Is it risky for Ukrainians to invest their money in real estate abroad at the moment, what are the pros and cons of this area of investment, which countries are more attractive for investments, and which ones should be avoided, and is it important to consult with experts before making a decision? About this, and much more, "EliteExpert» spoke with an investment expert from the International Expert Club Volodymyr KUTSENKO - the head of a successful company «INVESTHOUSE INTERNATIONAL CLUB», as well as a professional lawyer with many years of experience in notary and judicial bodies.
The latest studies of the International Expert Club and rating agency "ElitExpert" concerned investing, in particular, in residential and commercial real estate both in Ukraine and abroad. So, is it profitable to invest today and what are the risks in this area?
Investing in real estate is always profitable. In the long term, from 10 years or more, any investment you make in this area can bring profit.
If we analyze real estate prices in any country in the world over the last ten years, we will see periodic fluctuations, but in the end, assets always grow.
Globally, this is connected with the inflation of the euro and the dollar, with the constant increase in the price of energy resources and construction materials. In addition, construction technologies are also changing, the quality of objects is increasing.
Of course, there is a possibility of unscrupulous attitude of some developers to their obligations, but these risks are minimized by scrupulous study of the market and builders.
Thus, with a professional approach and support, long-term investments for 5-10 years always turn out to be successful.
Investments for a short term, 1-2 years, can sometimes be more profitable, but at the same time risky, because they depend on short-term market fluctuations, the country's economy, the political situation and natural disasters. I will give you some advice: if you have invested, for example, 100 thousand euros, and after one or two years the price of your object has dropped to 60-70 thousand, do not panic, do not rush to get rid of it, but wait a few more years until the market stabilizes , then you will definitely sell for more than you bought.
invest in Asia or old Europe
It is assumed that it is important to choose the right country for investment. For example, in the TOP of the latter MEK rating — Turkey, Germany, Cyprus, Finland and Poland.
Indeed, according to many investment ratings, Turkey is the undisputed leader. In the last few years, it gave about 200% return on investment, and in the short term. In 2-3 months, it was possible to receive from 50 to 70% profit from investments.
Europe always attracts both developers and investors with its stability and security at the legislative level. This is especially true for Germany with its strong and successful economy, Finland and the Netherlands.
Poland has much lower growth, but demand and price growth there are also positive.
Northern Cyprus is dynamically developing and attracting investors, but, in my opinion, the instability of its political status and rejection by the international community make investing there rather risky. Therefore, the price bar for entering the Cyprus market is extremely low. But I would recommend investing in it only in the short term, there is no point in staying with money for a long time.
Criteria for choosing countries: economic and political stability, size and growth of the economy, infrastructure, fight against corruption, how do they affect the choice of an investor?
All these factors are important and require study, I would add to them also the ecological situation. For example, Finland, Holland and Germany pay increased attention to ecology, which makes their facilities much more competitive.
Investments in real estate are not virtual. You are buying a real object, the demand for which is always higher in a stable country, without any political or economic upheavals.
The fight against corruption – in the investment sense, it is a check of the legality of the origin of your money. And the more strictly the state controls and checks it, the lower the investment profitability indicators.
Profitability is higher in countries that are more loyal to the origin of the investor's funds. Today, sums up to 1 million euros do not pose any particular questions in the Arab Emirates, Turkey and Cyprus - accordingly, more money flows in, increasing the demand and profitability of short-term investments.
Thus, long-term investments in real estate of European countries, with their high-quality legislation and stable political situation, minimize your risks and guarantee a stable, but low income.
Investing in real estate in Turkey, Northern Cyprus and Dubai will show much higher returns, but the risks will also be higher.
Forming optimal investment cases for our partners in these countries, we recommend investing in short-term projects for 3-6 months, a maximum of a year.
Ukraine his side we constantly study the economic, political and environmental situation in the region, monitor the extent to which laws are followed, so that our investors can always defend their rights.
