- EIB loans amounting to as much as €175 million to two Austrian savings banks will finance a total of 1,750 affordable rental flats in Salzburg and Innsbruck.
- Credits to Salzburger Sparkasse and Tiroler Sparkasse include favourable interest financing and boost sluggish investment in housing sector.
- New homes will also be climate friendly and are due to be completed by 2028.
The European Investment Bank (EIB) is extending loans totalling as much as €175 million to two Austrian savings banks for the construction of affordable and green housing in the cities of Salzburg and Innsbruck. The EIB loans are up to €100 million to Salzburger Sparkasse Bank AG and as high as €75 million to Tiroler Sparkasse Bank AG.
The credits are part of total financing of €200 million in Salzburg and €150 million in Innsbruck to build affordable flats for low-income tenants. In total, 1,000 new flats in Salzburg and 750 in Innsbruck can be built by 2028.
“Together with these savings banks, we are showing that new, energy-efficient rental apartments do not have to be expensive,” said EIB Vice-President Thomas Östros. “This project will help the vibrant cities of Salzburg and Innsbruck continue to grow.”
Supporting investment in social housing construction
Higher interest rates and rising construction costs have made many housing investors in European countries including Austria reluctant to build. Developers must either bear the extra financing costs or, where permitted by law, pass them on to tenants. The EIB loans to Salzburger Sparkasse and Tiroler Sparkasse address this squeeze by providing long-term financing at favourable interest rates. The framework loans are guaranteed by Austria-based Erste Group Bank AG, which serves both Salzburger Sparkasse and Tiroler Sparkasse.
“It means we can offer non-profit housing developers long-term loans at fixed interest rates through the framework loan provided by the EIB,” said Salzburger Sparkasse Chief Executive Officer Christoph Paulweber. “With this arrangement, non-profit developers can rely on stable long-term financing costs, which should counteract the general investment shyness and ultimately benefit tenants.”
“Housing construction and renovation are also an important source of value creation in the domestic construction industry and contribute to climate-friendly energy consumption in the region,” said Tiroler Sparkasse board member Patrick Götz. “That is why we, as Tiroler Sparkasse, want to support social housing developers – which are major contributors in the construction and provision of affordable housing in the region – with attractive financing conditions for new building projects or the renovation of existing non-profit housing.”
The need for new affordable housing in Austria is high. A survey by Erste Bank and the savings banks showed that rising costs for housing and heating are causing public frustration.
In the past two years in Austria, already-high rents have gone up even further due to indexation. Innsbruck and Salzburg are among the most expensive cities in Austria. Average monthly housing costs per person are €678 in Salzburg and €706 in Innsbruck, above the Austrian average of €647.
Construction projects in line with EU climate objectives
Sustainability is also important to residents of Salzburg and Innsbruck: nearly 70% of all survey respondents in the two cities expressed a desire for improved sustainability in their own homes. The high energy-efficiency standards of the planned homes will contribute to the European Union’s climate-action and environmental goals by limiting carbon-dioxide emissions from buildings and helping Salzburg and Innsbruck on the path to climate neutrality. The standards also promote social inclusion in the two cities by providing more housing opportunities for low-income residents.
Background information
The EIB is the EU institution for long-term lending arrangements that align with EU objectives. Its shareholders are the Member States. The EIB’s key priorities are climate and the environment, development, innovation and skills, small and medium-sized businesses, infrastructure and cohesion. It works closely with other EU institutions to foster European integration, promote the European Union’s development and support EU policies in more than 140 countries worldwide.
With around 600 employees, Salzburger Sparkasse Bank AG serves 250 000 customers at 41 branches and 29 self-service locations, as well as nine regional advisory centres for business customers, members of the liberal professions and clients in residential construction. It is part of the Erste Bank Group AG, one of the leading financial service providers in Central and Eastern Europe.
Tiroler Sparkasse Bank AG serves around 155,000 customers with around 400 employees at 21 branch and 8 self-service locations as well as the central advisory centres for business customers, freelancers and housing and local authorities. It is part of the Erste Bank Group AG, one of the leading financial services providers in Central and Eastern Europe.