A good investment always pays off
Investing in a property in the past was mainly considered a benefit – mostly that people always need somewhere to live and do business. The crisis and consequent economy situation cast doubt on this belief, and property investment has become a critical topic. As everybody can invest in property, this is an issue that concerns all, not only investment companies.
“Investment analysis is not, of course, an issue you decide about while reading a newspaper over a cup of coffee in the morning. Whether an investment will be successful in the long term depends on several factors. Property purchase is more demanding for higher transaction costs. Much lower is also the liquidity of this investment, or better still fast monetization if an investor is pushed to sell in a short period. This investment is not for everyone. At the same time, property investments offer longer investment potential,” says Vladimír Vaňo, main analyst for Volksbank. Miroslav Fülöp, Commercial Director at J&T Real Estate, is also in favour of property investment. ”All the following are arguments supporting property investment: favourable balance between risk and return, and slower response to economic developments that give investors time to react.“ He also highlights the partial protection of revenue from this investment against inflation, because when agreeing the lease agreement the rent then annually adjusts to the current inflation rate. Market stabilization “The fi rst signs of real estate market stabilization emerged at the turn of 2011 and 2012; but labour market stabilization is the key point that will determine the future development of the real estate market”, states Vladimír Vaňo. He adds that due to the complex situation on the world markets, which determine our export and economic situation, it is necessary to get ready for a bumpy ride. A positive development in future years will, hopefully, be influenced by the trend in Slovakia from abroad, which is to rent apartments rather than own one.
How to invest?
The key to success is to choose a property with a tendency to retain value. Analysts suggest investing in good locations the value of which will be higher rather than lower. “This kind of location is, for example, a capital’s centre and the wider centre. It is easier to lease a property and faster to sell at a good price in a luxury location. Generally speaking, we have noticed a tendency of buyers to return from city suburbs to the city centre due to problems with transportation and services. It is essential to look at an investment from these perspectives too,” says Miroslav Fülöp.
“The statistics that our analysts use indicate that the residential market is gradually stabilizing,” says Miroslav Fülöp. In his opinion, the prices of new apartments will not decrease, also thanks to a lack of quality apartments on the market and demand, reaching a historical maximum due to demographic developments. “The number of people of productive age 25 – 40, who are establishing families and looking for housing is very big, and probably will not fall in upcoming decades,” says M. Fülöp. The other factor is the fact that Slovakia has the lowest level of public housing facilities in the European Union (Housing Europe Review 2012). As a result, we can say that old beliefs have not lost their truth – people will always need somewhere to live. So by making reasonable and smart decisions, property investment will certainly pay off.
Author: Leona Bezručkova. The article was published on October 31st, 2012 in the specialized attachment Mediaplanet - Improve your living