Income levels are declining, competition in the housing market is growing, and general economic uncertainty is forcing investors to turn to more conservative investment options. These traditionally include real estate.
What are the prospects for investing in real estate in 2023?
Against the backdrop of a clear declining level of income of the population and effective demand, market experts agree that the most popular and promising for investment in real estate will be the mass segment of housing.
As Alexey Perlin, CEO of the development company SMU-6 Investments, notes, in 2023, investments in new buildings of the mass segment, where there is a relatively small entry threshold, seem to be the most optimal.
Against the backdrop of this trend, it is worth being more careful in choosing a future asset and bypassing illiquid lots.
– First of all, due to the lack of effective demand, prices for new economy-class buildings in areas of compacted development with an undeveloped residential environment will decrease in the near future. It will be very difficult to find a buyer for such lots even at bargain prices. There are no prospects for the construction of infrastructure facilities in these locations, since there is simply no place left for this, – Asya Levneva, Director of the Marketing and Sales Department of CJSC Baltic Pearl, warns.
exclusive commentary for The Realty Times
Now it makes sense to invest only in liquid projects that are positioned as “real estate for life”, and not for investment. It is most profitable to enter into a deal for those who are ready to pay 100% for an apartment in cash or choose an unsubsidized mortgage for calculation. This option is good if the apartment is taken for subsequent resale.
- Foreign real estate news
How to buy property in Phuket in 2023: price overview, buying methods and property options
In addition, investments in street retail of the same new buildings will be relevant in 2023: developers offer commercial lots of any cut. It is especially profitable to buy premises in projects of a high stage of readiness – this will allow you to quickly reach payback and ensure stable client traffic.
Despite the unstable economic situation in the country and in the world, real estate investment does not lose its relevance. The Russians do not want to keep money in their accounts, and are ready to invest in meters. As of January 2023, out of 10 client requests, 30% of requests are specifically for investing in real estate, emphasizes Valentina Baryshnikova, a private real estate expert in St. Petersburg.
In the current conditions of the crisis, real estate is more of an understandable tool for saving funds, rather than for increasing them. However, in a situation of economic and geopolitical turbulence, the risk of investing in any product increases significantly, and little can compete with square meters in terms of reliability. Therefore, if there is money, then investing in real estate will save you from major losses and, with an expert approach, can bring profit in the new year.
Investing in real estate: what to choose?
The answer to the question of where to allocate the accumulated funds is both simple and difficult in practical application. Interviewed market experts assure that now it is profitable to invest in projects that will increase the most in price from the initial level “on the foundation pit”. It remains only to figure out what exactly the experts have in mind.
If before, everyone roughly understood that these are advantageously located projects in the center of Moscow, St. Petersburg or in prestigious areas, with good transport and social infrastructure (which is or will be in the project) and the price is lower compared to the current market price for finished real estate. Approximately the same parameters for Sochi, only the sea is added instead of the metro, and social infrastructure is not so important.
Now all this does not work: prices may drop significantly, demand may drop sharply and this state of affairs will last for a long time. In addition, investments with the introduction of escrow accounts have become more difficult and less profitable. As mentioned earlier, now it is not enough to purchase an object at the excavation stage, wait until the end of construction and, as a result, receive a profitability twice as much as the amount invested.
– Of course, instability and crises end at some point. We all really want 2023 to be a year of peace and economic growth, but no one knows how it will actually be. When will the situation in the real estate market turn to growth? It depends on the situation in the entire domestic economy,” said Vladislav Preobrazhensky, executive director of the Moscow Investors Club.
exclusive commentary for The Realty Times
One way or another, experts emphasize, it is always profitable to invest in residential real estate in large cities, since the price per square meter is steadily growing due to high consumer demand. At the same time, this concerns Moscow in the first place.
In the long term, real estate always rises in price, but objects in undervalued locations grow faster in price, in which transport interchanges, metro and developed infrastructure will appear in the future. These are remote areas with low building density, good ecology, water bodies and natural resources.
As for, for example, St. Petersburg, objects in popular areas with an established comfortable living environment will be in acute shortage in the coming years due to a lack of building plots. They may increase in value in the future. Another issue is that it is difficult to find non-overpriced lots here.
- Luxury real estate news
How and where to buy a luxury apartment in 2023: new trends in the luxury housing market in Moscow
Investment in apartmentsand apartments
Konstantin Storozhev, General Director of Valo Service LLC, Chairman of the RGUD Apartments Expert Council, also adds that apartments are certainly a successful and effective investment asset. They are distinguished by an advantageous location in terms of infrastructure and transport accessibility, a hotel level of security and related services, such as apartment cleaning, food delivery, and dry cleaning. Most of the apartments are rented with a full finish, many also include furniture and household appliances.
To summarize all of the above, in order to maximize profits, you need to choose high-quality liquid projects. Objects that are positioned as an investment option are high-rise buildings with fine cut. It should be borne in mind that subsequently it will be difficult to withdraw from such a project due to great competition with the developer and the same investors who have decided to put their apartments up for sale. This is true both for Moscow and St. Petersburg, and for Sochi.
– At the same time, real estate prices in these cities are overheated more than in the whole country. Therefore, I would pay attention to promising cities, for which demand will gradually shift, for example, Krasnodar. This millionaire is underestimated, but it has great potential. Interesting high-quality projects in this city are perfect for investment,” said Ruslan Syrtsov, Commercial Director of Evropeya Group.
exclusive commentary for The Realty Times
Ways to invest in real estate
Real estate has historically been one of the least risky investments that is relatively resistant to inflation and tends to rise steadily in value. And, as emphasized by the professor of the Russian University of Economics. G.V. Plekhanova Natalya Prodanova, traditionally there are at least two options for investing in real estate: buying an object with a view to reselling it or subsequently renting it out.
If the goal is to resell the object in the future, then you need to pay attention to construction objects at the “start” of sales (“on the foundation pit”). In the conditions of an unstable geopolitical and economic situation in the country, the risk of unfinished facilities is quite high and, resorting to this investment option, you need to be very careful.
To buy an apartment for the purpose of further renting out, you should look to the secondary market. At the same time, one of the determining factors for the profitability of such investments is the location of the object (proximity to the metro, transport accessibility, availability of business and shopping centers, and so on), the economist summarizes, noting that in any case, in order for investments to pay off, it will take at least 13-15 years old.
However, this period can be significantly reduced if you earn on daily rent. Here it makes sense to look at apartments that are cheaper than apartments, but at the same time are in great demand from tenants.
Now, at the moment, the client can get the maximum benefit with a 100% cash payment or by choosing an unsubsidized mortgage. Of these two options, the option of an unsubsidized mortgage is more profitable for an investor, which allows you not to spend the entire amount at once, but to make only a small down payment.
There is a little trick here: the rest of the money can be put in the bank at interest, from which monthly payments on the loan can be made for several years. After that, you can put your liquid project up for sale. Profit in this case is guaranteed.
The message Invest in real estate and not go bust – experts told what kind of real estate to invest in in 2023 appeared first on the Realty Times.
