In most developed countries like UK and USA houses prices now are stagnant. It could take months or even a year to sell a property at descent price. When I was living in Aylesbury near London in United Kingdom, every day I was walking to my job and was seeing the same properties for sale for years. The house near me was sold after one year and a half.
you look at real estate market at developing countries you can see
completly different picture.When I moved into Moscow I was shocked,
investments into real estate are a golden field you can grad as much as
you want. Speculative
demand quickly drives up the price (increase in recent months does not
fall below 0.5% per week). In some profitable districts it rises even to
1% per week. You can easily deal 50-70% per year or even more if you
are lucky. .This is especially true flats of the lower price segment,
where customers in an effort to catch up with "Leave the train" are
ready to buy housing at any stage of construction and in virtually any
the situation, more and more people are buying apartments in buildings
under construction are not to use them for other purposes, and to invest
money or make money on resale.
Why is it so popular?
answering this question - the fusion of mathematics and psychology.
People are looking for ways to keep their savings. In fact, capital
gains are now able to provide the two markets - the stock and real
estate. The stock market is potentially more profitable, but riskier and
less predictable. Real estate is always and everywhere seen as the most
reliable way to invest. And in our situation, investments in real
estate not only compete on an equal footing with investments in
securities, but in many cases provide a higher return. In addition,
stocks and bonds, most perceive as being "virtual" and the apartment -
it is an object, the notion of which way or the other can make each.
How much can you earn?
the beginning of 2000 the average price of a typical housing under
construction in St. Petersburg has more than 2.5 times, with the main
growth was in the past two years.
example, in the past, in 2011, the price of housing under construction
in mass demand, increased by 43.4% in dollar terms. But this average.
For most successful projects was the rise in prices of 50-60% per
is an example of successful investment in housing under construction: I
bought my first flat in Moscow for 48 000$ several years ago and now it costs about 350 000$, also i received 1000$ each month for renting it.
Why is it under construction?
contrast to the apartments on the secondary market, the overall
profitability of investment in housing under construction consists of
two components: the general market growth rates per square meter is also
added to the growth by increasing the availability of building the
house (from "zero cycle" before the final takes place on average two
the amount of "bonus" for the financing stage of excavation varies and
depends on the behalf of the developer. Less well-known companies are
willing to give real estate investors a higher bonus. In the largest and
most reliable companies the size of the bonus is rarely more than 15%
per annum and has a tendency to decrease. These companies do not make
sense to borrow from real estate investors at high interest rates - they
can get a cheaper loan from a bank.
it was, even without relying on market prices, an investor can provide
not less than 10-12% per annum only "for the faith in the successful
completion of construction."
addition, the apartments to be built - this is not an object property
(it can become so only after completion of construction). As a result,
the seller shall be exempt from any tax payment from the sale.
What to buy?
who invest in the housing under construction, for its operations often
choose economy class housing. And in most cases we are talking about the
one-bedroom apartments. This is the most liquid commodity, which enjoys
high demand in the market. With the continuous rise in prices and lack
of ability to pay customers in the segment, one-bedroom apartments
concentrated much of the demand, and virtually all of the primary home
purchase, which if developed lending instruments would have been largely
divided between two-, three-room apartment.
a cheap and small-sized apartments is the maximum number of
transactions, problems finding buyers in the current circumstances do
not arise. And this is important. For the investor it is important not
only because the time to buy an apartment, but it is easy to sell it,
not forgetting about your profit.
However, the apartments elite class can often bring the investor more money in absolute terms.
downside - the need for substantial upfront investments and possible
liquidity problems (the process of finding a buyer luxury apartment has a
chance to severely delayed and thereby reduce the potential yield).
selecting an object for investment, real estate investors to assess a
number of factors affecting its potential profitability. Among the major
- the location of future home, the prospects for development of
infrastructure, the method of construction and finally the name of the
company, a leading construction. This is followed by smaller ones, but
often no less important factors: where the windows of the future
apartment, what floor, there is a balcony or a loggia, which inserted
the windows, which are scheduled lifts, etc.
who invest in the housing under construction, often prefer to invest in
the best-known objects of urban developers, who together control about
60% of the proposals in the primary market.
the question is mainly limited by the minimization of risks - the
executive order and the prospects of the leading property developers are
assessed higher than that of smaller lesser-known players in the market
(perhaps not always objective). However, where the higher the risk, and
higher income potential - is the general rule.
