Investing in Real Estate: What’s Happening

Investing in Real Estate: What’s Happening

Real estate investment has always been considered a topic of particular interest. Perhaps this is because it evokes thoughts of significant profits or provides a sense of security due to the tangible nature of the acquired asset. However, purchasing property for investment purposes is a complex activity that deserves to be approached with the right awareness. Therefore, let’s analyze the main issues to consider when delving into this fascinating world. First and foremost, understand the real estate sector before proceeding.

The real estate sector, especially at the end of one of the most severe global health and economic crises, had responded by lowering housing prices, a situation that had sparked strong interest among Italians in purchasing property. However, the most recent data indicate rising prices in the market, with positive values also concerning the volume of recorded and projected sales for the latter part of this year. Nonetheless, the outlook remains uncertain due to the current macroeconomic scenario, which also suggests a more cautious approach from credit institutions in granting mortgages, often necessary for Italians to buy property. Beyond the basic framework, some current trends can influence the real estate market, such as the preference for short-term rentals as vacation homes over hotel accommodations, a phenomenon easily linked to the increase in second homes purchased since 2021, even before COVID. Investment expectations can vary depending on the type of investment, whether it is family, personal, or business-related. In the case of family investments, much attention is paid to the needs of the family and the environment in which to live and raise children. On the other hand, for personal investments, it is crucial to clearly define the objectives to be achieved, why, and within what timeframe the entire operation should be optimized. If the real estate investment is business-related, the direction of the investment must be defined, whether it should concern business growth, enhancing an existing asset, or capitalization. These latter cases also differ in terms of timeframe and liquidity destination. Failing to clarify these variables in advance exposes one to the risk of getting lost in the confusion of the real estate market. The wide range of properties available on the market, easily viewed through various real estate portals, gives the illusion of being able to decide how to invest easily… but this is not the case, especially if it concerns rental income from tourism, where the supply does not meet the demand.

Hence the importance of relying on qualified and targeted consultations from industry experts, capable of recognizing expectations and helping to create the best investment project suited to the investor’s needs. After 25 years of experience in the business world, I have understood how important this topic is, extremely delicate due to the risk an investor faces in the absence of a needs analysis. The weight of uncertainty should not be overlooked, considering that around 2.5 billion euros were lost in the first three months of 2023, with hopes of a recovery by the end of the year. The only exception is the Milan market, likely due to the cautious stance of investors driven by the global macroeconomic context.

In the next issue, we will provide numbers and detailed analyses to understand how to navigate this moment of great uncertainty.