Commercial real estate in Austria – Guest article

Buying vs. renting – which makes more sense for young, foreign companies

If you want to set up a company in Austria, as a young entrepreneur you will be faced with the decision of whether to buy or rent your commercial property in Austria. Both options have their advantages and disadvantages in terms of financial obligations, real estate management and location flexibility, which are discussed below.

Initial costs

When purchasing a commercial property in Austria, young entrepreneurs face high initial investments. The purchase price of a property can vary greatly and depends on various factors, including the location, size and condition of the property. This can represent a considerable financial burden for entrepreneurs with limited capital.

In Austria, however, there are tax incentives for companies that own commercial real estate. These include depreciation and tax deductions for mortgage interest, which can ease the financial burden of purchasing a property. Nevertheless, young entrepreneurs should consider the long-term viability of a real estate purchase and conduct a comprehensive market analysis to understand current market conditions.

Renting a commercial property offers young entrepreneurs in Austria greater financial flexibility. Compared to purchasing, you have lower initial costs and only include the rental deposit and first rental payment.

However, it is important to note that operating costs and ancillary costs can vary depending on the rental agreement and affect the total monthly costs. A careful review of the rental agreement is therefore essential.

Real estate management

The purchase of commercial real estate offers young entrepreneurs the opportunity to make long-term investments and build up assets. The property can increase in value over time and serve as a financial reserve. You also have full control over the space and can adapt it to your specific business requirements.

However, in addition to considerable initial capital investment, owners are responsible for the entire property management themselves, including maintenance, repairs and operating costs.

Meanwhile, commercial real estate leases typically require lower initial financial commitments and offer greater flexibility to respond to changes in business requirements or location needs. Tenancy agreements often place responsibility for maintenance and repairs with the landlord, which can simplify property management.

In the long run, however, renting can be more expensive than buying, as the monthly rental payments never contribute to the company’s assets. Tenants have limited control over the space and may not be able to make all the adjustments they want. Uncertainty regarding lease renewals can influence business plans.

Flexibility

When you buy a commercial property, you are usually tied to a specific location. This can have a negative impact on flexibility with regard to the choice of location. This is particularly relevant if your business is developing rapidly or if market conditions change. Renting is therefore particularly advantageous for young entrepreneurs, as you can explore new markets more easily without making long-term commitments.

The choice between buying and renting commercial real estate is an important decision for young, foreign companies that want to set up in Austria. Your decision should depend on your financial resources, long-term business goals, location preferences and flexibility requirements. A careful analysis of the current market conditions and a thorough examination of the contractual terms are also crucial. Ultimately, the decision depends on which option best suits your business model and your company’s financial goals.

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