Investments in real estate are the most stable and proven not even for years, but for centuries. However, most Ukrainian investors are limited to their city or region due to fear and mistrust of new markets and countries.
In recent years, investments in real estate abroad have become more relevant and attractive, and many properties from Turkey and the Emirates are on the market - but old Europe, as before, remains not so interesting to Ukrainian investors due to high prices and little awareness of the specifics of the markets.
In this material, we will dispel some myths and introduce you to a new real estate tool that is in great demand in Europe - public and private auctions, which offer very favorable conditions for investors and reasonable prices for objects.
Our interlocutor is an expert in real estate and auctions Iryna Georgieva, which has been working in Italy and France for many years.
Iryna, let's immediately understand what an auctioneer does and why it is incorrect to call him a realtor?
Due to the fact that the field of auctions in Ukraine is very little developed, and most real estate objects are bought through agencies, it is generally accepted that all those involved in this field are realtors.
But auctioneers have a more extensive field of activity and work not so much on direct sales as on consulting when buying real estate in Europe, with the help of auctions, the peculiarity of which is that the investor can purchase the object at a price significantly lower than the market price.
How is the purchase of real estate at auctions in Europe?
Since 2017, I started participating in Odesa auctions for the sale of premises that the city put up for sale. And in the process of studying the legislation, the market and the features of auction sales, I came to the conclusion that it is more interesting and promising in Europe.
The main differences between Ukraine and Europe in mentality, taxes and approaches to investing.
We still have a deep-rooted stereotype that you need to live and work for the sake of your children in order to leave them some real estate. But under the conditions of the new world system, the grown-up children are unlikely to live there, or even move to another country.
In Europe, this is no longer a panacea, and many people do not even plan to buy real estate for their children, since they often live far away, and sometimes even across the ocean. And parental real estate for them is not as promising as an investment, as it is established in our understanding.
In addition, the difference in taxation in Ukraine and Europe plays an important role. Our taxes on purchase or inheritance are many times lower than in Europe, where maintaining real estate is unprofitable for most people.
For example, in France and Italy, where I work as an auctioneer, most people cannot inherit real estate because they have to pay up to 60% taxes, and they simply do not have the funds. All the more so since this money must be "white", because in Europe it is impossible to simply take funds and put them in your account - their origin must be legal and confirmed.
And auctions are an alternative for selling such real estate. For example, the owners have no heirs, then they transfer their housing to the state, instead of lifelong maintenance in homes for the elderly. And the state can sell it only through an auction. Most often, these are very promising objects for investment, and, unlike Ukraine, this process is quite fast, lively and "transparent".
In general, in Europe, the auction system is very developed and profitable, which is why it is used. In Ukraine, this process has mostly a negative perception among society, because even after years, heirs or other claimants to the property you purchased may appear, and a person will end up in court or lose real estate altogether. In Europe, if a property is auctioned, the owner has exhausted all legal options to get it back, other than buying it. And further, the conditions of the auction for him, as well as for the rest, are absolutely the same.
In addition, after purchasing a property at auction, the buyer becomes its sole owner, and there can be no appeals or revisions.
That is why investors need an auctioneer - to understand the processes of auctions, the laws of the country of investment, help and advice when choosing an object. A professional who will orientate correctly will tell you what is better to invest in, draw up an investment plan for the objects and review them himself, if the investor does not have the opportunity to be present in person.
How can people invest in European real estate through auctions, will they be able to do it themselves or is it better to turn to specialists?
Of course, it is more expedient for potential investors to seek professional support from specialists who have extensive experience in the market, who will be able to help the client with opening an account in a European bank, and with the rest of the issues related to the auction.
What is the advantage of the European market for such investors?
First, I suggest participating in auctions in France, where the liquidity of real estate is one of the highest, and in Italy, where the passive income from renting or selling real estate is quite high. Other European countries have lower rates of return, so I don't work with them.
Secondly, the high seasonality of Italy and France for rent is at least 9 months a year.
The starting value of real estate at auctions is always at least 40% lower than the market value, and even at the final sale, it very rarely reaches the market value.
I will give an example - an apartment in Antibes, on the French Riviera, 150 meters from the sea and with an area of 55 square meters. meters, went to auction with a starting price of 70 euros, when a similar apartment in this building costs 280 - 320 euros. As a result, this apartment was sold for 130 euros. Of course, such real estate often needs to be repaired so that it can be rented out or lived in, solve the issue of eviction of previous residents, but, all the same, it will cost no more than 50 thousand euros in total, which in any case is less , than to simply buy it on the market without an auction.
What does the purchase of real estate provide for the investor, what are the current costs and risks?
It is necessary to understand that many Europeans are single and claiming an inheritance is simply a matter of risk. And even if the owner has heirs, but the property went to auction through the court, and you bought it, then I can guarantee 100% that no one will take it away from you.
In addition, the purchase of real estate gives an advantage in obtaining a residence permit and socialization in the country of purchase. For example, Bulgaria has a minimum financial threshold for obtaining a passport, but old Europe does not. But the purchase of real estate simplifies the process of obtaining documents and allows you to extend your stay in the country, simply by providing a certificate of housing availability.
Also, the availability of real estate provides better conditions for lending in European banks. The investor fully integrates into the social life of the country, receives a tax number and becomes a full-fledged financial resident.
As for real estate taxes, they are not much higher than they are now in Ukraine. In addition, in France, on the Cote d'Azur, due to its geographical location, heating costs are minimal.
There are specific taxes, such as luxury tax, but it is 1-1,5% per year and it depends on the area of the property.
If a person purchased an object not for housing, but for investment, then I offer after-sales service. It includes insurance, payment of utilities and rental issues. Based on experience, I can say that it is unprofitable and difficult to do this on your own, without constantly working in this field.
For example, if you need to go to court during registration, you need a lawyer with the appropriate license. To minimize the risks, I already have a list of experienced lawyers for such matters that I work with, and they accompany our investors.
What is the liquidity and profitability of real estate after its purchase?
Having invested in an apartment or house from 150 thousand euros in France or northern Italy, the annual increase in the cost of rent and the real estate itself will be 1-2%. Last year, France showed a record +15% for the year before the value, if you buy for resale. This is due to migration from Ukraine, Russia, Kazakhstan and Moldova. Recently, many clients from these countries have been signing up for consultations with us.
When considering Turkey and the United Arab Emirates for investment and living, it is very important whether the mentality of these countries suits you. In addition, Turkey may soon become saturated with investment and the market will "sag" and, as the recent earthquakes have shown, there is a big problem with compliance with building and fire safety regulations.
In my opinion, investments in old Europe are always long-term, be it for children, for business or moving. This is for a change.
Olena Ovchinnikova spoke
Photo from the personal archive of Iryna Georgieva
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