Omar Montes, the third most listened to artist in Spain in the entire year 2021 according to Spotify data, released one of the first financial advice for this year. As soon as the chimes of New Year’s Eve ended, the singer took the microphone to recommend investing in parking spaces.
“I would like to say that you are all very happy, that you all take care of the family and that invest in gold to protect yourself from inflation, and in parking spaces“. How much reason is there in the words of the artist from Madrid? According to several real estate experts consulted by the sixth, does not seem to be very misguided in his words.
Susana Rodríguez, General Director of Business at Savills Aguirre Newman, affirms that “doesn’t lack a certain reason”. The expert, in words for the aforementioned medium, considers that at this time the real estate market is in a good moment. The reason is that there is a lot of capital, both institutional (investment funds, pensions or insurance companies) and private.
High profitability
The first reason to commit to parking spaces is offered by Solvia’s business director, Ernesto Ferrer-Bonsoms. “The parking restrictions in city centers, the decrease in free places or the increased use of private transport for routine journeys have resulted in an increase in rental demand,” he indicates. It is, as the expert explains, a good time to buy and rent later. “It is an excellent investment bet“.
The profitability of these assets has been positive in recent years, and experts believe that it will continue to do so in 2022. “According to our latest profitability report, corresponding to the year 2021, the garages closed the year with a gross profitability of 6%”, says Francisco Iñareta, spokesman for Idealista. A positive figure, although slightly lower than that of 2020, when it reached 6.9%. However, for this year the forecasts point to it reaching 7.5% profitability. A remarkable figure compared to the State bonds that Spain has just issued for ten years, with a yield of 1%.
The year of garage spaces
As Ferrer-Bonsoms explains, garages are an asset “that have always awakened a lot of interest among investors“. Something that has been increasing in recent months. “The purchase value has gone down, but demand and rental prices have risen, which makes it an excellent investment option”, he assures, confirming that the return will rise in the coming months as a result of the rental demand.
One of the characteristics, for which it is an interesting asset, is that does not have the complexity that others have, such as offices, hotels or shopping malls. In turn, the initial investment is much less compared to other properties, so on many occasions financing is not needed. Other positive aspects are low maintenance costs, high rental demand if you choose a good area and infrequent defaults.
On the other hand, the law is more flexible with these rentals, since they are not subject to Urban lease law. In the event, it will be easier to sell and convert the asset back into cash. The main problem, according to the director of the Real Estate Investment Baking area, Carlos de la Torre, is “the lack of liquidity at the time of sale, since the number of investors focused on these assets is much lower than in other real estate segments”.
The effect of the pandemic
After passing the worst part of the pandemic, experts now consider that it is the ideal time to invest. First of all, there is already a certain recovery, while consumers have discovered new needs after confinement, says Cristina Arias, director of the Tinsa Studies Service. Also, with the pandemic there is a certain reluctant to use public transport, especially in the big cities, where it is overcrowded. As a consequence, the use of private vehicles increases. That, and the complexities to park in depending on which zones, make them an interesting asset.
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