The main rule of investing in real estate is to buy when the market is down, sell when it is up. A decrease in interest on deposits makes it unprofitable to place money in bank accounts; real estate investments look more profitable even during a pandemic.
To invest as profitably as possible now and squeeze as much benefit as possible, you need to act quickly. Of course, paying attention to the trends taking place in the world and in the country that you have chosen to purchase real estate.
If we consider the situation very briefly, it can be noted that the victory over the pandemic by blitzkrieg failed, now the war has turned into a positional one. The virus is throwing new strains into battle, European governments are sitting in the trenches. Traveling between countries is still not so easy. So the recovery of the market to pre-covid parameters, which almost all economists predicted back in the summer of 2021, will apparently be postponed again.
However, there is also good news. Even if it is not possible to completely defeat the pandemic in the coming year, the world will gradually learn to live in new realities. Many business processes have already gone digital. So, today, it is not so difficult to buy real estate almost anywhere in the world using only a smartphone. All stages, from the selection of an object to the conclusion of a transaction, can be carried out online.
Another factor that unexpectedly affected prices in the real estate market is the rise in the cost of metals and building materials. Along with them, the cost per square meter crept up, but there was no frantic growth in the real estate market - the still low demand does not allow prices to rise. Developers are forced to cut prices in order to attract a client, in many countries there is still a significant discount on the purchase of real estate. Therefore, the first or second quarter of 2022 is a good moment to fulfill an old dream and buy property in Europe.
Overview of the European real estate market at the beginning of 2022
The situation when everything is bad for everyone is already good because sooner or later things will be better. If you have money, then this is the best time to invest. However, even in a relatively small and densely populated old Europe, the situation is not the same everywhere. If some countries, due to old reserves or economic features, suffered from the coronavirus crisis to a lesser extent, a number of EU states had a hard time. The closure of borders and the reduction of the tourist flow has led to almost a disaster. Cyprus and a number of small states, whose economy depends on tourism, are among them.
Let's note one more moment - why do you need real estate. If the ultimate goal is to move to the country, then it is only important to buy housing with maximum profit when the market is still “lying”, if you are considering further resale or receiving dividends from use, then it is better to choose a place with a rapidly growing economy, where there are prospects for a quick recovery in tourist flow (Croatia, Cyprus, Italy) or business or educational centers of Europe (London, Berlin, Paris).
10 cities where it is profitable to buy real estate right now
In London, in 2020, house prices rose by 5.3%, even though this year was perhaps the most dramatic for the British economy - the outbreak of the coronavirus and the planned but prolonged Brexit.
Despite COVID-19 and Brexit, home prices in the UK rose by 5.56% in 2020. The average price per 1 m2 of housing in the UK capital was 18,057 euros. The market shows the best growth rates since 2013, which means that investing in the UK real estate market is much more profitable than placing funds on a deposit in a bank.
Prices for residential real estate in Britain are pushed up by the decline in the activity of the construction sector. In 2020, the number of new residential square meters decreased by 25%. Such a reduction provoked an increase in prices, even despite a significant (11%) decrease in demand.
The yield of housing in London from renting out due to the closure of borders is at a very low level - 2.6%, and the cost of apartments is the highest in Europe - an average of 18,057 euros per 1 m2.
Despite the coronavirus, Ireland's economy is showing steady growth - almost 3.4% in 2021 and, according to the European Commission's economic growth forecast, 3.5% in 2022. This is facilitated by the growth of consumption and exports, an increase in investment in the country's economy. Given this acquisition of real estate in Dublin looks like a good investment.
The increase in real estate prices last year amounted to 3.4%. At the same time, in Dublin, the number of those wishing to purchase housing decreased by 21%, and housing commissioning decreased by almost 2%.
Acquiring housing in Dublin should be primarily for those who plan to make a profit from rent. The yield for renting here is one of the highest in the EU - 7.18%, and the cost per square meter is several times lower than in London - an average of only 2354 euros.
