Most interestingly, the number of transactions with agreements on limits to liability was particularly high in Eastern Europe, including de minimis clauses (70%), basket clauses (52%) and caps (75%) – a trend that has since driven segment growth in Europe more widely. The CMS European Real Estate Deal Point Study 2023 now includes over 2,500 transactions, spanning the period from 2010 to 2022. This comprehensive study has empowered CMS to identify significant market trends and guide their clients through the dynamic landscape of European real estate.

The state of the real estate transaction market in Europe The new CMS European Real Estate Deal Point Study 2023 now includes more than 2,500 transactions. Compiling the study involved comparing all the transactions on which we advised in the period 2010 to 2022, enabling us to highlight developments and trends in the real estate market. The market response to our study indicates that over the years it has repeatedly proved to be a valuable tool when preparing for contract negotiations. CMS’ analysis of the real estate market in 2022 revealed the following key trends

Your guide to real estate development in Austria

The Austrian federal government has drafted the Renewable Energy Act (EWG, Erneuerbare-Wärme-Ge­setz), which is expected to contribute to making Austria climate neutral. The draft EWG bill aims at switching the heat supply of buildings to renewable energy sources and providing so-called ‘qual­ity-as­sured’ (i.e. decarbonised) district heating by 2040 through the gradual prohibition of the burning of fossil fuels. The EWG will also regulate the installation of heating systems in new buildings as well as the conversion of heating systems in existing buildings. The draft, which will likely not be passed before January 2023, contains the following points. Residential and non-residential projectsThe installation, conversion and extension obligations for heating systems envisaged in the EWG bill will be of crucial interest to project developers since it will cover all kinds of existing and newly constructed buildings, both residential and non-res­id­en­tial. Ban on fossil heat transfer media in new buildingsThe bill’s main innovation is a comprehensive ban on installing oil, coal and gas heating in new buildings from 2023. Such a ban has been in force for central oil and coal heating since the Oil Boiler Installation Prohibition Act 2019 (ÖKEVG, Ölkesselein­bau­ver­bots­ge­setz). According to the draft, from 1 January 2023 the ban will extend to cover existing decentralised heat supply systems running on oil and coal as well as gas heating systems. The ÖKEVG is to be replaced by the EWG. Decommissioning requirement for central heating systems existing buildingsThe law centres on the decommissioning requirement for central heating systems in existing buildings. Natural gas heating systems must be decommissioned by 2040, and oil, coal and liquified petroleum gas (LPG) heating systems must be decommissioned by 2035. In addition, buildings with central heating systems running on oil, coal or LPG will be particularly affected since building owners must decommission heating systems earlier than this depending on the system’s year of construction. According to the current draft, central oil heating systems built before 1980 must be decommissioned by 2025, while newer systems must be gradually decommissioned by 2035 (as part of the successive decommissioning requirement). This will mean significant additional costs since existing fossil-fuel systems must be de-installed and converted to other systems. Those costs must be carefully considered for buildings already in operation and for project planning and contract design, especially when determining the purchase price of real estate. Renewable energy requirement for central heating systems in existing buildingsIf a central heating system in existing buildings is renovated, improved or renewed, it must either be converted to a system using use renewable energy sources or the building’s heating supply can be switched to quality-assured district heating. Consequently, as of 1 January 2023, central heating systems not running on oil, coal or LPG any more may not be replaced with another fossil heating system. The heating system to be replaced must be decommissioned. The EWG offers some flexibility. For example, the replacement of old systems will not be required and a switch to district heating and other alternatives is also possible as explained below. Developers are encouraged to take the renewable energy requirement into account for their projects, both in planning and contract drafting. For repairs, refurbishments and improvements to fossil-heating systems, the costs of removing and disposing of old systems and installing new ones must be weighed against a possible switch to district heating (for which the bill provides technical exceptions).  Conversion requirement for decentralised systemsExisting decentralised plants running on oil, coal or gas will be treated more strictly. They must be converted to centralised non-fossil fuel plants by 2035 or, if operated by natural gas, by 2040. Operating a building will only be permitted if the building is heated with renewable energy sources or quality-assured district heating. For decentralised natural gas heating systems, this only applies if the building is located in an area, which already has quality-assured district heating or where this will become available by 2035. If this is the case, individual units (e.g. flats, offices, shops) must be connected to this central system within five years. If this conversion has not taken place in a building, this must be taken into account in project planning and cost planning. In individual cases, it must be examined in more detail what exactly "quality-assured district heating" means and how a real estate investor can determine this or check whether "it will have district heating by 2035". It is also not clear whether tenants can insist on a certain changeover or, conversely, oppose it. According to the bill, further regulations are to be expected for those natural gas-based systems that are not covered by the renewable energy requirement, the successive decommissioning requirement and the requirement to convert decentralised systems. Therefore, another draft to address the phase-out of fossil gas heating systems in existing buildings will appear soon. However, these natural gas plants will also have to be decommissioned by 2040. Energy Outlook – is green gas the future?According to the draft, declared objectives of the EWG include the expansion of district heating and the conversion of heat supply to renewable energy sources or quality-assured (i.e. decarbonised) district heating. According to the draft, energy from renewable gas falls under energy from renewable energy sources and is therefore a means of decarbonising district heating. The explanatory notes to the bill refer to the use of green gas for the latter in addition to waste heat utilisation, heat pumps, geothermal energy and biomass. As a result, heating systems that are operated with renewable gas are exempt from the decommissioning requirement for central heating systems. Pending regulations on natural gas heating absent from the EWG will not change this either. Green gas plants can be operated beyond 2040. Authors: Thomas Hamerl, Dr. Johannes Hysek, Karl Weber-Wois­etschläger 

