Listed property as an investment
Listed property is not only interesting as a possible tax saving scheme: it also has many other features which can make it an attractive investment.
A long-term capital investment
Property mainly serves as an investment with a long-term horizon which provides the owner with regular income. This means that the investment can be planned with a far-reaching perspective into the future, and involves only a comparatively low speculative risk. A property is purchased once and kept in the portfolio to bring in revenue. If the property is sold after a certain period of time, there is potential for profit through the property increasing in value.
Listed properties are in advantageous locations
One of the most important criteria for estimating the sustainable value and rentability of a property is its location. Listed properties are often found in popular city centre locations characterised by high rent prices. These areas are particularly sought-after as they are in direct proximity to the cultural life and economic heart of the city. In addition, the infrastructure that is in place in these areas is of importance to many people. Tenants are prepared to pay higher rent for a flat in the city centre. Furthermore, the location guarantees a high demand, meaning empty properties are easily avoided. Not only do lots of working people want to live near to their office in the city centre to avoid a long commute, but the older portion of society also hold the area in high regard thanks to the many medical facilities and recreational activities available.
Security- a key issue
Lots of investors look for a secure investment without a high risk of loss. In this sense, listed property is a recommendable investment, as it continuously produces income from rent. As well as this, it is clearly more recoverable than other products on the finance market, as the value of property is not subject to the daily fluctuations of the stock exchanges. Even the country’s economic situation has no real impact on property prices. In fact, it can be seen that it is particularly in times of economic crisis that investors invest their money primarily in property, leading in turn to an increase in demand.
Demand is high for listed properties
Today’s tenants are often looking for more than just a flat with a practical layout in a good location. The particular charm of historical buildings makes them more attractive places to live and is thus a convincing argument for renting. A large majority of tenants favour renovated old buildings over new builds, as the older existing buildings have their own character and, more often than not, have a generously designed layout. The quality of listed properties means that in many areas, the demand is simply much higher than what is on offer. This once again gives property owners the possibility to offer the property at a higher than normal rental price for the area.
The rarity value of listed properties
Only a small proportion of existing buildings in Germany are listed. As a result, these properties are rarely on the market and have correspondingly high market values. Another value enhancing effect is that listed properties, due to their advantages, are very coveted amongst investors and can be sold more quickly than other properties on the market. The rarity, then, is a factor that can have positive effects on potential for increased value.
Protection from the threat of inflation
While money in the bank account and other capital investments are strongly dependent on inflation, listed property can offer protection against inflation. As a material asset, property has the advantage that its value is not substantially affected by inflation. Rather, it can be seen that inflation can also lead to higher rent and purchasing prices.
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