Germany means stability. Therefore, despite the fact that several coronavirus waves and periodic lockdowns did affect the German economy, the demand for real estate in Germany did not fall even in the most critical 2020, due to the good economy, which is now gradually recovering. In 2020, house prices in Germany rose by 11.42%. According to the Federal Statistical Office of Germany, the number of issued permits for the construction of new facilities increased by 4.8%.
All this is largely facilitated by government policy: subsidies for the purchase of housing and improving housing conditions, low interest rates on mortgages, urbanization, the good financial situation of companies and citizens.
Real estate in any city in Germany is a reliable financial investment. The average cost of apartments in Berlin is on average about 4991 euros per 1 m2, and the yield on rental housing in Germany ranges from 2.9% to 3.7%.
Lisbon is the westernmost and one of the oldest cities in Europe. The Celts erected dolmens in this place, and even before it, there was a large Phoenician port here. Tourists drive themselves to see the Baixa Quarter or the Park of Nations. Try Portuguese cuisine, visit national holidays and festivals. It is quite cozy and relatively small among European capitals. It is home to just over a million people.
The country is considered quite cheap. Economic growth has been somewhat slowed down by the pandemic, with Eurostat predicting economic growth of 5.4% in 2022, one of the highest rates in the EU.
Construction activity, like almost all of Europe, has slowed here in 2020. The market has not fully recovered yet, and has not reached the levels of 2019, when the country experienced a construction boom and prices for projects rose by an average of 11.2%, while the number of building permits issued increased by 18.4%. Last year, the growth in real estate prices amounted to "only" 6.2%, which is also not bad in the current realities.
Among other things, the country has a fairly popular passport program among foreign investors, which helps maintain interest in buying a home.
The yield from rental housing in Portugal is 5.45%, and the average cost in Lisbon is 3830 euros per 1 m2.
In 2021, Spain was among the most popular destinations for non-EU investors. It attracts foreign buyers with a favorable climate throughout the year, ample opportunities for beach recreation, many cultural and historical attractions and comfortable living conditions. Barcelona is the most attractive - a beautiful, charming, spectacular and very unusual capital of Catalonia, the main autonomous region of the Spanish kingdom, a cultural center, a place where the great Gaudi and Dali worked.
In 2020, due to the COVID-19 pandemic, real estate prices dropped significantly here: discounts, especially in the secondary market, reached 40%. Now prices are steadily rising. If at the end of 2020 the cost of 1 m2 here averaged about 1391 euros, having decreased by 340 euros compared to June of the same year, now they are at the level of 1963 euros and reach 2950 euros in the central part of the cities.
According to the forecasts of the British consulting company Knight Frank, residential property prices in the city will grow by at least 6% in 2022. The cost of living in Spain is lower than in a number of other European countries (Great Britain, Germany, France). But at the same time, the return on investment is also less.
The price of Spanish real estate was supported by a decrease in the speed and rise in the cost of construction, a shortage of new housing; an increase in domestic demand (the Spaniards began to buy more houses for their children so that they could work or study remotely, the demand for housing in rural areas and small towns also increased); stable demand among foreign investors due to the current passport program.
The rental yield of Spanish real estate was 8.2%, the average cost in Barcelona is 3682 euros per 1 m2.
Contrary to the logic that the most expensive real estate in the capital, Rome has long yielded this position to Venice, where the acquisition of real estate is associated with certain difficulties. Here, the average cost per square meter was 4467 euros, and on average, housing on the Apennine Peninsula has risen in price by 2% (1719 euros per 1 m2), taking into account inflation.
The local real estate market is positively influenced by low mortgage rates and the growth of domestic demand. And a unique program, according to which in a number of municipalities you can buy real estate for just 1 euro. It operates in particular in Ollolai (Sardinia), Sambuca (Sicily), Cantiano (Le Marche), Mussomeli (Sicily), Zungoli (Campania), Gangi (Sicily), Bivona (Sicily), Cammarata (Sicily), Borgomezzavalle (Piedmont), Nulvi (Sardinia), Vergemoli factories (Tuscany), Oias (Valle d'Aosta), Troina (Sicily), Delia (Sicily), Taranto (Apulia) and Cinquefrondi (Calabria).
The average cost of housing in Rome was 2848 euros per 1 m2, and the yield from renting out reached 4.5%.
