There was a time when many people purchased second homes, or offices
with a view to let them, and earn some rental income. The trend has
shifted today, because property prices, are not really that affordable.
However, rents too have seen a downward slide due to growing
unemployment and other economic problems.
More and more people are opting for homes that are smaller, or homes
that they can share with others, like paying guests. People are moving
in with their families, or moving towards the outskirts. Properties to let are remaining vacant for months at a stretch; a trend that did not
exist in the past. This scenario exists both in office spaces as well as
residential properties. Analysts are forecasting another boom for real
estate markets around 2016 and 2017.
People who let their properties look for the rate of returns on their
investments. When there are no people to rent, the returns dwindle while
the property owners continue to incur property taxes. While interest
rates on other securities are faring no better, the investment required
to let a property is much higher. This is the reason why properties to
let are not being favored as a profitable form of investment by many
people.
Even so, smart investors are out there shopping and they are likely to
find good bargains in the present state of world economies. They reckon
the trend will soon change as the European crisis may not have a long
lasting effect as was feared in the last quarter of 2011.
Many properties are being foreclosed. Banks and other lenders are trying
to increase the term for repayment of loans, thereby ensuring that it
is not necessary to foreclose the property. They are also offering
reasonable terms and conditions to new borrowers, who are willing to
purchase the foreclosed properties.
However, risks of job losses loom high in most countries. This is the
reason why even those who have survived the preceding recession, are not
venturing out to buy properties. Banks and other lenders are unwilling
to sell some of the properties as it would mean absorbing losses.
In this situation, some property owners have come up with the novel idea
of starting serviced office spaces, and serviced apartments. Serviced
apartments have been around for quite some time now. However, they were
not as popular as they have become now. The Letting industry is
witnessing a spurt in such usage of properties to let. Not only does it
fetch the property owners' higher returns, but it also helps the lessee
to cut down on costs. This is particularly true in case of properties
that are located in prime areas, or in well designed stylish buildings.
Basically, a serviced apartment is like any other apartment. The
difference is that the responsibility of its maintenance and management
is with the owner of the property. Secondly, it can be taken on short
term lease, at times even for a few days. Formerly, people took premises
on rent for an entire month or more. With the new offer, they get the
premises for shorter periods, and do not have to spend money on
furnishing it. This is similar to hotels but works out much cheaper.
Serviced apartments also offer more privacy when compared to
conventional hotels where everybody knows who is the guest. Some of the
serviced apartment owners offer services of cooks, and the menu can be
decided by the people who choose to stay in the apartment. Serviced
apartments are also being let out to tourists at fairly affordable
rates. Some of the serviced apartments let out rooms instead of the
entire apartments, and collect rental charges that are collectively
higher than what they would have got had they let the apartment to a
family or a group of delegates. Increasing profitability of property to
let in this way is bringing the focus back to such property, but the
investment constraints continue.
Like serviced apartments, there is a growing demand for serviced office
spaces as well. These come with additions such as services of
administrative staff and maintenance staff.
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