Putting your money in real estate is a safe investment! But not all properties are equally valuable and do not bring the same return… The real-estate market, which is linked to economic circumstances, can also vary from one region to another. Here’s a brief overview in four expert tips.
1. Which residential property is the most profitable today?
These days, traditional apartments and buildings intended for letting are the properties that record the best profitability rates. Private investors are usually offered student housing, service residences or rest homes sold by the unit and run by an operator at lower rates of return. In order to further boost the return on traditional apartments or houses, you could also think about co-tenancies, furnished properties, short-term leases, etc., if the location is suitable.
2. What is the Belgian rental market like?
The rental market is doing fairly well at the moment and this is expected to continue. In fact, more and more young people are continuing to rent for longer. Either because they are not financially in a position to purchase a property or because they want to be able to remain ‘flexible’ and move easily. Added to that is the increasing number of elderly people who are leaving their homes and moving to an apartment in the city, without necessarily wanting to be owners again.
3. What can you hope for in terms of return?
Over a five-year period, the experts talk about a gross annual return of approximately 4% (+/- 3% net). Compared with the rate obtained on a savings account or a bond, these are certainly substantial figures. Not to mention a future capital gain which in our opinion should at least keep up with inflation.
For your return, think about investing in renovating your property and managing it dynamically. This will enable you to secure your rental income to the full and potentially increase it.
The table below summarises the gross/net returns that you can hope to obtain depending on the type of property.
If you wish to delegate the management, the fees charged will have a direct impact on your net profitability. These fees will usually increase in line with the degree of complexity of the property to be managed, widening the gap between the gross and net return more significantly.
4. Which are the most attractive cities?
Thanks to their proximity to numerous services such as schools, shops, leisure facilities and public transport, the experts expect the population of major cities to grow. Demographic growth necessarily means an increase in demand and hence prices. So if you are considering an investment, it’s a good idea to favour developing cities such as Antwerp, Brussels, Ghent, Mechelen or even Ostend. To make management easier, it is always preferable to purchase in one of these cities that is closest to you.