When the COVID-19 pandemic began at the beginning of 2020, many experts feared that the real estate market would collapse completely. However, this did not happen, and it even began to develop at a dynamic pace. According to EY’s report “The Polish Real Estate Guide 2023”, in 2022 the total volume of investments on it reached EUR 5.8 billion, which was slightly less than in 2021. The lower availability of mortgage loans in banks in Poland has resulted in a slowdown in demand for flats or houses, which is why these are the conditions that speak for investing your cash in the real estate market.
Identifying investment opportunities
The mere purchase of an apartment in order to rent it or later resell it at a profit does not exhaust the possibilities of investing in real estate. You do not have to buy it entirely to be able to benefit from the capital invested in the real estate market. You can invest in investment funds, in condo hotels or aparthotels for rent, as well as on the commercial real estate market – in offices and service and commercial premises, i.e. the so-called commercial premises.
The real estate market turns out to be more attractive, the lower the interest rates apply, because it is not conducive to investing savings in the bank. Despite the fact that we currently have record high interest rates, high inflation in Poland makes this type of capital investment very attractive.
Real estate market tracking
Although the prices of residential or commercial premises do not change very dynamically on the real estate market, they can fluctuate under the influence of, for example, the level of interest rates, problems on the financial markets or the reduced availability of mortgages in banks.
An investor interested in real estate should determine what opportunities he has on his local market and what rules of operation apply there. Doing thorough research and supplementing information over time will certainly prove helpful in rational investment of money.
Getting to know the specifics of the market
Specialists agree that the real estate market has a specific specificity. Investments are made differently in commercial premises, differently in residential ones, and differently if they are undertaken in towns with high tourist values. Before you start making any investments, familiarize yourself with the specifics of the market you want to operate in. Choose a target group and analyze their needs. You need to determine the key criteria for choosing a property and ultimately invest in a property that best meets the expectations of the market.
Diversification of the investment portfolio
Introducing real estate to the investment portfolio, next to, for example, shares of listed companies or foreign currencies, will help to increase the diversification of this portfolio. It can make the risk well balanced. Real estate investments fall into the same category as long-term investments, which usually bring a stable rate of return.
Planning and controlling activities
- The key to success when investing in real estate is to take actions such as:
- calculation of current financial liabilities,
- determining what savings you can spend on real estate investments,
- control of market trends,
- choosing the right investment path – do you want to invest, for example, in apartments for rent or commercial premises,
- preparation of revenue simulations for at least several variants of property occupancy, taking into account accompanying costs.
All this will make you make the best investment decision for you at the moment. For example, monitor the LTV (“loan to value”) ratio on an ongoing basis, i.e. the ratio of the value of the outstanding loan to the value of the property, if you have incurred such a commitment for investment purposes. Also follow the market in order to determine the right moment to realize the profit from the investment in real estate.