2023-11-18 23:00:00
Anyone who has money can now invest cheaply in real estate. Prices are stable to falling, but there will be fewer completions of new buildings in the future.
Especially in days like now, good advice is expensive when it comes to investing in real estate. For many years, buying an apartment as an investment and renting it out as additional income was a relatively safe thing to do. But now everything has changed. Lending has been tightened and interest rates have returned. This affects both investment behavior and return structures. Even among the big players in the industry, not one stone is left unturned, as the turbulence surrounding Signa shows.
Real estate offering: Interested investors can take advantage of the full range
The consequences are already visible on a small scale in the domestic real estate market, confirms Salzburg real estate agent Elisabeth Rauscher: “The offer has doubled, anyone who is interested can take advantage of the full.” This means that prices can be negotiated if, for example, the operating costs are not optimal or there is no photovoltaic system or heat pump in the new building. “If the overall package doesn’t fit, then something can be done regarding the price,” says Rauscher. Anyone who gets a loan – which is no longer so easy at the moment – must also be able to pay the loan interest. Rauscher: “The interest rate level is high, but it is easier to calculate than a few months ago because no major increases are to be expected.” In any case, there are now far fewer investors than before, but they primarily think long-term. “Even if high returns are not expected at the moment, the value will be maintained or increased.” Real investors are in a good position.
New construction: Hardly any new real estate projects anymore
However, a shortage is expected soon, especially in new construction, because current projects will be completed by the first half of 2024, but new ones will hardly be started. Many investors are already investing in used properties that have “regarding half their own funds and the other half are financed through external financing,” says the expert. “The rent will pay for it.” However, you can currently no longer invest with only 20 percent of your own funds.
In any case, the price of new properties is stable because the property developers also have to stick to their calculations. “In the prices for used apartments, a price drop of five to ten percent is already noticeable; if the overall package is not optimal, it can be up to 15 percent.” But still: “Everything is becoming more expensive, only real estate is becoming cheaper. If you have money, now is a good time with a large selection,” confirms Rauscher.
But how are the banks dealing with the current situation?
“The simplest form of investment in this area is a real estate fund. This is also possible with small amounts,” says Christoph Paulweber, CEO of Salzburger Sparkasse. “This makes sense in the long term, even if there was a strong setback in price developments.” Another option for “indirect” investment is real estate stocks.
However, direct investments in a specific property, which were very popular in recent years, have become less attractive. “Demand has fallen significantly,” says Paulweber. However, there are still interested parties who see an investment in living space as the only permanent option. “Nobody can take that away from you and in times of low interest rates it was almost the only form of investment.” That has now changed because there are alternatives once more, such as “resurrected” bonds, stock funds or various forms of savings. “Although the interest rates are below the inflation rate, they are significantly higher than before,” confirms the expert.
From the bank’s perspective, a real estate investment is certainly attractive for many customers, but is only one option for many to invest. “Large institutional investors such as insurance companies, foundations and pension funds have recently invested a lot in real estate, but are now increasingly focusing on other forms of investment.”
According to Paulweber, private individuals are still investing in residential property, even if the trend stopped around a year and a half ago. “This is also because it is more difficult to finance with debt. You need a higher proportion of equity and have higher financing costs.” The banks have also registered price reductions for real estate, which are favorable conditions for investors. “The more difficult financing situation is problematic for people with personal needs, but for investors it means a calming down on the market.”
If you have money, investing in real estate is definitely an interesting option. Paulweber: “It depends on your assets. Buying your own property for small and medium incomes is currently more difficult.”
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