Key Points to Consider

factors to consider when investments


Demographics are the data that describes the composition of a population, such as age, race, gender, income, migration patterns and population growth. These statistics are an often overlooked and underestimated but significant factor that affects how real estate is priced and what types of properties are in demand. Major shifts in the demographics of a nation can have a large impact on real estate trends for several decades.


Interest Rates

Interest rates also have a major impact on the real estate markets. Changes in interest rates can greatly influence a person’s ability to purchase a residential property. As the interest rates fall, the cost to obtain a mortgage to buy a home decreases, which creates a higher demand for real estate, pushing prices up. Conversely, as interest rates rise, the cost to obtain a mortgage increases, thus lowering demand and prices of real estate. In the UK the Base Rate has been unchanged at 0.5% since March 2009.


The Economy

Another key factor that affects the value of real estate is the overall health of the economy. This is generally measured by economic indicators such as the GDP, employment data, manufacturing activity, the prices of goods, etc. Broadly speaking, when the economy is sluggish, so is real estate. However, the cyclicality of the economy can have varying effects on different types of real estate. Thus, although you should be aware of the part of the cycle the economy is in, you should also focus on the real estate property’s sensitivity to the economic cycle.

The UK is one of the world’s most globalized countries.  London is the world’s largest financial center alongside New York and has the largest city GDP in Europe. The economy of the United Kingdom is the seventh-largest national economy in the world measured by nominal GDP and eighth-largest measured by purchasing power parity (PPP).

In 2011, Australia was the 13th largest national economy by nominal GDP and the 17th largest measured by purchasing power parity (PPP) representing about 1.7% of the World economy.


Management of the Investment

Property should be like any other investment and there should be no need for any personal involvement in it. To select property which has strong demand is only part of the bigger picture. If there is not a quality property manager involved on a continuous basis gaps in tenancies and losses in rental income may occur. Our main property management agency manages almost 800 properties and achieved a 98% occupancy rate in 2011.


Investment Motives

The motive should always be clear, whether it is simply diversifying your investment portfolio or creating a nest egg in a foreign currency. Without a motive there cannot be a goal and without a goal there cannot be success. We at BDB know that every investor is unique. The Investors viewpoint needs to be established and a suitable investment opportunity found to tick all the boxes. By focusing on the goal at hand it will be a worthwhile experience watching your investment reach and even surpass your expectations.