In moments of uncertainty attention returns to what the collective imagination has introjected as the safe haven investment par excellence: the brick. But is it still true that real estate is always the best investment?
According to a study by the independent Turin-based consultancy ALFA, except that the house offers that comfortable feeling of "physicality" of the investment that can be seen and touched, it must however be considered that in the last 10 years the real estate market has shown a lot of volatility and average prices have gone down.
Unless you are able to buy multiple properties in different areas, it may be a good opportunity to choose properties real estate ETFs, low-cost instruments also listed on Borsa Italiana which allow the saver, with a single "investment", to purchase shares in dozens of real estate companies. Yet once upon a time the belief that real estate is always a good investment opportunity was firmly rooted among people. But is that still the case?
Where does the idea that a home is always a safe investment come from?
In the Italian national culture, investment in real estate has been a milestone in the country's growth from the post-war period to the third millennium. Anyone who invested in real estate in the 50s underwent a strong capital appreciation due to multiple factors:
– The post-World War II stability phase and the economic boom they made sales and real prices increase exponentially;
– The average net income of households grew more intensely than the real estate price curve and this allowed part of the savings to be allocated to it;
– Access to other forms of investment was more difficult (physical holding of gold, securities investments: the first funds date back to the mid-80s).
In some areas of the world the real estate investment phenomenon has been very powerful (as in Spain for example). But then many other factors took over so that a bubble effect has occurred in some countries. Italy is not in this situation, but when the global market goes down, it is unlikely that the already most fragile one will go against the trend, says the report.
Home, what are the risks of the real estate market?
We have already talked about the volatility of the sector, but we must add that too the lack of diversification of the investment can be a problem, but above all the themes of the costs and actual performance.
On the cost side, in addition to the sale and purchase price, real estate investment is not exactly free of cost. Must quantify transaction costs (purchase and sale), including real estate agency commission, registration tax, notary fees. Also there might be restructuring costs, furnishings, insurance up to the costs for a possible mortgage or loan (expenses, interest, practice) and then they will have to be added in the future the maintenance costs of the property.
Not only that - says the report - "there is another more difficult risk to quantify which concerns the relative"illiquidity of the investment”, since it is often difficult to transform the building block into cash in a short time if necessary.
There is the possibility – it is true – of to rent out the property, but it is necessary to be sure of "finding DOC tenants who pay regularly and do not contribute to anticipating the deterioration of our investment".
Real estate ETFs may be a less risky alternative
Real estate therefore remains an absolutely interesting asset, but it must be evaluated with great attention within a well-diversified investment portfolio, says the report. However, in order to at least try to reduce some of the risks, one can think of approaching it with listed and low-cost instruments such as real estate ETFs.
There are several also listed on Borsa Italiana which allow the saver, with a single "investment", to buy shares of dozens of real estate companies (REITS) who carry out their activities in a professional manner, in different geographical areas, different sectors (there is not only the residential sector, but also commercial, logistics, etc..) and which allow at least the reduction of the specific risk (yes buy shares in thousands of properties) also in geographical terms. As an added benefit are theimmediately negotiable.
