Investment opportunities in European real estate

4 mins read

A significant investor risk for landlords is when tenants don’t pay. This is because the system depends on tenants paying rent in full and on time.

Serious problems can arise for all when tenants cannot pay.

France and Italy have laws that are significantly favourable to the tenant.

France has rules that can prevent the eviction of non-paying tenants from residential properties during the winter months.

On the other hand, the UK and Monaco have more balanced rules allowing an easier resolution to this situation.

A country with laws balanced between landlords and tenants will attract more investment into real estate, and this is what every country should be trying to achieve.

Most prudent investors buy existing income-producing buildings. In my opinion, property development is the riskiest part of any real estate investment.

And if you are developing away from your own country, the risk is even higher, and you will need the right local team.

It can be the most rewarding of any property sector, but the timing has to be right.

High-interest rates, recession, war, change of government, or well-known international banks like Lehman Brothers or now Credit Suisse going bust, can easily create problems and change the mood for everyone.

This is why you need to mitigate your risk as best as you can by having other sources of income.

I feel for those starting out with no help because I know what it is like; I could not mitigate my risk when I first started.

I had to take many calculated risks with my developments to create a solid, stable income.

Now, I can be the best buyer of real estate in the world as I can move very quickly if it is the right deal.

And, if I get a fantastic price to sell a building, I will sell.

However, I am the worst property seller because I become miserable and depressed, and most people know to stay away from me.

But I do feel better after the profit has been reinvested again in more real estate.

It does not matter about the size of your company.

Once you create trust with the banks, and they know you are serious and perform regardless of the risks, they will be there to support you.

After all, the banks are there to make money!

When you have the full support of your bankers, the only good problem you have is finding the right deals.

Rule number one; don’t let your banks down.

Rule number two, don’t forget Rule number one. Don’t let your banks down!

When dealing with banks, negotiate as best as you can and always stick to the agreement.

They are a key to your success.

Planning rules

Good planning rules – and following those rules – is good for everyone; the quality and safety of structures improve, and this benefits both the construction sector and the wider economy.

The construction industry is the largest industrial employer in Europe, employing almost 7% of the workforce, over 4 million people and with an annual turnover of almost €1.7 trillion.

The planning rules on developments are the approvals required to new-build or renovate a building.

Each country has their own minimum building standards, but the planning process can vary from country to country.

In Monaco, applying for planning permission for new buildings is strictly controlled and permission for internal renovations can be time-consuming.

In France, the planning process is complex but has become easier to navigate since the end of 2021 with the introduction of a new online application system.

In Italy, planning permission can be costly and time-consuming.

However, the government has introduced a fast-track system where permission is not required if the work is ‘permitted development’.

Local expertise will definitely be needed.

In the UK, planning permission rules are thorough, with an online portal and information to assist developers through the process.

My experience is that planning permission in the UK is a more cost-effective and efficient process than elsewhere.

More property investors will be attracted to any country through an efficient planning process with clear rules.

Let this be a lesson for a government that wants to increase GDP and attract investment in any sector by making processes efficient for investors.

You only have to go to the UK now with all the cranes and the buildings going up; then you will see the reality.

Russia and Ukraine

If you want to make some safe money, go to countries with decorum and a good rule of law.

If you want to make some risky money, invest in Ukraine, or depending on your scruples, ethics, and risk appetite, Russia.

At some point, the war will end. But, if you decide this is your business strategy, GOOD LUCK! You are going to need it!

Northern Cyprus

The illegally-occupied part of Cyprus by Turkey is not recognised internationally except by Turkey.

It is not because my family lost their homes in 1974, but I genuinely do not understand how anyone can invest money there when they cannot receive a genuine title deed, purchasing land and property from someone who is not the legal owner.

The rest of Cyprus, on the other hand, goes from strength to strength.

Recently, Fitch Ratings upgraded Cyprus to a Triple B rating. This improvement is due to better public finances and reduced government debt.

No negatives

A real estate investment company is looking for something different to an individual seeking a holiday home in the sun.

The real estate investment company seeks a country with higher returns, laws balanced between landlord and tenant and a swift planning process.

The holiday home investor checks days of sunshine each year and the availability of local airports and direct flights.

For me, real estate is the best business in the world for any real estate investor. When managed well, it can provide the following:

  • capital appreciation,
  • hedge against inflation
  • security
  • a steadily growing income

There is no negative.

If you love what you do, do your homework, and have the right team around you and the right banks to support you, as they say, the sky is the limit; you can drive your company to the very highest levels.

By John Christodoulou, chair and owner of the Yianis Group https://www.yianis.com/