Overview

Currently, units in Austrian real estate funds can be redeemed daily at the current net asset value (NAV).

Effective 1 January 2022, an amendment to the Austrian Real Estate Investment Fund Act (Immobilien-Investmentfondsgesetz) was enacted. This amendment introduces new rules for the redemption of units in real estate funds. The new rules will apply from 1 January 2027 and include several important changes:

1. Minimum holding period of 12 months
   Units must be held for at least 12 months before an irrevocable redemption declaration and the corresponding redemption order can be submitted for the first time.
2. Redemption notice period of 12 months
   The redemption of units requires an irrevocable redemption declaration. After submitting this declaration and placing the redemption order, the payout will be made after 12 months at the net asset value applicable at that time. However, there is one exception to the redemption notice period: the annual exemption allowance.
3. Exemption allowance rule
   • The exemption allowance applies to all investors and to units that are held in the custody account as of 31 December 2026.
   • In each calendar year, an exemption allowance may be redeemed per investor and per fund without observing the redemption notice period, at the current net asset value. An irrevocable redemption declaration is also required for this purpose.
   • 2027 & 2028: Annual exemption allowance of EUR 20,000
   • 2029 & 2030: Annual exemption allowance of EUR 10,000
   • From 2031 onwards: No exemption allowance applies (the 12-month redemption notice period will apply in full).

Why are these changes being introduced? The new rules are intended to strengthen the stability of real estate funds while safeguarding the interests of all investors. If a large number of investors redeem their units simultaneously, this may create liquidity challenges for the fund. The new notice periods allow fund management to plan more effectively and, if necessary, sell properties at market-appropriate prices. This underlines the fact that real estate funds are designed as a long-term investment.

What does the redemption notice period mean? Once the 12-month minimum holding period has expired, investors may submit an irrevocable redemption declaration and place the corresponding redemption order for the first time. Redemptions can only be processed through the investor’s custodian bank and not directly through ERSTE Immobilien KAG. The payment will be made 12 months after the redemption declaration is submitted and will be based on the net asset value determined at that future date. The only exception is the exemption allowance described above.

Why is there an exemption allowance? The exemption allowance is intended to give existing retail investors the opportunity to redeem smaller portions of their investment if needed. Within the scope of the exemption allowance, the redemption notice period does not apply. The exemption allowance is designed as a transitional measure for investors whose units were already held before the new redemption rules come into effect. For units acquired on or after 1 January 2027, this transitional arrangement does not apply. Consequently, no entitlement to the exemption allowance exists for such units.

We will provide you with further details in good time before the new rules and deadlines become effective. If you have any questions, please contact your bank advisor.