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The liquidity of foreign real estate

The liquidity of real estate, including foreign, is a key determinant of its attractiveness when buying. The higher the liquidity, the faster and cheaper you can then resell the object.
09.07.2013
Homesoverseas.ru editorial office
190
The liquidity of foreign real estate is determined by how quickly and with what income an object can be sold in the current market situation, or by how large the annual profit from renting it out is. An adequate price set by the seller also plays an important role. Therefore, when buying a property, it is very important to analyze the level of its liquidity.

Real estate can be considered liquid, which will be in demand on the market with almost any development of the economic situation in the country, says Ekaterina Maslova, director of Largus Estate. This generally accepted definition is true for all countries. But it should be borne in mind that for the mass segment of the real estate market and exclusive properties, there are different factors that affect the degree of liquidity.

Natalia Zavalishina, CEO of MIEL Distant Property Management, notes that liquidity is primarily an opportunity to sell a real estate object quickly and without losses. With today's market dynamics and depending on the country, the level of the object itself, its location, this is a period of two to six months, for expensive real estate - within a year. Without losses, this is at least at the same cost at which the object was purchased. If it turns out to sell the object more expensive, then this is already good. But, of course, the dynamics of sales rates and liquidity strongly depend on the purpose of the real estate itself – urban, metropolitan or resort.

What affects the liquidity of real estate?

There are main factors that increase the liquidity of the facility. Obvious signs of high liquidity can be considered high demand, good location, adequate cost of the facility, a good facility management system and a high probability of renting it out.

Nadezhda Prinz, head of Prinz Dom Immobilien, believes that the main factor affecting the liquidity of real estate is, of course, the developed infrastructure, the proximity of airports, green areas, reservoirs and other factors indicating a high comfortable quality of living, combined with an appropriate price.

The first condition for property liquidity is location, says Thomas Rixis, a real estate consultant at Baltic Expert. For example, as history shows, property in the centers of the capitals of the world is not getting cheaper. However, an inflated price can make a liquid object illiquid even with a very good location.

Albert Kasperchik, head of Business development at Extra Sales Consulting Ltd., also believes that real estate in the capital of the country, especially in its central areas, will always be considered liquid real estate, but other large cities are not excluded. The factors that affect the liquidity of real estate can probably be listed by the dozens, but the main ones are still new buildings, developed infrastructure, the climate in the country, direct flights, the prestige of a particular complex or resort, the technical parameters of the facility and many others.

Sometimes buyers can make mistakes when buying, as it seems to them, liquid housing, says Ekaterina Maslova. If a house is bought for the purpose of subsequent sale in the short or long term, then real estate purchased in an unstable economic situation in the country, as a rule, falls in price, and you will not be able to get the amount you expected for it. To a lesser extent, this applies to exclusive, luxury real estate.

Sometimes a buyer, seduced by the low price of housing, buys real estate in areas with a high criminal situation, surrounded by squalid buildings and structures. The risk of not selling such an object in the future is very high. In addition, liquidity may be reduced due to the fault of the seller. For example, if you purchase a property with a sea view, and in the future the plot in front of the house is built up, blocking the sea view.

How to assess the liquidity of a foreign property?

All buyers have different requirements when choosing a suitable property abroad. But in order for the purchase to be the most liquid, it is necessary to take into account several main points.

Being in Russia, it is not so easy to assess the liquidity of a property abroad, says Nadezhda Prince. When choosing, statistics on the cost per square meter, the cost of houses and villas in different regions of the country, and several opinions of independent, conscientious consultants can help. But you still can't do without an inspection of the object and knowledge of geography.

To get a preliminary assessment of the liquidity of real estate in the housing market of interest, you can independently find information on the Internet and the media about a particular object, Albert Kasperchik notes. But for a more detailed analysis, it is better to contact the specialists of the local real estate market.

First of all, you need to clearly understand the goals of the acquisition, and, based on this, plan the purchase, Natalia Zavalishina believes. It is worth analyzing the opportunities in the real estate market. For example, if banks easily lend to facilities, it means that they are fairly confident in their liquidity. And this is a very strong argument in favor of buying, even if you have no intention of using the loan. In addition, it is worth paying attention to the rental market - if real estate is popular with tenants, it means that there is not enough housing on the market, it is in demand and this is also an argument in favor of liquidity. You should not chase much cheaper objects, as a rule, this indicates their low liquidity.

