A chance for Investors
establishes condominium ownership and the subsequent sale of individual units is popular, but offers earnings opportunities that are rarely seen in this form. The weak new construction activity pro- vides additional protection for apartment prices. At the same time, apartments in older buildings are available for inspection and immediate occupancy by potential buyers. This aspect is becoming more iGiven the above factors, properties in mid- priced locations with few new construction projects are generally interesting. This is especially true for districts west of the Several factors support this position: The challenging economic situation has crea- ted a climate of uncertainty among many investors, while low-income households are turning to affordable ownership as an alternative to high rents. That reinforces the demand for the almost forgotten “DIY hits”. Another factor in support of this trend is the cost of renovation, which has risen substantially as a result of the higher prices for subcontractor services. Unreno- vated apartments give the buyers comple- te freedom to design and renovate to meet their own needs.
beltway with their large stock of 19th Cen- tury buildings. New construction activity is particularly slow in these areas and is a contrast to the strong upward trend in demand, also because rents have risen so dramatically that the purchase of an apart- ment has again become the financially best option for broader target groups.
factor. An additional issue is the growing government intervention in existing rental agreements, which is reflected in a flight by investors as well as renters. And last but not least, the present market weakness is also a result of the tense financial situation surroanding previously active market participants.
Even so, the growing difference between apartment and investment property prices creates soand investment opportunities. The separate-and-sell business model that
High gloss isn’t always necessary The sale of apartments in need of renova- tion is an interesting alternative for invest- ment property owners.
The costs for a solid apartment renovation generally range from 1,500 to 2,000 Euros/sqm and up to 2,000 Euros/sqm or more for expensive modernisation to meet top standards. A successful sale, in any event, requires common areas that are in good condition. In contrast, investments in the individual apartments should be preceded by an exact calculation to determine whether renovation is justified by a higher return, especially given the potentially longer marketing period.
For investment property owners and project developers, the sale of modern or high-quality renovated units was, for many years, the best way to maximise earnings. Other options have since become more appealing because the sale of unrenova- ted units is not only less time-intensive and less expensive but is also the most profitable option in many cases.
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