Property Investment. Is it the Best Inflation Guard?

14/ 07

Property investments are considered to be traditionally secure and old approved method of capital saving and growth (leasing). However, today, general economic volatility creates certain problems, which have to be considered.

Signs of current turbulence are obvious to everyone: foreign exchange fluctuations, price hikes, complicated political environment, etc.

“Many investors are trying to increase profitability, whereas nowadays we meet more and more people who just want to save their capital. This is not as easy as it may seem. Holding capital in currency exposes this capital to a major risk of depreciation, whereas there is no risk of depreciation for property; seasonal price fluctuations are possible but, as a rule, they do not affect it materially. Summarizing the above, we may come to a conclusion that out of all popular investment tools – precious metals, bank deposits, investments and shares – property is the most promising and reliable source for investment of capital”, says Dmitry Vlasov, RDI commercial director.

The thing is that risks here are minimized; as a rule, in a year, prices for apartments grow by 15% in average. Buying property is more reliable than expecting profit from investments into banks or into foundations considering inflation, depreciation, or even economic sanctions, which is especially important lately.

Correct solution is to invest money into liquid property of active countryside real estate market, which experiences explosive growth currently.

For instance, cost of a square meter in “Novo-Molokovo” Residential Complex grew by more than 20% in the last year, in “Yuzhnaya Dolina” (Southern Valley) architectural suburb by almost 15%, whereas the inflation rate was 7%. Hence, property, in contrast to, for example, gold (which became cheaper by 10% in the last year), shows consistent growth, which withstands even the severe inflation resulting from the global financial crisis.

Thus, it is possible to not only save your money but also grow it; such investments will not bring incredible or superfast profitability, but secure money from depreciation, which is extremely important in the current economic situation when ruble looks down, and such world currencies as Euro and dollar are extremely volatile.