Economic instability forces investors to seek more reliable ways to preserve and increase capital. In times when financial market volatility and uncertainty are at their peak, assets with real physical value come to the forefront. Real estate — is one of the most attractive and proven options because it is considered a reliable asset. Its strength lies in its ability to withstand inflation, provide regular passive income, and maintain its value even in the most turbulent times.
In this article, we will examine in detail why real estate investments are considered strategically important and what specific advantages they offer in times of crisis.
Real estate is a reliable asset due to its ability to maintain value during external turbulence. In 2008, when the US stock market dropped by 38%, residential property prices fell on average by 19%, but by 2012 they had already started to rise again. In the UK, the buy-to-let sector showed a 9% annual yield increase despite the global downturn.
Financial instruments lose liquidity, while apartments, houses, studios, and commercial properties continue to generate rental income. Even during a pandemic, rental demand did not disappear — it changed: subleasing, short-term rentals, flexible formats remained in demand.
Profit consists of two elements: capital growth and rental income. In Europe, the average annual yield of residential properties ranges from 3 to 6%. In Berlin — 3.2%, in Lisbon — up to 5.5%, in Budapest — 6.1%.
With a smart approach, the asset shows a stable income higher than deposits and comparable to conservative funds. Against the backdrop of inflation, real estate protects capital. Rental rates are indexed, and the price per square meter grows along with consumer prices.
Risks of real estate investments exist but can be controlled. Legal due diligence of the property, location analysis, asset type diversification reduce the risk of decline.
The real estate market demonstrates less volatility than the stock market. The MSCI IPD Global Annual Property Fund index showed a standard deviation of 5.6% over 10 years, while the S&P 500 showed over 15%.
A novice investor uses different entry paths. The flip-resale strategy is suitable for active markets. Buy-to-let works as a long-term model, providing monthly cash flow. Value-add is applied when renovating outdated properties and capitalizing on them later.
Financial leverage enhances income. With an LTV of 70%, a 10% increase in property value yields a profit on invested funds of over 30%, through the use of borrowed capital.
Real estate as a safe asset is manifested through international diversification. In Austria, owner rights protection is combined with high liquidity, in Georgia — simplified registration. In the UAE, tax-free rental income.
A room in Paris brings 4.1% income, a studio in Tbilisi — up to 8%, an apartment in Dubai — 6.5% with high liquidity. The model works in both developed and developing economies.
The first step to successful investments is understanding the factors influencing the income and stability of the asset. A novice investor analyzes not only the price but also the prospects of the property in the long term.
Before starting to invest in real estate, it is important to consider:
This comprehensive assessment helps avoid common mistakes and choose an investment with a predictable outcome. The deeper the analysis, the higher the chance of stable income and capital preservation. Such due diligence reduces risk and increases investment efficiency.
Residential and commercial properties serve as a reliable hedge for capital. They can redistribute the impact of inflation in favor of the investor. Unlike money losing purchasing power, square meters appreciate, especially with limited supply.
In Germany, the housing price index from 2010 to 2023 increased by over 65%. Over the same period in the US — almost 75%, with the inflation index around 32%. Similar dynamics are observed in Turkey, Spain, Poland.
Inflation increases construction costs, and therefore the final price of properties. In long-term rentals, index adjustments can be included, compensating for rising consumer prices.
The benefits of real estate investments go beyond income and stability. This asset integrates into any financial strategy: from capital accumulation to retirement planning.
Properties become collateral for other transactions, form an active part of the balance sheet, strengthen positions when obtaining financing. Using bank credit secured by real estate reduces the cost of borrowed funds, opening up opportunities for scaling.
The peculiarity lies in the fact that the asset generates income and a platform for other investments. Thus, ownership is a reliable asset not only by itself but also as a cornerstone for financial growth.
Yes. An asset capable of surviving fluctuations, regulating risks, protecting capital, and generating income. This instrument has proven its reliability in crises, coped with inflation, and adapted to consumer changes. Investments are of interest to both beginners and experienced investors. It is not just a way to earn money but also a part of a stable portfolio.
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