Buying Property: The best investment
Many people wonder if in the current scenario it is worth investing in real estate. This year things were not easy due to the climate of protest for social demands and the political uncertainty over the plebiscite to change the Constitution.
Now, to complete the complex scenario in the country, the new coronavirus COVID-19 has generated a worldwide health crisis with already tangible side effects (fall in the price of currency, for example).
Why invest in real estate in times of crisis?
Despite the social, political and financial climate, investment in real estate continues to be, by far, one of the best bets for generating good dividends in the economy. These are four reasons to invest:
Investing in UF is an inflation protection
The Unidad de Fomento (UF) is a currency that does not physically exist, but it occupies a preponderant place in real estate investment (buying and selling of houses) and for credits and bonds, both from the State and from companies.
The greatest advantage of investing in UF is given by the way its value is calculated: it is subject to the inflationary marker, that is, it is determined according to the Consumer Price Index (CPI). In other words, if there is no inflation, the UF remains the same in relation to the peso; if there is inflation, its value increases and if there is deflation, its value decreases.
In concrete terms, this means that with a 1 UF you can always buy the same thing, even in 20 years or more. What varies? The value of the UF in pesos.
Therefore, investing in real estate in UF is a protection against inflation and the volatilities that the economy can present in times of crisis.
Interest rates remain at historic lows
Recently, the Central Bank announced a historic measure to reduce the interest rate to 1%. This measure seeks to ensure that the credit market functions normally in the midst of the crisis generated by the COVID-19.
This situation -apart from the flexibility that some financial institutions have granted for the payment of dividends- makes investment more attractive in times of crisis because a mortgage, or consumer credit, is cheaper as it has to pay a low interest rate to the bank.
Therefore, it is a good time to ask the bank for a loan and execute the real estate investment.
Demand remains stable
Although the social demonstrations of 2019 had an impact on many markets (including real estate), when observing the historical marker of recent years the sale of real estate -particularly of apartment- continues to expand, so there should be no major obstacles for the investor when looking for a public interested in acquiring or leasing a property.
The profitability of an investment is an aspect that must be evaluated before making a decision because it determines the profits that are obtained from the investment. As for the projected ones, the real estate market delivers positive figures to its investors, even higher than the variable income (IPSA of the Stock Exchange).
In this way, and depending on the real estate project and its location, the investor can perceive the not insignificant figure of 6.5% average profitability.
Without a doubt, investment in times of crisis, especially real estate investment, pays good dividends. However, in order to guarantee a good return on investment it is necessary to know how to identify those projects that provide good habitability solutions.
To find great information, you can visit Kent Ridge Hill Residences Condo to learn more.