Real Estate in Spain: a Safe House for Investors
Unlike stocks and bonds, real estate exists in the real world. While financial analysts and market experts are discussing in what form the recovery of the Spanish economy after the coronavirus can follow, relying on letters such as V, U and W to trace possible trajectories in the coming months and years, one letter is missing in their alphabets : N - for real estate.
Equities, mutual funds and long-term bonds have traditionally been the lion's share of many personal investment strategies, attracting hard-earned savings from most people who plan for the future, no matter how uncertain it may be. But experienced investors know that the best and most reliable investment in case the unthinkable happens is real estate investment.
As COVID-19 shows, this unthinkable can happen too quickly. The spread of this pandemic led to the fact that international stock markets began to suffer from negative symptoms, while indices and individual investors suffered heavy losses. Real estate markets also suffered, as some of them, including Spain, were forced to stop activity at the moment. But a number of key differences between stocks and real estate make the latter a much safer investment over time.
While it is not easy to find financial institutions that are ready to allow you to borrow money to buy shares, it is quite easy to purchase property in Spain, having a small part of the required amount to buy it. Just go to the bank. Mortgages today allow you to get a loan up to 80% of the value of the property and pay for a long period at historically low interest rates.
Some analysts predict that after the worst-case scenario of the coronavirus pandemic has passed and the economy has begun to recover around the world, inflation could skyrocket, because, among other reasons, rising demand from international consumers leads to higher prices. Bonds are considered the most at risk due to inflationary trends, since the promise of security often hides low guaranteed returns, which over time affect the purchasing power of investors.
On the other hand, real estate proved to be a reliable protection against inflation. Real estate that provides rental income can be tied to market rates, so when rental prices rise, your income follows this example. While real estate value does fluctuate in the short term,
in the long run, real estate investments are generally more profitable than even the most effective stocks over time.
Unlike stocks and bonds, property exists in the real world. This means that you can enjoy it personally, you can constantly live and spend your vacation and leisure, you can rent it to others. In any case, you get a guaranteed return on your investment. And over time, the value of these investments will only grow. If you are lucky enough to have a house on the coast of Spain, you already know how profitable real estate investments can be here, in the long run, as well as every day in this beautiful sunny country.