Published on CEE Legal Matters | February 23, 2022 CMS has advised Greiner on the sale of its extrusion division, including operational assets in Austria and the Czech Republic, to Nimbus. KPMG Legal advised Nimbus. Greiner is an Austrian plastics and foam specialist company.

Shortly before the beginning of the year, CMS Austria supported the Austrian plastics and foam specialist Greiner AG on the successful sale of its extrusion division, including the associated operational real estate in Nußbach, Upper Austria, and Trhové Sviny, Czech Republic. On 21 December 2021, the German Federal Cartel Office approved the sale of the Austrian- based Greiner Extrusion Group (GEG) to the Dutch-German investment company Nimbus – the majority owner, amongst other things, of bat­ten­feld-cin­cin­nati, one of CEG’s competitors with subsidiaries in Germany, Austria, the USA and China. The now affiliated companies intend to exploit synergies in purchasing, at least. Otherwise, both entities will remain independent companies with their organisational structures and market presence. As part of the transaction, the experts of the CMS advisory team, led by Alexander Rakosi, Florian Mayer and Anna Hiegelsperger, had to navigate numerous complex legal topics on trans­ac­tion-re­lated aspects as well as in the areas of real estate law and an­ti­trust/com­pet­i­tion law. The internationally experienced team of experts at CMS Austria also included Dieter Zandler (antitrust law), Vanessa Horaceck (competition law), Hans Lederer (trademark law), Johannes Hysek (real estate law), Mariella Kapoun (real estate), Sibylle Novak (international tax law), Thomas Aspalter (tax law), Cornelia Kreuth (M&A), Christoph Birner (financing) and Alexandros Hantasch (corporate trans­ac­tions). In addition, the Austrian advisory team was also supported by colleagues from other CMS offices. The international CMS team consisted of Stepan Havranek (CZ), Eva Bryndova (CZ), Michael Munzinger (PRC), Lei Shi (PRC), Dipesh Santilale (UK), Sabby Kenzie (UK), Margaux Deuchler (F), Thomas Hains (F), Blazej Zagorski (PL) and Marta Osowska-Buba (PL). Lead partner Alexander Rakosi happily notes: “International transactions bring multi-faceted challenges. We are glad to have been able to provide comprehensive legal advice to the Greiner Group from project kick-off to its successful closing across all countries.”

Recent work highlights Planning and environmental Advised on construction and planning law issues in respect of the new project RWA Campus, a real estate development project in lower Austria. Assisted GLOBOPHARM Pharmazeutische Produktions-und Han­dels­gesell­schaft mbH in connection with a new real estate development project in Vienna from construction and planning law aspects. Assisted Church Rectorate St. Karl Borromäus & Verein der Freunde und Gönner der Wiener Karlskirche in connection with construction, re-dedication and planning legal issues in respect of “Karlskirche Wien” and surrounding areas. Construction and development Advised the Swiss and Austrian planning consortium on the construction tunneling project Brenner Basis Tunnel. Advised on various construction law matters in connection with the refurbishment and resettlement of the Austrian Parliament. Advised IES Immobilien Pro­jek­tentwicklung GmbH on one of the biggest residential real estate development projects in Vienna. Advised on construction law matters in connection with the hospital project Krankenhaus Nord in Vienna. Investment and disposal Advised an Austrian investor regarding the forward purchase of a hotel project in Tyrol. Advised BNP Paribas REIM on the acquisition of Inno Plaza, an office building in Vienna, by way of a forward purchase from the Austrian developers S+B Gruppe AG and List Group. Advised a German investor regarding the forward purchase of an office building in Vienna. Managers and occupiers Advised several international luxury brands regarding the establishment of flagship stores in Austria. Advised two Tyrolian hotels on several construction and refurbishment law issues. Advised the asset management of an worldwide acting international insurance company regarding its Austrian assets. Financing Advised the lender, a consortium led by HYPO NOE Landesbank für Nieder­ös­ter­reich und Wien AG, on the syndicated financing for the construction of the office building Austro Tower in Vienna. The sponsor is an Austrian real estate developer group. Advised the client as a consortium manager in the financing of the Campus, the new headquarters of Erste Group Bank AG. Advised the client on the construction financing of a five-star hotel in Vienna. Advised Erste Group Bank AG on the financing of a €100m+ portfolio of shopping centres. Advised on the financing of the acquisition of Austria Campus. Advised Münchener Hypothekenbank on the financing of a logistic centre