Is it a good Idea to Invest in Small-sized apartments in Russia and abroad?

Is it a good Idea to Invest in Small-sized apartments in Russia and abroad?

Small apartments are traditionally in demand. At the same time, they are increasingly being acquired not as housing for themselves, but rather as an object for investment. To what extent the investment will meet the investor’s expectations will largely depend on the country in which he plans to choose an apartment.

Micro-apartments in Europe

In European countries, apartments of 17-35 m² (micro-apartments) are gaining big popularity. Such housing is most often furnished, includes a bathroom with shower, small kitchen, and a bedroom. The lack of space is compensated by the fact that usually, the building (apartment hotel) has a room with storage booths, public recreation areas, and laundry facilities. Investors acquire micro-apartments for renting to students, seconded workers and seasonal workers, tenants without a family or tourists.

The market for micro-apartments is most developed in the UK and Germany. These two countries account for 86% of all transactions. Behind them are France and the Netherlands. The average yield of micro-apartments in the UK and Germany is 4-6% per annum. In recent years, student apartments have become increasingly popular in the UK. At a very favorable price, like, for example, this apartment in the center of Liverpool, they promise a record yield for both the UK and Western Europe – 8-8.5%!

Small-sized Apartments in Russia

At the new buildings market in Moscow, out of 181 projects, only in 44 to buyers are offered small apartments (less than 35 m²). More than half of them (64%) are concentrated in the zone from the Moscow Ring Road to the Third Transport Ring. Currently, apartments with an area of ​​less than 35 m² account for 18% of the total supply (2.1 thousand lots).

At the same time, the bulk of the supply is implemented in comfort-class projects (48.2%), the economy segment is in second place (38.6%), and business class is the third (12.8%). In the premium segment projects, only 0.4% of lots are represented. Micro-apartments are in great demand among the buyers – they account for 33% of transactions under equity participation agreements. Then there are lots of 35-45 m² apartments (21% of sales).

What should an Investor Take into Account?

Before deciding on the purchase of small housing, you need to choose the country and its location in it. For example, when looking for a small apartment for investment in Turkey, remember that you can get the most out of Istanbul, and not on the tourist coast of Antalya.

Consider profitability and new trends in the real estate market. Today more than 50% of investors are interested in profitable micro-apartments in Germany. Do not forget about the possibility of lending! In many countries of the world, foreign investors can rely on quite attractive mortgage conditions.

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