Should I buy a distressed property in the eurozone?

17.05.2012 15:45
Articles about real estate | Should I buy a distressed property in the eurozone? Prices for residential and resort property in the most problematic and weak economies of the eurozone - Greece, Portugal, Spain, Italy, Cyprus - in the coming year will be adjusted downward, according to respondents, "Vedomosti" experts. But the real price collapse is possible only in the case of the most negative scenario - the collapse of the euro area.

Over the past year, according to the company Knight Frank, prices for residential and resort property in Cyprus fell by 9.5% in Spain - 6.8%, in Greece - 5.9%, Portugal - 5.1 %, in Italy - 2.3%. In the short term, prices in these countries can continue to adjust downward, but it will be small, the president of real estate agency Gordon Rock Stanislav Singel.

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"Euro buried early. Countries with strong economies - Germany, France and Austria - will not allow the collapse of the monetary union. Chance of a controlled withdrawal of weak economies, such as Greece and Portugal, or in extreme cases of Spain and Italy from the euro area ", - said Singel. According to him, only for the development of the negative scenario - the collapse of the euro area - is expected this fall in property prices in the countries of southern Europe. "Then the question will arise about the credibility of the economies of these countries as a whole. Significantly worsen their macro-economic indicators, unemployment will rise, be subject to adjustment rates, rating agencies will review credit ratings of these countries, which are oriented including large institutional investors. To invest in real estate these states it will be interesting. Banks will no longer provide funding for the construction sector. If the event will actually develop in the negative scenario, then the property will inevitably fall in the price "- he adds, but does not undertake to predict the depth of the fall.

Igor Indriksons, managing real estate investments, the founder of the consulting portal, includes Greece and Spain in the top 10 countries, most dangerous to invest in Italy in 2012, is also faced with serious challenges in the economy, this list is not included. "There are strict rules for coastal development have not led to such a notorious consequences, as in Spain, where the state did not control the issuance of building permits. In addition, before the crisis, the prices are not growing as fast as the rest of Europe. Since the beginning of the crisis is real estate prices dropped by 20%, whereas in most countries, southern Europe, the fall in prices over the same period was 30%, "- says Indriksons. Not included in the list of dangerous countries and Portugal, where from 1996 to 2006 house price growth has not exceeded 10% and there was a building boom, as in neighboring Spain, where between 1996 and 2006 prices increased by 110%.

According to the Singel, in consideration of the real estate markets can be divided into wealthy and disadvantaged regions. For example, in Italy are very different prices in the south and north. In the southern region of Calabria for the unbuilt € 60-70 thousand you can buy a two-room apartment. "However, this property will be" a gift for life ", which will undertake to sell every realtor" - adds Singel. At the same time in the north of the country prices of apartments are a good investment quality (at ski resorts in northern Italy, on the lakes, in cities such as Venice) from just € 250 thousand similar situation in Spain, where a relatively stable real estate markets in Madrid and Barcelona, Costa Brava and the disadvantaged - in Murcia, Costa Blanca and Costa Dorada. In the prestigious Marbella hard to find apartments for € 300 thousand, but in the desert Costa Blanca for this amount can keep an eye on a house, said Singel.

With regard to Greece, there should not look to the region, and specifically for the project. Can be dangerous to invest in apartment complexes in the primary market with unprepared infrastructure. "The crisis in the country to last a long time, and probably it never will be built. This is a deliberate illiquid "- says Singel. According to him, now in Greece, you can expect a discount of 15% of mortgage defaults in the bid price sellers. Budget-bedroom apartment, for example, in Crete, on average can cost € 100-150 thousand

Russian investors in distressed real estate in the euro-zone countries have suffered as a result of falling prices, do not repeat their mistakes, warns Indriksons. At the same time, those who invested in real estate in France, Austria, Germany, have not lost anything, because it is tightly regulated by the States markets. At Knight Frank added to this list of Switzerland, where last year prices rose by 5.5%. According to the company, the increase in property prices has also been observed in France - 4.3%, Austria - 5.1% and Germany - 5.4%.
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