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ECONOMY

Austria struggles to compete with European neighbours

When it comes to competing on a global scale, Austria is lagging behind some of its neighbours in Europe.

Published: 31 May 2016 11:58 CEST
Austria struggles to compete with European neighbours
Parlamentsdirektion / Peter Korrak

That’s according to the latest results from the World Competitiveness Rankings from the Swiss business school IMD.

According to IMD, Austria placed 24th, a fair way behind countries such as Germany (12th), the Netherlands (8th) and Sweden (5th).

The competitiveness report rates countries on several different factors, including economic performance, government efficiency and infrastructure.

Having steadily fallen down the rankings from eleventh place in 2007 to 26th in 2015, this year Austria for the first time in nearly ten years managed to move back up again.

The decline over the past decade is partly due to the country’s financial problems following the global recession, including the billions of euros of debt incurred by the state of Carinthia following the collapse of the Hypo Alpe Adria bank.

The country also does not fare well when it comes to government efficiency, where it places 35th out of 61 total countries. This is partly to do with the ranking of Austria’s ‘fiscal policy’ which places 60th, almost at the very bottom.

Where Austria does impress, according to the report, is in infrastructure, which includes quality of life (where it places 2nd) and health infrastructure (3rd).

In terms of challenges in 2016, an early retirement age, administrative reform, bottlenecks in secondary education, and reducing tax burden are top of the list according to the Federation of Austrian Industry who provided information for the report.

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ECONOMY

Key divisions of Austria’s property giant Signa file for insolvency

The two most important property divisions of real estate giant Signa -- whose vast portfolio includes New York's iconic Chrysler building -- are filing for insolvency, the company announced Thursday.

Published: 28 December 2023 14:23 CET
Key divisions of Austria's property giant Signa file for insolvency

The filings mark the latest troubling developments at Signa, exacerbating the spectacular downfall of self-made Austrian tycoon Rene Benko.

Benko — one of Austria’s richest men — founded Signa in 2000 and grew it into a property and retail conglomerate. But as the sector is hit by higher borrowing costs and rising building material prices, a growing number of developers are filing for bankruptcy.

The Signa Prime Selection division — which includes properties such as the Berlin shopping gallery KaDeWe — on Thursday initiated self-administrated insolvency proceedings at Vienna’s commercial court, the company said.

A second subsidiary, Signa Development Selection, will also file Friday to restructure under self-administration, it said.

BACKGROUND: Austria property giant Signa to file for insolvency

Credit rating agency Fitch had already downgraded the Signa Development unit earlier this year.

“It is well known that external factors have had a negative impact on business development in the real estate sector in recent months,” the statement said. “Despite considerable efforts in recent weeks, the necessary liquidity for an out-of-court restructuring could not be secured to a sufficient extent, so that SIGNA Prime Selection AG has applied for restructuring proceedings with self-administration,” it added.

At the end of November, Signa’s holding company filed for insolvency after Benko announced he was handing over the chairmanship of the company’s advisory board to a German restructuring expert.

According to the company’s website, the assets of Signa Prime Selection are valued at €20.4 billion. Prime Development owns assets worth €4.6 billion, the website states.

Several Signa projects, including the construction of a landmark high-rise in the German city of Hamburg, have ground to a halt. Recently, Signa has been looking at selling its partial ownership of the
Chrysler building.

READ ALSO: Can foreigners buy property in Austria?

The leading German department store chain Galeria Karstadt Kaufhof, which Signa purchased in 2019, filed for bankruptcy in 2020 amid the coronavirus pandemic, and the chain decided to close 52 stores at the start of the year.

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