Real Estate Market
Except running their own business, a lot of accomplished businessmen also make investments. There are countless investment patterns and the most profitable and effective ones can be chosen for everyone according to personal benefit. At any time, investment in property is a reliable way to save and increase money holdings. This type of investment has rather high profitability and the same liquidity if, of course, it is produced properly.
Types of and Ways to Invest in Property
Today six variants of investment in property are singled out. While choosing, the amount of savings and expected income with risk co-relation are to be focused on.
- Investments in residential property with its further renting.
This variant has the least risk. Everything is simple: You buy property, and then you rent it. In such case, the location of the property and the living conditions play important role. However, a constant personal commitment is necessary. More profitable perspective projects have unusual architecture, successful completion, infrastructural supporting. Not only this but even an apartment itself is highly priced: it can have excellent planning but an unattractive view from the window.
- Investment in building property.
Here, rather high income can be expected. Nevertheless, there are some risks. One of them is the
possibility of crisis and unfinished building, and the other one is waiting a long period of time for the return on investment. For guaranteed realization of profit, the object selection should be made with adequate criticality and attention.
- Investment in commercial property.
Investment in commercial property brings higher income than investment in residential property. This type of investment needs sizeable outlay; instead, you can always buy prepared rental business.
- Purchasing of land plots
The price of such plots is more moderate, the probability of frauds is minimized and to make the plot be unsuitable is rather difficult. Additionally, land value taxation is low.
- Investment in countryside real estate
Such property investment is possible in several ways such as the purchase of suspended construction, finished houses and land plot for a building. Similar investments are sure to become profitable within time. On the other hand, not every cottage can generate income. That is why its location, remoteness fr
om highways and the nearest town should be taken into account.
- Other ways of investment in property.
Pros, cons and risks
- Putting aside political risks, realty is a rather safe investment type. Its full invalidity is extremely unlikely.
- In the long run real estate prices usually increase.
- Usually real estate is profitable when rented, including in a down economy.
- Purchasing residential realty as the first buyer, you can get income tax credit (depending on local laws).
- Buying real estate on the drop of prices, could cause a long term profit as the prices rise again in the future.
- Purchasing through long-term credit you can get payoffs in case of depreciation of loan currency.
- Owning realty leads to expenses being caused. Taxes, utility bills and other levies.
- Prices of particular apartments, buildings, and land plots often change a lot due to local factors, even in the situation of market stability in total.
According to the risk level, investment in realty is neither in the first nor in the last place. This way is more beneficial than investment in unknown financial companies, value metal (the place for keeping metals is necessary, converting in money amounts about 10% and there is a tendency for price decline). Investment in foreign currencies is also inferior to real estate because of high conversion rate (loss of about 10% of amount). Beneficial ownership of PAMM accounts is notable for high risks and incomes, if you choose brokers carefully. Due to risks, real property comes short of valuable security (but for successful investment a lot of knowledge and practice is necessary) and of investment in own business, which depends on you and the country you live in.
In 2015 property investors express readiness to accept more risks. The majority is planning not only to support already-existing high risks levels but also to increase it with the aim of yield enhancement.
Market review for 2015
The number of investors, expecting improvement of investment conditions for 2015, decreased from 62% to 39%. Marginal majority of Asian investors, around 73%, predict further enlargement of investment volumes in 2015.
Approximately 66% of Asian investors do not deny the existence of profitable investment opportunities in the market, but they emphasize that usually it is difficult to identify such opportunities. China has the leading position among the best regions for Asian investors. On interview data, 41% of respondents plan to make investment in the real estate market of this country during 2015. Singapore and Hong Kong entice 36% and 33% of investors of Asian region.
Europe and Middle East
The most sought-after countries for investors from European and Middle East countries
When it seemed that the economy of the euro-zone finally started to gain momentum, the descent of economic indicators of the countries of the European Union such as Germany, France and Italy, called the steadiness of the region into question. In September, European Central Bank (ECB) still expected the growth of euro-zone economy by 0,9%, in the light of recent economic recession the rethinking of given indicators may apply.
