Recent studies claim that during the first quarter of 2016, real estate investment amounted to 2,100 million euros, which is the second best start of the year since the beginning of the crisis in 2008. These data show that investment in real estate market through mutual funds is a very valid option to investors at all levels, either directly acquiring a property, acquiring debt on real estate assets or through investment funds they invest in such assets. The first of the above options allows investors to enjoy active, the rest of modalities simply give the possibility to enjoy its profitability, but adding an important advantage: liquidity. This form of investing, you can enjoy the profitability of long-term assets, profitability always comparable to that of global equities. In the last 15 years, this type of investment has provided superior to that of any other asset class, namely 10.7% annually.
When carrying out this type of investment must take into account such factors as:
– In short periods of time, its correlation with the rest of the equity is high, but in the long term the asset is highly correlated with the evolution of real estate prices. Thus, although in the short term we should assume the volatility of equities in the long term, profitability will be marked by the total property.
– Investment in real estate provides an extra return without increasing risk. It is therefore advisable to have between 15% and 20% of the assets invested in this asset class.
– When analyzing the return on investment in REITs or listed property against any other type of investment should be used as regards total return on investment as the dividend yield on this asset class is higher than the equities in general. Keep in mind that dividend growth and inflation offset difference.
– As for the idea regards injury on investment because of rising interest rates we can say that if these increases are accompanied by an improvement in the economy and inflation demand, rising incomes neutralizes the impact of higher discount rates.
The above data confirm that investment in real estate can be considered as a good alternative for investors who want to get an interesting long-term profitability and diversify its assets.
At Ripoll & Mateu Solicitors Mallorca we work to get total satisfaction of our customers effectively by offering legal services and personalized assistance in foreign investment area with regard to funds from other countries for investments in real estate and commercial Islands. Our team has extensive international experience, we also have cooperation agreements with international firms and are members of the AIPP (Association of International Property Professionals).