Should Ukrainians seek to invest abroad? After all, this process has both positive and negative sides.
In my opinion, today is precisely the period when people leave their comfort zone and are ready to try new areas of business - because the war showed that nothing is permanent and stable.
Ukrainians could invest more abroad, but they are stopped by fear, lack of experience and elementary ignorance of foreign markets. But the world is open, and modern technologies make it much easier to find any information.
Investing abroad is not a withdrawal of capital, as some believe, because the investor, a citizen of Ukraine, remains in the country, pays taxes and spends money in Ukraine. At the same time, he gets the opportunity to expand his horizons, have additional income and a place where he or his family can come in case of some cataclysms.
In addition, the investor understands how business, laws, and the tax system work abroad, and gains new financial experience. After all, any investment is temporary. You have bought something, sold something, are studying and trying different countries and opportunities.
Before the war, Ukraine had almost ideal conditions for working with real estate. You could earn 10-12% per annum on rent compared to 5-6% in Europe. There was also growth in the real estate itself - up to 20-25% per year, so many foreigners invested in Ukraine, which gave a large profit. Today, many foreign investors withdrew their money and invested it in other countries. But as soon as the situation in Ukraine stabilizes, the domestic investment market will revive, investors' money will return home and work for the restoration of our country.
Real estate always needs to be seen and touched. However, if it is not possible to do it personally, there are always experts like us who will give advice and guide you in all controversial issues. For example, in any city in any country there are areas that are in demand and those that are less attractive. And in order not to face problems, not to buy illiquid, it is important for the investor to get advice from an independent expert who knows this market and works on it.
Or, you know that in Europe, in Turkey, it is very rare for a developer not to complete an object. Criminal liability is provided for this. But in some situations, deadlines are violated - they promised to build in a year, but handed over only in two years, and, accordingly, the investor did not receive the expected profit. Therefore, our company very carefully studies each developer, all its objects and obligations, in order to protect the investor as much as possible.
Recently, we had such a situation in Europe: after studying the object, we realized that the developer would not be able to hand over the house on time. We informed our client about this and he invested the money in another object. As a result, everything happened just like that: the loan rate rose, the sale stopped and the house was not delivered on time.
IT IS IMPORTANT NOT ONLY TO BUY A HOUSE, BUT TO MAINTAIN IT
Yours company engaged in consulting: what do you offer to potential investors?
The first question we ask our clients is "why do you want to invest and in which projects?" If you want to buy an object for resale in 6-12 months - it's one thing, but if you buy it for yourself and possible rental - it's quite another.
A year ago, the main demand was "buy and sell", but today the situation has started to change, and approximately 80% of investors want to buy real estate for themselves.
And in this case, an important nuance to which we draw the attention of investors: understanding and taking into account the cost of maintaining real estate.
Each country has its own standard of living and, accordingly, different amounts of housing costs. They include payment for the maintenance of the house, the cost of utilities and taxes - the three main payments. And if in Europe, maintaining a one-room apartment can cost from 500 to 1000 euros per month, then in the same Turkey - from 50 to 100 dollars.
Currently, our company mainly deals with objects of the middle price segment (80-100 thousand euros), which are in great demand. At the same time, today on the Turkish market there are objects even for 30 thousand euros - these are studio rooms on the seashore, the maintenance of which will cost only 20-30 euros per month.
Such objects are very interesting for rent. By investing only 30 euros, you will get a studio room on the seashore, where you can come and relax at any time, and in the rest of the time you will rent it out with a high profitability - 10-15% per annum, from 300 euros per month in winter to 500 euros per season.
Studios are much cheaper than one-room apartments, but have everything you need for living. In addition, the developers we work with already offer rental management services.
Today, similar studio rooms are being built in the south of Turkey, in the promisingly developing city of Mersin. For comparison, in Alanya, such studios cost much more, but they will be rented for the same 300-500 euros per month.
