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Along with the growth of the real estate market potential sellers are more and more hoping for the return of the fat years and revalue their properties, by setting inadequately high prices, points out Ms Liene Meldere, Investment Advisor of the Commercial Space Sales and Lease Department of "ARCO REAL ESTATE".
The above-mentioned trend is observed in the segment of multi-storey buildings (residential space, offices) and lands for commercial building, where the owner often determined the price not on the basis of economic calculations and the potential economic return for the potential investor, but based only on certain criteria known only to him/her, including funds invested before the crisis, historical value or the potential future value of the property in the case of erection of buildings on the land.
„The crisis in the real estate sector is over, but it is stagnating, and though the growth of the market will undoubtedly follow, the owners of the building lands, as well as office and residential buildings most often overestimate their property. Everyone hopes for a mysterious investor, who is not only supernaturally rich, but also is a fool who buys property in Latvia without considering the price or the economic benefits, emphasizes the specialist of "ARCO REAL ESTATE".
Also Ms L. Meldere adds that there are also impulse purchases in the real estate market, but such cases are reported only in transactions with such investment objects that have cultural and historical value and a particularly aesthetic facade, rather than land plots intended for building or properties to be reconstructed.
The spokeswoman of "ARCO REAL ESTATE" specifies that any investor who wants to invest in real estate, before buying it calculates the necessary additional investments in rearrangement of the property, as well as the potential cash flow, which depends on both the existing city building regulations for the specific plot of land and on the property location and market forecasts.
„Sooner or later the real price of each property is determined, so that the question is: how long the process of sale of the property will last and whether the owner can afford to maintain the property during the sales period. If you fail to invest adequate funds in order to bring the property in order today, would not it lead to a situation where the loss exceeds benefits?", rhetorically asks the expert.
To prevent occurrence of such situations, "ARCO REAL ESTATE" offers to perform a full economic analysis of the property before each transaction and evaluate the potential benefits and risks of the investment, and regarding a land plot intended for building to determine the possible building volumes, construction costs and value after the sale thereof taking into consideration the costs of re-construction of buildings already existing on the land plot, as well as to evaluate the most advantageous type of use of the property in the future, basing on both market trends and strict economic calculations.
Additional information:
Liene Meldere
ARCO REAL ESTATE Investment Advisor
Commercial Space Sales and Lease Department
Mob. | 2911 1232
Liene Meldere | business consultant and expert of investment projects, has been working in the field of business consulting since May 2006. Activities include economic analyses and financial projections, advising both buyers and sellers on the best property or business development scenario, the potential cash flow and return in the future.
10.06.2014.