In Belgium, Engel & Völkers, the property services expert, has an expert understanding of the market of each locality. Real estate buying opportunities abound, but to invest wisely, some tips are needed to optimise potential real estate yield.
Existing or a new-build? An ongoing dilemma
Traditionally, the purchase of an existing property remains a safe bet. Largely located in city centres or neighbourhoods with an established reputation, in a relatively stable real estate market, these properties generate easily estimable returns. However, although purchase prices remain lower than purchase costs of new-builds, in the long run, condominium fees and the amount of interior maintenance will weigh more heavily on your budget, so old houses are more likely to have a lower return.
Investment in new real estate represents a better compromise in terms of energy efficiency, for example, which leads to lower heating bills. In addition, these homes can be let far more easily because they are up to date. New houses are better investments for a homeowner interested in the rental market.
Anticipating the future in developing neighbourhoods
The dream of many investors is to buy a property in popular neighbourhoods, usually close to major cities or businesses, or conversely in quiet suburban areas. This shared ambition should not make you miss out on future real estate opportunities, in neighbourhoods are expected to be redeveloped in the near future or will see the establishment of new shops or urban facilities nearby.
The location of a property is important, yet the image of a street or a section of a city can change over time. Engel & Völkers keep an active watch throughout Belgium on up-and-coming neighbourhoods with strong development potential: close to the construction of new buildings, such as future public transport lines, there are rare gems. In these areas of the city, the prices are still affordable, but the development of the district could bring a nice profit after the resale of your property.
Calculate the yield of your property
In the short and long-term, anticipate how much your property will earn you. The yield is the result of the deduction of rents against the total cost paid for the acquisition (including registration fees, notary fees and any sums of work disbursed). It is considered that a yield of 4 to 5% is already a very good return on your investment.
Engel & Völkers oversees your investment over time. In Belgium, a capital gain tax of 16.7% applies to the difference between the purchase price and resale price, if you resell within 5 years of your acquisition. It is, therefore, better to invest in a sustainable purchase, especially since the tax on capital gains is increased by 5% (for each year since the acquisition) and by 25% (if resold in the first year). Investors, therefore, are better off selecting a property that they intend to keep for a long time.