for specialists real estate, the scope of the exchange rate from the dollar to the euro represents an investment opportunity in properties in Europe.
According to Mariano Capellino, CEO of Inmsa Real Estate Investments, after the announcement of the US inflation rate of last week, which caused the price of the dollar to exceed the price of the single European currency for the first time in 20 years, a series of opportunities are presented for real estate investors before a more “expensive” scenario in America.
“The increase in the inflation index in that country (United States) provokes, without a doubt, a rise in interest rates in mortgage loans which implies lower leveraged returns, fewer possibilities of access to housing for end users and difficulty in paying variable mortgages”, explained the specialist.
And it is that, according to Inmsa Real Estate Investments, before an increase in the reference rate in the United States of up to 2%a loss of value could be generated on the properties, if the asset in question was acquired with a credit at a variable rate.
The rise in interest rates in the United States and its impact on home purchases is an issue that has been alerted by the National Association of Realtors (NAR) of that country, because according to data from the agency, the average cost of housing has increased by 800 dollars every month since the beginning of the year.
“These higher mortgage rates hurt affordability,” said Nadia Evangeolu, senior economist and director of forecasting at NAR.
On June 15, the FED decided to increase reference interest rates by 75 basis points, the largest increase since 1994, to bring them to a range of 1.5-1.75% and it is expected that, at its next meeting, on July 27 next, again an increase is announced.
Recognize the phase of the cycle: the key
For Inmsa Real Estate Investments, under this scenario real estate investments they must be decided with the recognition of the economic cycle of each region in which it is planned to acquire a property or commercialize.
According to Capellino, taking into account that the main players in the real estate concentrate 84% of their investments between the United States and Europe, identifying markets in distress situations (in financial difficulties) can be a differentiating element.
Under this scenario, the manager stated that Spain could be an alternative for investors seeking to take advantage of the parity of the euro against the dollar and at the same time invest in a market in recovery as a tourist destination and with available inventory.
“The main Real Estate investment funds that invest in Spain had forecast an investment volume of around 20,000 million euros to be developed in 12 months, of which six months have already passed to confirm this favorable situation and trend,” he assured. Capellino.