Majority of global investors expect the increasing of investment flows in the countries of Western Europe in 2015 (in 56%).
The analysis of experts of Colliers International, the leading real-estate company in the world, shows that common reduction of investment volume in the first half of 2014 was generally concentrated in local markets of Russia and Ukraine. And there was the raise of interest to ‘active investors’ in other countries of Central and Eastern Europe.
Great Britain (35%), Germany (21%) and France (12%), Spain (9%) and the Netherlands (9%) became the most suitable EMEA countries (Europe, the Middle East and Africa) among the respondents for investment. Concerning cities, London stays the most desirable one. Additionally to London EMEA investors prefer Berlin (22%), Paris (16%), Madrid (10%) and New-York (18%). Also during last two years, a big interest is focused on the East and particularly in Dubai.
Dubai. EXPO 2020
The heart of UAE – Dubai, in which realty continues to be one of the most requested investment assets. Due to data of official statistic of Dubai Land Department (DLD) the total cost of Dubai realty amounts to 64 billion Dirhams by the first quarter of 2015. Due to Expo 2020 in Dubai the request on office rental of higher category increases constantly. Investing in commercial property, private investors implement very profitable deal, as office premises and other objects of commercial purpose even now produce high profit. Last year the rental rate practically doubled. According to the data from British agency Knight Frank, this year the rent of commercial realty in Dubai overgrows by 20%, for this very reason many investors consider this emirate sector to be one of the most remunerative.
For executing the transaction of buy and sell in Dubai a physical person needs only a passport. For legal units, constitutional documents of the company, state registration certificate, directors resolution of real estate item purchasing and the passport of authorized representative of the company, authenticated proxy (if relevant) are required. You also should not forget about the necessity of getting NOC Certificate for vendor and purchaser (if it is legal unit). A unified form of the agreement can be downloaded from the state portal E-mart; after filling necessary items, you can execute the contract by its signing and prepaying 10% of object total value. For closing, the agreement should be registered in Land Department. In UAE, the fee should be paid while registering the realty in the department. In Dubai, the registration fee upon purchase of real estate amounts to 4% of the object cost.
What should be known before investing?
- Property investment should be considered if you are ready to put up the capital for a long period. If you need money within the next year or year and a half, it would be a rather doubtful choice.
- Investment in realty is a wise choice if your priority is the possibility to get some income even in the most difficult times, without the risk of your input devaluation.
- While planning property investment, take into consideration the expenses you need to make for its keeping and the potential opportunity of them increasing.
- While planning property investment, estimate pluses and minuses, which can be caused by current and prospective actions of federal, state and municipal officials.
- Your property investments will be the most profitable in the case that you buy realty during price collapse.
- Real estate purchase can have negative profit on condition of price drop renewing.
- When buying property using real estate credit, the currency risk should be kept in mind. If you take out a loan not in the currency of your income, then there is a risk of heavy losses during the growth of loan currency rate. But, on the other hand, you can gain because of its falling.
- When purchasing realty using real estate credit you should consider that if the coat of the apartment is lower than the amount of the credit, the bank could demand from you to discharge corresponded dissemblance and probably the full credit.
Before investing in your first property unit, you should thoroughly research laws concerning given activity types since it is quite possible that there will be a list of rather essential nuances (starting with all possible indulgences for young/multi-child families – and ending with probable privileges concerning the ability to provide urban amenities etc.) By the vast majority, property investments are a rather valued way of capital expenditures, however, it needs an attentive approach, examination of market and ins and outs of legislation.
Property investments are not just popular but profitable, and yet still not without risks. We advise you to consult with independent experts and lawyers, to analyze the amounts of taxes in the country, which you would like to invest in. As of today’s date, month, year – Dubai is very advantageous for investment due to the absence of taxes, global building boom and EXPO 2020. You can read more about real estate in Dubai and EXPO 2020 here.
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