European Union Real Estate: Benefits and Pitfalls

Category Date Nov. 21, 2019
European Union Real Estate: Benefits and Pitfalls

Residents of post-Soviet countries have been peering into the real estate market in Europe for many years. And not only large businessmen – even those who have from 100 thousand euros to invest, consider apartments in the EU as a profitable investment. Why?

Firstly, it is a stable and understandable market. Perhaps its rules seem tough for us, but this is a fee for stability and investment protection.

Secondly, Europe has cheap mortgage. Forget about bank robbery, in the EU rates are affordable not only for millionaires.

Thirdly, there is a culture of long-term rent in Europe. People have lived in a rented apartment for years, providing the owner with a source of income.

Fourth, housing is growing in price, by 7-10 percent annually in central European countries (Czech Republic, Poland). So, after a few years, you can profitably resell the property.

Fifth, a number of EU countries offer a "golden visa": a residence permit in exchange for an investment in real estate from 250 thousand euros. These, for example, are Portugal, Greece, Spain, Malta, Latvia, Cyprus, Bulgaria.

Which options are beneficial?

The fastest-paying type of housing in the EU is resort property. The term return of investment in them is about five years (for a city apartment in Poland, for comparison, this period is from 15 years). At the same time, this is the riskiest investment. Examples of Spain and Bulgaria are still fresh in memory. In the wake of the boom of the 2000s, these countries began to massively develop tourism, build real estate for investment, and in the future – for rent. However, crises have led to the fact that even on Ukrainian ad sites you can find Bulgarian apartments in the resort at ridiculous prices.

Are you surprised by the desire to get rid of an apartment in the EU? But housing in Europe is not only a reliable investment, but also considerable costs for its maintenance. In Spanish resorts, utility bills can reach up to 300 euros per month, and even in the same Bulgaria, apartment maintenance will cost 100-150 euros. To maintain such apartments without filling is an expensive pleasure.

Another thing is the opportunity to obtain a residence permit. It is worth immediately determining that such an investment is unlikely to be profitable in the literal sense. For example, when buying an apartment in Lithuania, you should immediately accept that this is your home, because its commercial use, according to experts, will be unprofitable. Investments in Greece, Portugal, Cyprus can be more profitable. However, the path to the "golden visa" is dotted with pitfalls. The European Commission requires countries to control the origin of funds invested in real estate.

By the way, you could pay attention that in the list of countries that provide "golden visas", there is no UK. It is for the latter reason. A huge number of opaque investors forced Her Majesty’s government to close the issue of “golden visas”.

You are hardly a corrupt oligarch, but investing in a European residence permit, you may find that the income that is completely legal by our standards for Europeans may look dubious.

For all the problems mentioned above, there is one general solution: you need agent assistance. Competent lawyers, brokers, and simply – your “eyes and ears” in the EU. They will help you to avoid discrepancies in legislation, unnecessary risks and to understand the local subtleties.

The simplest example: did you know that in the EU you cannot buy an apartment for cash? You need a bank account. Moreover, a non-resident of the country will be forced to explain the origin of the funds in the account. This procedure is greatly simplified if you are advised by a lawyer on deposit issues.

And finally – advice on the experience of our agency.

Central European countries are the best starting investment for those who want to gradually develop the EU housing market. Slavic mentality, low prices (1.5 – 2 times lower compared to the eurozone), high level of service and infrastructure, the pressure of housing shortages on prices... There are many reasons to invest in Czech and Polish real estate. In addition, in these countries you get the opportunity to combine investments in resort and ordinary residential real estate. Karlovy Vary is both a historic powerful spa and a dynamic center of modern life. You get a thousand-year history and a city with growing German investments in logistics and production.