If you are interested in investing in real estate, maybe that’s because some told you it’s a safe place to invest your savings or an interesting way to grow your patrimony without taking too many risks. And it may be true. Around the world, some currencies have gained or lost their value through the years, but properties stay more or less the same. Or do they? Maybe it’s time to ask: Is real estate a growing industry in all countries? To come with an answer to that question we need to study a few cases, but first let’s explain some useful details.
What to look for
In this business, if you don’t want to start with a mess in you mind, should start reading at least two numbers: property values and gross rental yields. I highly recommend to star with those as most investors tend to start looking for a low initial investment with a high gross rental yield to keep things running by themselves. If you find good positions in both numbers, you’re good to go. Once you’re good at the beginner numbers, it’s time to measure the year-by-year numbers, which can help you calculate if a property is losing or maintaining its price through time. While being a real estate investor, you want to keep a good patrimony in case it’s time to release a property and look for a buyer for it. Everyone’s looking for a good deal, and no one’s going to buy it if your offer is not up to the situation. Now let’s begin reading numbers around the world.
United States of America
In the US, such as many other countries, you can find all types of scenarios and stories about the real estate business. Some of the stories are scary, and some of them can grow in you an illusion of being a millionaire in just a few months. What’s the real deal behind it? Well, as you can possibly imagine, since it is a big country, it depends on the location. In places like Dallas or Denver, the prices appreciations are among the highest ones, which makes the market works like a dream come true. In those places you can get up to a 20% return in the first year, and if you’re talking about real estate business, that’s a beautiful number. In places like Miami the numbers can be as high as 18% of retribution a year. But don’t let those numbers delude you. In Boulder, which by the way, just like Denver, is in Colorado, the prices go down year by year about 5.7%, and that’s a terrible way to invest your money. You’re basically losing it year by year. And it’s not an isolated case, in cities like Salem, in Oregon, the prices go down a 8.1% from one year to another. So, if we take the US as an example, real estate is not a growing business, it’s more like a moving business.
Popular cities in Europe
So, is real estate a growing industry in all countries but the US? Let’s go to popular cities in Europe and find out. London, for example, has one of the highest prices to buy a house or apartment, and one of the highest rents too. An apartment of 250 square meters in a central location is worth about 6.1 million euros, while its monthly rent is bout 16 thousand euros. Does it seem like a good number? It isn’t. It’s actually the most expensive place to invest in Europe, with a gross rental yield of about 3%. Want a good number? Go to Lisbon, where a 120 square meter apartment located in the center costs about 23.5 thousand euros, and has a monthly rent of 121 euros. That gives you more than a 6% rental yield. So, again, its not about the business, is about the location.
Your holidays overseas
Some of the cases, the investments are made to get a decent price for a place overseas. A nice house by the beach is a dream of many, but the smart part here is to look for worldwide values, and not only for the popular places. Did you know Bulgaria has the best prices for that kind of investment? In this country, the average price of a nice property goes around 90 thousand euros. We’re talking about beach places, which usually come with higher prices. In Croatia, for example, the average price is about 185 thousand, double the price of Bulgaria, and it is still the sixth cheapest country. Imagine how expensive it can get. South Africa is the tenth country in the list, and its average values are more than 200 thousand euros. Bulgaria sounds amazing now, right?
I know, there’s more of the world we need to see, but here’s a not so little secret: the mechanics are the same around the world. Is real estate a growing business around the world? It could be, as long as its investors learn to read the numbers, choose a location and learn from the risks other people have already taken. It is a business that, if you choose the right location, the prices can give you a lifetime of incomes to enjoy, but if you act without looking for any data before, you can lose all your savings.