How much money do you need?
minimum threshold for entry to the market price corresponds to the
typical one-room apartment (about 80 thousand dollars). Typically,
resellers apartments prefer 100% advance payment.
the primary market offers investors the opportunity to reduce the
amount of starting investments using a variety of schemes installments.
But it raises the cost of the final installment of the cost of
apartments and reduces the potential return on investment. However, it
suits many. There are many subtle nuances at first sight, manipulation
of which allows investors to be a winner in any case. Here's an example.
The investor lowers the threshold of entering the market and makes,
say, a 50% discount in advance for an apartment. Later, the "real" buyer
pays not only the remaining half of the purchase price and the total
difference between the "start" and "current" cost per square meter (the
income of the investor), but also part of the installments.
becoming more common and buying apartments to be built on borrowed
money. Investors are taking in banks unsecured personal loans, add money
to their friends and make the full cost of the apartment. The income of
investors from the difference between the sum received from the sale of
an apartment paid on income and bank interest. If this operation was
carried out last year, the difference would amount to approximately 30%
per year in foreign currency.
When buying and selling?
recent years the market functioned as a standing housing seller's
market, which dictates the price. In the near future is unlikely to
change radically. The demand for housing, particularly low-cost, is
still significantly higher than the offer. The course of events shows
that the construction industry in its development lags behind the needs
of the market.
the sharp increase in housing supply in the near future should not
expect, we can assume that prices will continue to grow. The dynamics of
their growth depends on several factors. In addition to the general
economic situation, it is possible increase in construction and
development of home purchase loans. If construction does not increase
the volume and the volume of loans will increase sharply, it will lead
to further inflation of prices. On the contrary, if the proposal will
significantly increase (at least 1.5 times), there may be some
stabilization of prices, which initially expressed in a slowing of
growth to predictable performance.
Most likely, the rise in prices in 2012 is unlikely to be below 30%.
investors, aimed at extracting revenue from the resale of apartments in
buildings under construction, carry out investments in the "stage of
excavation." First, it is starting from the lowest point for maximum
capital appreciation. Second, in the later stages of construction are
often not invest in anything. The most liquid (low-cost small-size
one-and two-bedroom apartment) is almost completely sold out at the
beginning of sales.
investors, resellers prefer not to wait for delivery of home state
commission. The fact that potential growth rates is almost exhausted,
when the future becomes the house completely finished shape. Then the
growth slows down, the last spike occurs already at the final stage.
Investors who are interested in maximum returns of capital, "captures"
the maximum growth rates in and out of the game.
How all this hard?
an apartment under construction "final" by the purchaser under the
contract of assignment of claims. It happens that the company's
developers have introduced a variety of restrictions on such
transactions (such nuances need to be interested before signing the
contract equity participation). However, in many cases, the sales staff
of construction companies not only failed to prevent the assignment of
rights, but also ready to assist resellers in finding potential buyers,
with a little interest.
investors generate a large number of successive operations of purchase
and assignment, "play" on the discrepancies in the growth of prices for
one-, two-and three-room apartment, and so "simple" to do all of the
investor does not make sense. So the complexity, by and large, is to
find reliable and profitable investment of the object and choose a good
time to sell.
What are the main risks?
major risks. The first - the risk of default constructor of its
obligations. The probability of this scenario is quite low for a proper
choice of the construction company. The safety margin of the largest
players in the market will allow them to finish the construction, even
in adverse market conditions change. The second - "bad behavior" of
market prices (you can either earn nothing or even lose). This
development is likely - the rapid rise in prices can not last forever.
The question is, when prices will stop and whether it will mean only
stabilize or possibly decrease. Say for sure, no one can.
sum up the estimates of experts, the price rise could last for
approximately for 2-3 years. Forecasts of growth rates differ. Builders
pinning hopes on mortgage lending - this will stimulate the demand for
apartments, even at high prices.