Investing in real estate is a strategic way of building assets, with the real estate market being a profitable one.
The prospect of earning a return on investment (ROI) is generally good since properties tend to appreciate instead of depreciating in value. And even if certain uncontrollable factors cause your property’s value to decrease, you have the option to keep it, sell it, or explore other real estate investment strategies—whichever works for you.
However, watching out for trends and being mindful of the latest strategies can point you in the right direction to invest and maximize your assets. Today, the real estate industry continues to evolve, with COVID-19 creating an impact in real estate market trends, including the consumers’ buying and investment behavior.
In this article, let us guide you through emerging trends in the real estate space, as well as strategies to navigate the current market.
Here are five of the emerging real estate market trends to watch out for:
1. Millennials will make up the majority of the buyer market
Personal milestones occur at various life stages. For millennials, who are now in the 25–40 age bracket, this is an opportune time to build their home. They’re planning for the future using the financial resources they’re getting from their job or business venture. They realize that a home is a physical asset that won’t disappear on them like stocks do.
Millennials may also be motivated to buy a home at this stage so that it will be paid off before they get to retirement, allowing them to enjoy life better and longer.
Considering that about 74 million millennials are ready to enter the real estate market by 2021, this demographic represents a huge group of homebuyers in the next few years.
2. A recession could slow the growth of real estate prices
Sad as it is, the World Bank forecasts that global economies may be facing the worst recession since World War II. In a recession where there’s negative economic growth, you can expect commodity prices to fall, or at least go up more slowly.
This is the same case for real estate—prices in the home buying market are less competitive today than last year when home prices went up by as much as 11% in certain markets. This means real estate investors and homebuyers can negotiate for better prices in the current market.
However, it’s worth noting that the values of properties won’t go down in high-yield areas like CBDs, thus this is the best time to invest if you have money. You’ll find better deals and have investments with high resiliency.
3. There will be an increase in the importance of sustainability
Sustainability is defined as “meeting our own needs without compromising the ability of future generations to meet their own needs.” And as one of the pillars for a sustainable future, environmental awareness is becoming part and parcel of many property developments.
Nature-friendly residential structures, including green buildings, nature condos, solar-powered homes, and the like, are especially appealing to young homebuyers who aspire for a healthy lifestyle in their living space.
4. Progressive cities anticipate a high demand for luxury homes
Another trend that’s reshaping real estate is the growing demand for luxury homes in progressive communities. These are booming cities in the metro where diverse, creative people live the life they want.
Amid the COVID-19 crisis, lifestyle changes have also risen to the surface. People aren’t spending a lot of time outside of their homes, most likely out of necessity than choice. They’re also spending less on customary expenses like travel or recreation. Instead, many people have channeled their resources and energy toward renovating their homes during the past months under lockdown.
It only shows that, when given the opportunity to spend money, people will choose to invest in building or recreating a beautiful home that can make them feel happy and comfortable.
5. Property amenities are adding value to real estate investments
Homeowners have always wanted access to great amenities, using it as one of the yardsticks in determining if a property is worth investing in.
Given the current situation, where a home is the most important place for everyone, property amenities like a private or communal garden, pool, gym, rooftop, and so on are considered essential to improving the quality of life. They can help turn stay-at-home periods into a healthier experience by considering the physical, social, mental, and emotional well-being of a person.
5 Top Strategies in Real Estate Investment
The best investment strategies for your next real estate purchase could be any one of the following:
1. Rental properties. Renting is one way to make money out of your real estate investment. With this strategy, you can use your monthly rental income to multiply your cash flow and diversify your portfolio faster. To achieve this, consider renting out separate rooms in the property to multiple tenants instead of renting the whole property to a single tenant or household.
2. Fix and flip. In real estate, flipping a house means buying a property and then quickly selling it to gain profit after adding aesthetic touches or modifying minor design elements. However, you need to remember that the real estate market can change at any time, so you have to sell the property as quickly as possible.
3. Accommodation properties. Accommodation properties are similar to rental properties, except that operating a guesthouse or a hotel-like accommodation requires a more hands-on approach. Aside from entertaining queries about reservations or bookings, you need to be present on-site for daily housekeeping, meal preparations, and the like. If you have a passion for customer service while making money on the side, this is a great option.
4. Real estate investment trusts. Investing in REITs means you won’t be owning or managing property but instead, you’ll be pooling your money with funds from other investors. The pooled funds will then be used by a company that handles REITs to buy properties for rent. As an investment product, REITs can help grow your real estate investment portfolio and give you ROI, especially if you combine it with higher-earning investments.
5. Real estate wholesaling. Just like in REITs, you’re not actually buying a property. Instead, you’ll be putting a property that’s on sale in the market to match it with potential homebuyers. You also need to establish a network of property sellers, buyers, and investors. Wholesaling allows you to earn profit by assigning the contract to an investor or a buyer at a higher price than with the seller.
Key Takeaways
While the overall economic situation isn’t all rosy right now, the real estate market is holding up quite well. Investing now is a smart move if you are confident that you can afford it or generate a positive cash flow out of it.
Are you in the market for real estate investment opportunities in the Philippines? Botanika Nature Residences by Filigree specializes in high-end condominiums in the south of the Metro. Contact us to start your investment property search.