It is public and notorious that the returns on capital in Europe, in traditional investment channels considered as safer such as; Bank funds, public debt and others, are very low, often reaching returns close to 0 and sometimes even negative returns, such as German and even Spanish public debt.
Given this reality in which there are also no prospects of significant change in the short term, investment in real estate, housing, commercial premises and even urban land, appears as an excellent safe and highly profitable alternative.
It should be stressed, however, that a real estate investment should never be considered in the short term, but rather in the medium or long term.
This is without prejudice to the fact that in many cases such investments can be made with very high returns in the short term due to specific “accelerations or warming” of the market, which if it is known how to take advantage and manage properly, can produce spectacular returns. But betting on the short-term strategy in a real estate investment carries the serious risk of being caught in a cycle change or at least in some market readjustment. We must also consider that, like the weather, the real estate market in Spain is far from homogeneous.
In the same way that it can rain in the north and enjoy a radiant sun in the south, or vice versa, there can be a negative cycle in the west and just its opposite in the east. Therefore, the best countercyclical measure in a real estate investment will always be to be able to withstand such investment in the medium or long term. Historically,
and beyond some statistics that may not reflect reality in its proper measure, the cycles of real estate depression never exceed a period of more than 8 years (the last, and probably the biggest real estate crisis in Spain since the 40s, we could date it from 2008 to 2015).
This means that those who had the bad fortune to invest in a property on the “last day of the expansionary cycle” should, in the worst case, wait a maximum of 8 years to recover their investment and this, we insist, considering the worst case scenario as it was the last crisis suffered.
We stress again that we cannot consider the real estate market in Spain as a homogeneous market and therefore, if you are not an expert in this market, the advice of recognized professionals when making investments in this sector becomes essential. The real estate investment options can be multiple depending on the capital to be invested and the objectives of said investments, as well as the profile of the investor himself.
Our group Costa3 specializes in advising and managing investments in real estate within the framework of the Costa Blanca.
In future posts we will develop and analyze these possibilities.