It is difficult to imagine events that will make property ownership in Paris unprofitable. During the pandemic, investor interest in buying French property did not wane despite the lockdown and closed borders. At the same time, a slight decrease in demand, with a significant drop in supply during the pandemic, affected prices. Over the past year, housing in France has risen in price by 4%, up to 2807 euros per 1 m2.
In Paris, last year the price of residential real estate increased by 3.4%, with an increase in the number of commissioned objects by 9%. At the beginning of the year, the cost of housing in Paris is on average 10,535 euros per 1 m2, and the rental yield reaches 6%.
At the beginning of last year, the demand for housing in France began to grow again and added 14% by mid-2021. In this regard, it is possible to predict an increase in real estate prices in the coming year.
Low mortgage rates and the easing of lending rules have helped maintain demand in the French residential real estate market.
The Netherlands, thanks to consistently high demand that outstrips supply, remains one of the most promising countries for real estate investment even in a pandemic. It recorded one of the highest real estate prices in Europe - 7.33%.
According to CBS (Netherlands Statistics Agency), the country's market reacted to the coronavirus crisis in a paradoxical way. The number of transactions last year increased by 7.7%, while in 2019 the growth for this position was almost at zero level.
The cost of apartments in Amsterdam is 6900 euros per 1 m2, the yield from renting out reaches 6.4%.
The Romanian real estate market has been recovering for almost 10 years after a sharp fall in 2009, with the strongest growth of 4.2% recorded in the pre-pandemic 2019, in 2020-21, the growth in property prices again slowed down significantly and did not exceed 1%.
At the same time, demand in the last two years has been quite high. In 2020 alone, it grew by almost 11%, while the number of permits issued for the construction of new facilities decreased by 2.9%.
The benefit of buying a home in Bucharest is the relatively low price of real estate compared to the leading EU countries. Only 1,500 euros per 1 m2, but the rental yield is one of the highest in the EU - 6.07%.
In Bratislava, the average cost per square meter is 2,900 euros, and the yield on residential real estate for rent reaches 4.53%. At the same time, in the Slovak capital, a record increase for the EU in prices for residential real estate during the pandemic was recorded - 14.28%. For Slovakia, this is the best indicator since 2007.
This is facilitated by both domestic demand and interest from investors, mainly from Russia and other post-Soviet countries.
Despite the pandemic and the closure of borders, the demand for housing in Slovakia is growing steadily. The main growth drivers are both domestic buyers and external investors, in particular from Ukraine and Russia.
The return on rental property in Slovakia is estimated at 4.53%, and the average cost of housing in Bratislava is 2,911 euros per 1 m2. A decline in real estate prices in the near future in this city is extremely unlikely. Housing affordability is declining moderately. The main reason will be a slowdown in wage growth, while real estate prices continue to rise at a steady pace. Demand for residential property has been and will continue to be supported by very low mortgage rates and overcrowding in the existing housing stock.
The situation with prices will largely depend on the secondary residential real estate market, that is, on the degree of readiness of the current owners to sell their property.
What about in Cyprus?
Despite the pandemic, the residential real estate market in Cyprus showed in 2021 the highest performance over the past 10 years. Compared to 2008, the cost per square meter of apartments and houses in Cyprus has increased by more than 85%.
2021 has shown that Cypriot real estate is in stable demand. The most unfavorable of recent years is 2020, when demand was hit simultaneously by a pandemic, a reduction in tourist flow and construction volumes. In addition, one of the most painful blows to the sector was the cancellation of the passport program.
However, over the past year, the figures have approached those before the pandemic. Prices for new buildings only in the process of construction increase by more than 20%. According to analysts, the situation was favorably affected by low mortgage rates, government subsidies to certain categories of Cypriots, the restart of tourism, and the adaptation of existing immigration programs to modern requirements. An improvement in the situation in the real estate sector is also predicted in 2022, unless, of course, a new force majeure arises.
Interested in housing in Cyprus? Visit DOM. The portal has the largest database of real estate in the country - from residential to commercial. Choose and contact professionals who will help you make the right choice!
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