For many years, the Swiss market has been considered a safe haven for investors because of the strong value of the franc, the large account surplus and the low inflation rates. However, low inflation rates only mean one thing, low returns.
According to Credit-Suisse, the net yields on real-estate investments in Switzerland range from 2.5 % to 4.5% depending on the project and its location, with the projects leaning towards a 4.5% return incurring a much greater risk.
Residential rental property prices are starting to fall in Switzerland
Swiss real-estate investment is at its high point; however conditions in the rental markets are not as positive. Rents are declining, both for commercial properties and, most recently, on the residential market. “The situation is quite different in many other European markets, where price growth in rents is almost exclusively positive” as said by Credit-Suisse, “Switzerland will also report a decline in rents in 2017; there will be no escaping the supply overhang next year.”
Even though Switzerland House Price Index indicates that Housing prices are still rising, the fact that the rental housing market is starting to decline could be a sign that the real-estate market in Switzerland is starting to show weakness. Last year, used residential rental apartments were down by 1,2% and new residential rental apartments were down by 3,45%.
Spain, a higher yielding opportunity
Despite the safety offered by the Swiss real-estate market, the country does not offer long-term high yields. The value growth of Swiss properties is significantly lower than in Spain:
Spanish property in the biggest cities is currently offering almost a 9% annual value growth versus 2-3% offered by Swiss property.
Credit Suisse economists have forecast that from 2018 onwards, “there will be a demographically-driven weakening in demand in Switzerland, which after a few years could be up to a third lower than it is today”.
Spain on the other hand is being named as one of the top places to invest. In Knight Frank’s latest report: “The Wealth Report 2017”, Spain is ranked as one of the top 10 countries for investing in real-estate, beating Switzerland for the number 6 position.
The Iberian country is recovering fast from the economic crisis and the price of property is starting to show clear signs of recovery. According to lucasfox, “a growing economy, low financing costs, good potential for rental returns and capital appreciation will continue to drive sales throughout 2017 and beyond.”
Property rental in Spain: Increasing yields and high demand
At the moment, buying a property to rent in Spain offers an average gross yield of 4.4% per year. If we add to this the current growth value of the property in 12 months, the number amounts to 8.4% annual gross yield.
In 2007 the tenure of a property in Spain was low. According to data from the Spanish Association of Registrars, the average amount of time since a property was acquired until it was sold was three years and four months (2.675 days).
Now the situation has changed and the owners do not let go of their properties, selling them in average seven years and four months (4.854 days) later than they were acquired.
This drastic change of trend has a clear answer: the rental market. In our country, in the boom years, this market had a weight of between 7% and 9%; and now it represents over a 20%.
Fotocasa report: “X-ray of the property market in Spain 2016 – 2017” states that 80% of the owners managed to rent their properties, but only 56% of the people who looked for a flat or room to rent were able to do so.
The reality is that buying a home for rental is giving record profits in Spain.
This is why Housers is aiming this type of projects, as you can see in our latest property: Malvarrosa, that is set to be rented and sold in approximately 60 months, when it achieves the goal market-price.
Profit from Spain with Housers
At Housers, we offer investors from all over the world the chance to make the most out of their investments by presenting them with low risk, high reward opportunities. Our properties offer on average net yields of 4.04% and the cities in which Housers chooses its opportunities reached an 9% value growth (HPI) in the last twelve months.
To reduce risks, the property opportunities are chosen in high-demand areas such as Madrid and Barcelona, where they are sure to be rented. Having a tangible asset backing up your investments the risks are highly reduced.
Most recently we have opened our offices in Italy, another Southern European country that is showing a promising recovery in the real-estate market. Click here to see our first project in Milano and learn why Housers is aiming at this country as well.
Invest, diversify and get the most out of your money with Housers!