Lesson from Ukraine: Not every hot investment destination is also smart

The war in Ukraine has taught us that despite the temptation to exotic investment destinations, government stability and currency stability should be a top priority when it comes to real estate investing. So why should you pay attention from now on?

Dmitry Rosin, guest columnist

29/03/2022

Tuesday, 29 March 2022, 08:58

• Share on Facebook

• Share on WhatsApp

• Share on Twitter

• Share on Email

• Share on general

• Comments

  Comments

Thousands of Israelis have flocked in recent years to real estate investment opportunities in Eastern European countries in general and Ukraine in particular, thanks to the high yields "on paper" and the optimism about the investment's ability to generate quick profits. These assets.

The severe crisis that erupted in Eastern Europe is shaking the world of investors who are watching with bridal eyes and high alertness in what is happening in Ukraine, when a heavy cloud of uncertainty hovers over the fate of their investment - in the near future and in general. In a solid investment channel that is supposed to yield a steady return, riders have found themselves with a shaky speed on the emotional roller coaster that the capital market usually produces for its investors.

This complex state of affairs has sharpened the great weight that must be given to the choice of destination for real estate investments overseas, while addressing all aspects and scenarios for the future of the investment.

More on Walla!

Uncle Haim and DIY videos: new activities for children on the Israel Railways

In collaboration with Israel Railways

Who would have believed that this would be the case?

The bombed-out Kyiv (Photo: Walla !, Meirav Cohen)

The first issue that needs to be considered and sharpened in the face of recent events is the political stability, or geopolitical, that characterizes the region / country in which the investment is intended to be made.

In this context, although markets are "emerging" appealing to many real estate investors in light of the impressive one-way growth trend that characterizes them, and the great potential inherent in them, the viability and stability of investment in macro terms such as the stability of the country must be examined. A capitalist awakening of the region destined for investment is at the stage of early birth cords, or are the conditions really ripe to make deals that are currently burying the money in the fertile ground in the hope that it will bear fruit later.

There is no doubt that the Eastern European market has come a long way in approaching the West and its capitalist values ​​in recent years, and as such has also winked at investors.

However, a democracy that is in historical terms "in its infancy" may turn out to be a deceptive investment destination.

Investing in real estate in the United States, on the other hand, has proven itself over the years and even decades, given the simple fact that in economic contexts, both parties - Democratic and Republican alike - are democratic and capitalist in nature and will do much to encourage and attract foreign investment.

In this respect, elections or a change of government in the land of endless possibilities will leave investors in a similar situation, whatever it may be.

Another issue that deserves careful consideration is legal stability.

In the US, for example, (unlike in Israel and many other places) the rental market is regulated in all legal respects. There is meticulous regulation and legislation recognizing the rights of the property owner - on the property Therefore, when purchasing a property for investment and rent, you know what to expect when the tenant enters and leaves the property.

Still very stable.

Florida, USA (Photo: PR)

Dmitry Rosin (Photo: Michal Revivo)

Aside from aspects of political stability, of course a core issue of crucial importance to investors is economic stability.

The currency in which the transactions are made is not just a currency, but a critical factor in examining the viability of the investment, the opportunities and the risks inherent in it.

Thus, for example, the US dollar is the dominant currency in the world and will continue, according to forecasts, to be the dominant and dominant currency in the coming decades.

And finally, high and predictable returns are the key to success.

Current yields in the US are high relative to the country, but more importantly, they are easier to measure and predict.

Along with choosing the right location for the investment, while minimizing risks and maximizing opportunities, it is also important to make an adjustment between the nature of the investment - the place where it is made.

Income-producing commercial real estate, investment in private homes, investment in rental complexes, etc., keep in mind that different models of residence or rent are common in different regions of the world, and these models have a far-reaching effect on the ability to enjoy the fruits of investment.

For example, investing in residential real estate can benefit from tough demand, and these are rising at least at a pace and volume appropriate to birth or immigration - a strong area in the US market. Roof over their heads - a basic consumer product.

And finally, false promises of fantasy returns are a red flag.

Keep in mind that in the real estate investment world, there is no one who is as smart as someone with experience. Parameters such as transparency, reliability, and true partnership in risk-taking (skin in the game) should be given central importance. The

• Real Estate

• Sand

Tags

• Real Estate