If you are not an expert and want to buy property abroad, says Thomas Rixis, it is recommended to identify the most sought-after areas. Then, if you are looking for real estate through local advertising sites, we advise you to pay attention to the 20% of the cheapest offers. As a rule, these 20% show the real market value. If you find objects at a lower price, then they can already be regarded as highly liquid. It is possible to increase the degree of liquidity and provide additional added value in the future by making repairs or creating additional amenities.

According to Nadezhda Prince, it is possible to consider real estate liquid that was liquid before your consideration. As an example, we can talk about real estate in Baden-Baden. It was in demand in the last century, and now too. It is possible to observe absolutely insignificant fluctuations, which are difficult to call stagnation, and at the same time prices for objects in this area have always been growing.

Liquidity of different types of real estate

The demand for liquid objects of urban, resort and luxury real estate is always high, and it can sometimes be difficult to find objects at an adequate price on the market. At the same time, the signs that determine the high liquidity of an object may be completely different for certain types of housing.

In addition to the price, a small area of housing plays an important role in the segments of resort and urban real estate, Ekaterina Maslova believes. So the most liquid objects of this type of real estate are studios and single apartments. Such objects "go away" faster than others, their cost is lower than real estate of a larger area. In addition, it is an ideal option for renting. An additional advantage is the cost of housing maintenance. If it is acceptable to the buyer and is adequate to the market, this undoubtedly increases its liquidity.

It is no secret that the first line of the sea for resort housing is valued higher than the second and subsequent ones, continues Ekaterina Maslova. This applies even to countries where the first line is a rather risky location, for example, in Thailand.

Urban real estate is acquired for other reasons. As a rule, it is considered as a place of residence during study, work, with far-reaching plans, such as obtaining permanent residence. Therefore, proximity to architectural monuments, the historical center, the metro (if any), and educational institutions is important here. Often such real estate is a financial instrument, an investment, for example, profitable apartments in Germany.

Luxury real estate is subject to slightly different liquidity indicators, and its uniqueness in the market is the main one. In this sense, such objects can be compared with collectible items, which in turn will serve as an indicator of liquidity for the object.

It is quite difficult to generalize the signs of liquidity of different types of real estate, says Natalia Zavalishina. For example, even within the same city Limassol there are facilities in Cyprus that are quite liquid and not very, although they are located several meters apart from each other. The quality of construction, finishing, proximity to infrastructure, the sea, sea views, good facility management and price-quality compliance are important here. But speaking in general, as a rule, urban real estate, that is, real estate in large cities, is more liquid than resort real estate, especially in the most stable countries such as the USA, Germany, Great Britain. As for elite facilities, they have a different sales dynamics, a different target audience, but usually the liquidity of such facilities also depends, even more so, on the location and quality of construction and finishing materials.

Signs of illiquid real estate abroad

Not alwayssigns of illiquid objects may be obvious, and vice versa. The illiquidity of the object may be indicated by the cost, low demand or inconvenient location.

Albert Kasperchik notes that signs of illiquid real estate can be poor construction quality, minimal housing area, ground floors, a view from the window to a noisy street, etc.

The main sign of an illiquid object can be called the lack of demand for objects, that is, the willingness on the part of buyers to purchase them only in case of a discount, often significant, says Natalia Zavalishina. Such objects are either offered for sale with very large discounts, or they are sold, or rather, simply put up for sale for a long time, sometimes for several years. As a rule, they do not have the opportunity to get a loan or even installments, there is no good infrastructure, they are poorly accessible from the point of view of transport links.

An unambiguous illiquid object is real estate that is in disrepair, Ekaterina Maslova believes. But, if it is bought out for demolition and construction of housing, it may change to a different quality. And its liquidity, in the case of competent marketing, will increase.

Even if a real estate object abroad is purchased not for investment purposes, but for its own use, the purchase should be profitable. Therefore, when making a decision about buying a home in a particular country, it is worth first of all taking into account the level of liquidity of the object.

HomesOverseas.ru

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Elvira
Interested in commercial real estate for the most liquid objects rubezhom.Gde?
October 7, 2013, 15:26:24
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zorina_53@mail.ru
Hello! I would like to know and be informed of the real estate abroad. Lyudmila.
September 17, 2013, 20:33:17
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