The new normal in real estate investment. What assets and locations are your favourite’s?
Investment in residential has experienced a notable halt in the financial year of 2020, as it has been affected by the restrictions of the coronavirus pandemic, especially those related to the lack of mobility and the closure of borders.
The new normal in real estate investment is marked by prudence when closing sale and purchase operations, which are being concentrated in properties for rent that generate at least 4% profitability for the owner. What are these homes like and where are they located?
The arrival of the vaccine has awakened investor appetite, to the point that this sector will become one of the factors that reactivate the real estate market.
The residential sector currently registers a latent investment demand, which is “waiting to carry out high-level and large-scale operations”, especially after the start of the anti-Covid19 vaccination campaign.
This is expressed by Emiliano Bermúdez, deputy director general of donpiso, who emphasizes that “investors are seeing that the sector is walking on the path of recovery ” and in keeping with the expectations that the country generates.
This vision is shared by Raisa Venermo, co-founding partner of AvaLanding, who recognizes that “seeing light at the end of the tunnel in the form of a vaccine” has allowed investors “to start making plans.
” In fact, from donpiso they foresee that investment “is going to be one of the factors that will reactivate the real estate market.” A moment that will come, in his opinion, in the middle of the year, “when it is known what the real dynamics of prices are.”
The new normal in real estate investment focuses its interest on small spaces that allow good risk-quality optimization.
The confinement and housing limitations in 2020 have brought about a reconsideration of the requirements that until now existed around housing.
In this sense, Vicenç Hernández, CEO of Tecnotramit and president of the Association of Real Estate Agents of Catalonia (AIC), argues that homes “are giving more weight to common spaces, terraces and areas far from city centers, although well connected”.
These preferences are not observed in the investment market, where smaller spaces are sought “that allow a better optimization of the risk-quality ratio”.
In this regard, Iñaki Unsain, the main real estate personal shopper and president of Aepsi, argues that investors aim to “obtain at least a 4% return on their rental properties”, which currently makes it difficult “to find homes that adapt to these forecasts”.
Specifically, this expert regret that a context of “great uncertainty” is taking place in terms of regulations and income containment, which hurts investors, “who see that the prices at which they have to buy is marked by the rent they can put, which does not compensate them”.
The locations that allow a good balance between space and comfort are the most demanded by investors. The suburbs are in the spotlight
Regarding the location of the homes that are attracting the attention of investors, Hernández highlights that in recent months interest has increased “in the outskirts of large cities.
” Specifically, this specialist anticipates that the investment is going to properties located in the first belt of Barcelona, as well as towns near Madrid, “although without registering specific areas of greater focus.” Some locations, he points out, “that allow a better balance between space and comfort.”
For its part, Venermo refers to the behavior of foreign investors, who continue to be attracted to homes located on the Mediterranean coast and in large cities.
This is due, he emphasizes, this buyer “who buys to rent, but also to reside during his holidays”, sees a priority to have a good range of leisure and culture. “The foreigner who invests wants to have services next to his house, to be able to go to the movies or to dinner without having to use any other transport than walking.”
The pandemic does not change the profile of the investor. Most are funds with a high economic inclination and savers who want to insure their assets.
Although the coronavirus pandemic has changed several indicators that have been stable so far in the real estate sector, it has not changed the profile of the investor who trusts housing as a trustworthy asset.
In Bermúdez’s opinion, these are, on the one hand, international funds that present “a high economic inclination”, which know that investing in the national residential “yields very high profitability ratios, above the rest of the shares in the country. sector”.
From Tecnotramit they also point out that the funds continue to have a prominent presence in the investment sector in our country, but at the same time they emphasize that “there continues to be a mainly saver profile “.
This type of buyer wants to diversify his portfolio and secure several assets, so that these properties “allow him an income with which to complete his future income.” Likewise, from this company they point out that “we must not forget the foreign buyer “, who can make use of the home he acquires during part of the year “or choose to rent at other times in his life”.
Home Real Estate Events Real Estate Investment Opportunities in the New Normal
In the residential market, an increase in demand is expected for larger apartments, with a space for study / office, as well as houses with terraces and gardens. This will cause an increase in prices and new construction of these houses in places far from the urban center.
The Built-to-rent, residences and student flats, the park view city constitute a new trend to find real estate investment opportunities.
The conversion of apartments from tourist rental to long-term rental should lead to an easier entry to housing for young people.
Regarding offices, on the one hand, companies have discovered that teleworking is a formula that can be maintained, so that the demand of companies to have their physical spaces can be reduced.
On the other hand, the demand for coworking spaces and offices that are larger to promote social distancing and that have safety and hygiene measures that ensure the health of workers will increase.
The stock of unpaid loans from the real estate sector, in anticipation of the increase in non-performing loans, is expected to reach a value of 100,000 million euros.
OPINIONS ON REAL ESTATE INVESTMENT
After real estate investment fell 75% in March, 3 months later a recovery in the number of transactions is expected.
The most optimistic predict that the year will end with a volume similar to that of the previous year (500,000 homes sold in 2019); others, on the other hand, predict a 35% reduction in operations , with a 6% decrease in house prices (bankinter), due to delayed purchase decision-making.
In general, it is believed that real estate debt is a good investment, with returns of 20%, well above sovereign debt and without the volatility of the stock markets.
In residential, saving the aforementioned typologies of larger homes, with spaces for office, terrace or garden, the reduction in demand will lead to a readjustment of prices, causing sellers to lower their sale price in order to adjust to buyers’ expectations.
On June 20 and 21, the Investor’s online congress is held, with the intervention of several investment experts, or just Real Estate.
Enric Jiménez, from Tajarat properties , in his presentation, distinguishes between Investing alone or with someone. The figure of the Real Estate Personal Shopper is an attractive alternative, through which to obtain real estate properties, even off-market, with high profitability in each location.
Profitability can be achieved by investing an amount in real estate, depending on the different areas, with or without reform work, local taxes and rates of return.
The volatility of the stock market, interest rates at historical lows and the forecast of economic recovery in one to two years, leads many savers or investors to look at the real estate market.
In addition to Enric Jiménez, other investment experts participate in the online investment conference, which deals with investment strategies to manage wealth or savings.
The assistant’s profile is one who seeks profitability for their savings, a refuge for their investments or to expand their assets.
In addition to real estate investment, other topics will be addressed, such as financial psychology, flipping house, personal finance, taxation.
You can now request the Investment Congress Ticket, from June 20 and 21, 2020.
Entrance to the Investors Congress
Other speakers who will deal with real estate investment issues:
Do the real estate give little profitability? Know the method to achieve the highest returns in real estate investment?
ANDREA REDONDO, Real estate investments in the USA
How to obtain a return of more than 15% net investing in real estate in the United States
JUAN HARO, The tricks of the rich when buying real estate
Masterclass to explain the methods rich people use when buying real estate.
CARLOS DEVIS, How to buy real estate with a great discount, little money and without using credit institutions.
In the case of not having much money, the presentation will indicate how to generate a great source of passive income with little capital.
GEMA PALACIOS, How to make your house pay for itself and generate a salary
What would happen if suddenly, one of your biggest liabilities, your mortgage, starts to pay itself and gives you a small salary on top of it?
SERGIO FERNANDEZ and ANGEL MARÍA, Cool Living, real estate crowdfunding.
How it is possible to invest with purpose in the real estate sector, collectively, adding value to society.