Real estate

Can real estate become a tool for protecting capital

The advantages of buying property in European countries

The purchase of real estate in the EU countries – these include Spain, Latvia, Cyprus, and the Czech Republic, and Turkey and Croatia will soon be included – gives, in addition to obvious advantages (the opportunity to relax in your own house or apartment at any time of the year) purchase valuable asset, which in the long term will grow in value, as well as a number of other advantages.

Property owners in these countries have the opportunity to obtain an annual Schengen visa with the right to reside in the country for 180 days a year, as well as multiple visits to countries participating in the Schengen Agreement. And with a long-term stay in these countries, there is a chance to soften the conditions for obtaining a residence permit and EU citizenship.

Interesting market – Baltic

Among the countries that are promising in terms of buying real estate, it is especially worth highlighting Latvia, whose market is one of the most interesting at the moment. Until mid-2007, the residential real estate market in this country experienced a real investment boom, prices rose 30-40% per year. Basically, this was due to speculative purchases, and therefore there was a drop to 20% of the highs reached. Today the Latvian market is gradually moving from the stage of stagnation to recovery: the number of transactions increases, prices stop falling. It is worth noting separately that Latvia has already joined the European Union and is a member of the Schengen Agreement.

Among the resort places in Latvia, it is worth highlighting not only the well-known Jurmala regions, which traditionally attract tourists with music festivals and other events, but also directions that are still poorly understood, located on the other side with respect to Riga, more suitable for a measured and relaxing holiday among the unique beauty and pacification of the Baltic nature.

In the first category, it is worth paying attention to the completely finished design project “365”, located in Dzintari, built and equipped “with the latest technology.” The complex offers two-, three- and four-room apartments with a total area of ​​61 square meters. m –197 sq. m. The price for an apartment in the complex at the moment starts from 132 000 euros, and the price per square meter averages 2000 – 2200 euros. Ultramodern apartments in a resort location are primarily attractive in terms of purchase for subsequent rental.

At the same time, a calm and measured way of life, away from noisy streets and a large number of tourists, is becoming increasingly popular for Latvia. In this segment, the “Sun Republic” complex is interesting, which is located 35 km from Riga, on the very shore of the Gulf of Riga of the Baltic Sea. The project provides for one-, two and three-room apartments with a total area of ​​31 square meters. m to 135 square meters. m., as well as underground parking for 147 places. The price per square meter starts from 1400 euros. The complex is most interesting for an older audience, striving for a respectable lifestyle in a secluded place, and appreciating the environmental component of the place of residence.

Available Options – Spain

“Spain and the Czech Republic remain the most popular countries in terms of real estate acquisition. These countries offer good opportunities for conservative investors who value low-risk projects and are prepared for relatively low – but at the same time reliable – returns. At a minimum, participation in such projects will help preserve capital, even if it does not increase too much, ”N. Zavalishina notes.

According to the Ministry of Housing, over the past 12 months, the number of real estate sold in Spain fell by 25% compared with the previous 12 months, and nominal prices fell by 4.6%. At the same time, this decrease mainly occurred in the 1st and 2nd quarter of 2008, i.e. at the moment it is not progressing. The Spanish Government announced a number of measures designed to support developers and revitalize the country’s housing market. All this makes investment in real estate in Spain promising and profitable right now. According to Natalia Zavalishina, “the favorable period for purchases will last no more than six months, so for those who plan to have their own real estate in Spain, we recommend that you start looking for an object now, and to do this is quite realistic with the help of a loan.”

Traditionally, it is Spanish banks that are most loyal to non-residents when issuing mortgages. Today, you can get a loan in the amount of 50% -70% of the appraised value of real estate, at 5.5% – 6.5% per annum.

Growth Prospects – Czech Republic

As for the Czech Republic, its potential in terms of investment in real estate is due to the rapid transition to the euro area in 2012, and the Olympics in 2016, which always entails an increase in prices. And the country’s accessibility in terms of flight and cost of living once and for all made it attractive for our fellow citizens, who often move there for permanent residence with their families.

In the Czech Republic there are interesting investment opportunities for a Russian investor. An example is the investment project – the construction of a residential building in Karlovy Vary. Speaking briefly about the profitability and profitability of the project, it is worth noting that the total amount of necessary investments will be a little more than 7 million euros, and the expected profitability is about 60% for 2 years.

It should be borne in mind that non-EU foreigners do not have the right to purchase real estate in the Czech Republic, so the easiest way is to open a legal entity in the country with the only type of business activity – buying real estate. The minimum authorized capital of such a company should be 200,000 Czech crowns (less than 10,000 euros). After successful registration of the company in the commercial register, you can use this contribution as payment for the acquired property.

A mortgage loan issued by a Czech bank can reach 80% of the value of the property (depending on the solvency of the client). Mortgage rates in the Czech Republic range from 4.5 to 7%, but recently there has been an upward trend.

New Regions – Turkey

In line with new markets for investment, it is worth highlighting Turkey, which in recent years has directed all efforts to demonstrate its readiness to join the European Union. The desire to make the country more civilized and oriented towards integration into the world business community has led to the appearance on its territory of new projects worthy of the attention of investors. In terms of investment ratings DPMR, Turkey is rated as “A II”, i.e. the risks from investing in real estate in this country are comparable to Russian, and the potential even exceeds Russian. The last 2 years, since the Russians lifted restrictions on the purchase of real estate in this country, the interest in real estate of both potential investors and ordinary buyers has increased several times. Moreover, there are still many places little known to Russian investors and buyers, especially in regions that are historically and geographically close to Greece.

Thus, the development project on the territory of the Kas peninsula deserves close attention. The project involves the construction of a premium residential complex consisting of apartments and villas in the city of Kas, which is located in the south of Turkey, 180 km west of Antalya. The place is poorly understood by Russian tourists and developers, but the British have long mastered it. Unlike other resort cities in Turkey, there is no dominance of huge hotels. The first line of the sea is private beaches and respectable villas of foreigners. Kas is considered one of the most romantic places on the Mediterranean coast.

The amount of necessary initial investment for the project is about 4 million euros. The overall profitability of the project is about 72%. The project is interesting primarily because it allows you to almost double your equity – the total revenue from this project is more than double the initial investment.

Safe option – Cyprus

Cyprus is another country that deserves the attention of Russians in terms of real estate acquisition. This island is attractive both for investment and for the purchase of real estate as a “second” home. The interest in Cyprus is also great because it is an island, which means that the building areas there are extremely limited, which leads to a constant shortage and, as a result, price increases. In 2008, growth did not stop even despite the pan-European crisis: in some places it amounted to 5%, in some 12-15%, depending on the location and characteristics of the project itself.

As an investment, there is a package proposal for the purchase of one of the development phases of the Amathusa Coastal Heights residential complex in Limassol, most of which has already been built and sold to end customers. The completion of the construction of the complex and the commissioning of the declared areas, as well as their parallel retail sales, are tentatively planned for March 2010. The total amount of necessary investments for this project is 11.5 million euros, and the annual profitability is 34%.

However, in addition to quantifiable and predictable quantitative factors, there are qualitative nuances of the acquisition and ownership of housing, which vary significantly from country to country. For example, this is a series of restrictions on the purchase of real estate by individuals existing in some countries (of the most popular destinations for Russians – the Czech Republic, Croatia and a number of other European countries), as well as various taxes that arise at the time of acquisition, ownership, and surrender to rental property. These factors can significantly adjust investors’ expectations. To solve such issues, you need to contact specialists.

This post is also available in: English Русский (Russian)

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