Now you understand how important it is for an investor to have the right one consultant, who will tell him about similar nuances in each specific region?!
WHY REAL ESTATE
Ok, we have decided on the countries, but why is real estate the most promising investment investment today, and not stock exchanges, finance or cryptocurrencies?
Real estate is a more real, stable and understandable investment, unlike stock exchanges and cryptocurrencies, where the market is extremely unstable and unpredictable.
These are investments that you can use in a year, and in 5, and in 20 years. Owning real estate won't leave you with an empty e-wallet. It can always be sold. And what will you have left if you lose money in the stock market?
Unlike investing in securities, gold, future technologies or the agricultural sector, investing in real estate takes the least amount of time. Investments in something more complex, in order to be successful, need to be done carefully, constantly study the field and spend a lot of time on it. For example, cryptocurrencies, agriculture, or any other productive business should be done 24/7.
Investments in real estate require your time only at the investment stage, when you need to study the market, consult with specialists and make a decision. They decided to sell - they studied the market again and sold. Renting is even easier: you purchase, and then everything is handled by the management company.
And what about profitability?
You should always remember the main rule — the higher the yield, the higher the risks. And then everyone decides for himself how much he is ready to risk.
I call these the "Stages of Investor Maturity." A novice investor with 50 thousand who wants to earn a million can try himself in the area where both risk and profitability are greater. And when you've earned a million, it's enough for you and you need to save it as a priority, rather than increase it, so it's better to invest this money in something stable in stable countries, even if with a low percentage of profit.
When recommending investing in real estate, what, as a market expert, do you recommend paying attention to first of all?
It is important to emphasize the popularity of the region, because the growth of real estate on the market, as you and I found out, is not constant, but always moves with fluctuations.
It is very important to start investing not when the country is already hyped up and the investment peak is coming, but a little earlier. After the peak, there is always a downturn, and investors may not have time to exit with a profit. Yes, you can rent out real estate and still make a profit, but you won't get the money you were hoping for.
In every country, over a period of 10-20 years, the real estate market has 1-2-3 jumps of peaks and falls in prices. The reasons and time of exit from such peaks are individual for each region.
How stable is the rating of the most attractive investment destinations in the world? What does this stability depend on and how quickly does this rating change?
I would call this rating moderately stable. Everything depends on the economy and politics, on social processes, population migration, and elections. So, for example, in any country before the presidential elections, the demand in the real estate market drops, there is a lull, the market stops and freezes.
The new project of the rating agency «EliteExpert", which will be presented soon, is a sustainability rating of construction companies of the Odesa region. What do you think are the main criteria in it? And in general, should the sustainability of construction companies in Ukraine and abroad be determined by the same or different criteria?
The approach should be practically the same in all countries - of course, with an adjustment for Ukrainian realities. The first important criterion is reputation, an active presence on the market, and the second, and in the light of economic instability, the most important is the availability of additional business and working capital. In order for the company to be able to survive the crisis, it must be able to complete housing in the absence of external financing from investors.
Many domestic companies are used to working either on loan funds or on investor funds, and, under today's situation, they simply stop and go bankrupt. In our analysis, we necessarily take into account these factors, calculating the risks for the investor.
In addition, in the current Ukrainian realities, there are companies that are completely dependent on the authorities, tied to the corruption component when obtaining sites and construction permits. And it is important to understand that such companies are very unstable during political turbulence.
A separate issue is the quality of construction. This is an important factor, but it does not guarantee the stability of the company. During the economic crisis and a limited amount of funds, people will buy even low-quality housing. Therefore, the main factor of sustainability is not so much the longevity and professionalism of the construction company as the availability of additional working capital.
In our uncertain times, I would advise investors to think twice before investing in a company whose ultimate beneficiaries are unknown and whose financial capabilities cannot be verified and evaluated.
Olena Ovchinnikova spoke
Photo from the personal archive of Volodymyr Kutsenko
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