Non-liquid housing is like a heavy travel bag without wheels – it’s hard to carry (due to the burden of taxes and maintenance costs) and is pity to throw, and to sell is very, very difficult. Our discussion about the illiquid asset we will begin with colorful examples shared by our partners.
Typical “non-liquid objects” stories
A client from Russia buys a luxury house in the “modern” style in one of the French provinces. After some time it turns out that it is impossible to sell the mansion to the locals even with a 20-30% discount. An amount of €1.5 million to them is just unbearable. The same object located on the French Riviera would be sold out in a moment for €50 million.
Another Russian got land in Bulgaria and was planning to build a villa. To get cheaper, he chose a very lonely place. It was later revealed that for the construction he needed to change the status of the land. So, instead of villa, he got the firm, which he must support (in Bulgaria foreigners can buy land only by a legal entity). He had to say goodbye to the idea of his own unique residence in Bulgaria. To get rid of the costs of the company, the client was forced to give his property as a gift.
The moral of the story is: whatever your plans for the near future (in practice they can change dramatically), treat the purchase as an investment. You should always have in mind the ability to quickly and efficiently sell the object.
Liquidity criteria
Which criteria should be followed when choosing the liquidity of housing in Europe? The first rule of flats is adequate price. The second factor is a small area. The most common products on the market are compact studio apartments and one-bedroom apartments. They are much cheaper than suite, and much easier to rent out.
“Good location” for an apartment in the city means close proximity to the town center, schools, large enterprises, metro and transport interchanges. In the cities-resorts the distance to the sea/the ski slopes is the most important.
Keep in mind that there are resorts that will always be in trend. For example, Cote d’Azur is never out of fashion for the past 100 years, and in the future the situation is unlikely to change.
