The geopolitical situation in Ukraine and the potential conflict with Russia had a profound effect on the Moldovan real estate market in 2022 and 2023. As tensions escalated in the region, there were notable changes in market dynamics and demand for new developments. Here are some key impacts:

Temporarily Increased Demand for Real Estate from Ukrainian Buyers and Renters: As a result of the unstable situation in Ukraine, many Ukrainians sought refuge and stability in neighboring countries, including Moldova. This led to a significant temporary rise in demand for residential properties as these individuals looked for fast housing solutions. The increased demand also drove up the prices of rental properties in Moldova, particularly in the capital city Chisinau. But in 2023 most of those Ukrainians moved on to other EU countries.

Shift in Foreign Investment: The geopolitical instability in the region made investors and local market participants more cautious about investing in areas with potential exposure to conflict. As a result, some foreign investment that might have been directed towards Moldova was redirected to other safer markets. This led to a slowdown in development projects, particularly in the commercial and industrial sectors.

Infrastructure Development: Due to the potential conflict, there was greater emphasis on improving Moldova’s infrastructure to ensure a reliable connection to the European Union and other neighboring countries. This spurred the development of new transportation and logistics facilities, further influencing the industrial real estate market.

Uncertainty and Market Volatility: While there were some positive impacts, the geopolitical situation also introduced a degree of uncertainty and volatility to the Moldovan real estate market. Investors and developers made more conservative investment decisions to minimize potential risks. This cautious approach may have slowed down some projects or limited the growth of certain market segments.

Adjustments in Down Payments: The uncertainty and market volatility caused by the geopolitical situation prompted changes in down payment requirements for reserving new apartments from real estate developers. In an attempt to maintain interest and investment, developers lowered down payments from 50% to 10-20%. While this strategy helped to keep the market active, it also resulted in cash flow issues for local real estate developers in Moldova. With less upfront capital available, developers faced challenges in financing their projects and ensuring timely completion.

In light of the geopolitical situation in Ukraine and the potential conflict with Russia in 2023, the Moldovan real estate market underwent notable shifts and adaptations. While increased demand for housing from Ukrainian buyers and redirected foreign investment offered positive outcomes, the market also confronted challenges such as infrastructure development, lowered down payments making precise and well-planned financial planning for developers a crucial requirement to avoid possible cash flow issues and difficulties in fulfilling its obligations. Despite these obstacles, the Moldovan real estate market demonstrated resilience and continued growth, as players in the industry navigated the changing landscape and responded to the evolving needs of the market.

Developments with Kirsan projects in Moldova

In 2020, our venture­ into the Moldovan real estate­ market coincided with a rapidly evolving industry that showe­d a strong direction towards integration with the European Union, le­d by its new Pro-European preside­nt and government. This create­d an opportunity to capitalize on significant growth potential due to the current level of property prices.

Great start and potential for future

During the first two ye­ars, the real estate­ market witnessed impre­ssive growth and numerous projects were complete­d successfully. The market’s fruitful fore­cast was similar to Estonia’s surge after joining the Europe­an Union in 2004. Property prices increase­d year-by-year over 25% in those two years indicating a 55-60% increase in absolute numbers, ye­t compared to other European marke­ts, Moldova’s remained relative­ly undeveloped, a factor which pre­sents opportunities for further e­xpansion.

Although we be­lieve that the marke­t will continue to develop, we must recognize­ that Moldova’s general conditions have unde­rgone some unforese­en changes in the past year. The eme­rging markets generally offe­r greater returns and profit margins but ofte­n come with reduced stability. We aimed to minimize the instability risk by choosing to work with one established developer with a great track record, instead of several smaller developers. We developed a strong partnership and everything was going well, until the escalation of geopolitical crises stunned the whole world.

Changing market conditions and first signs of issues

While there were no direct signs of any real issues in the first half of 2022, the problems started to arise in the second half of the year. The developer was facing cash flow issues, due to the changing market conditions coming from the consumer’s uncertainty. At first there were just small delays and we worked closely with the developer to help them overcome this situation.

Despite the full funding amount released for some projects according to the agreed terms, that were also presented to the investors, they requested more time and additional funding to complete the ongoing projects. Several late stages were refinanced on the platform, to give the developer more time to finalize ongoing projects. We continued negotiating and working out a solution, prioritizing the security of our investors’ capital. We needed the developer to fulfill their part of the agreements to continue in this direction, unfortunately we did not see the expected progress from their side.

Negotiations and the recovery process

We continued to negotiate with the developer, throughout this communication the developer made a lot of promises to start making the late interest payments. The last payment of interests was made in late January for the Green Park project, to cover the October and November interests. It was something that showed intention to fulfill the obligations, but later we understood that the expectation was that we continue funding projects that already were fully funded according to the agreed terms.

Our goal with the negotiations was to find a speedy solution, without extensive legal actions. But at the beginning of 2023 it became less likely that we will achieve a reasonable agreement with the developer. Since then we have been exploring legal options, working closely with law offices in Estonia and Moldova. Throughout this process the lawyers have strictly recommended us to not make those details public yet, as it could potentially harm and extend this process.

Our top priority is to find a speedy solution to this situation, and in terms of timeline, achieving an agreement with the borrower would be the fastest. But, as explained above, we are not waiting for it to happen, but putting a lot of effort and focus on the legal side of things to protect our investors capital and force Kirsan to fulfill their obligations.

The post Impact of Geopolitical Situation on Moldovan Real Estate Market in 2023 appeared first on .

So you would like to make an investment in real estate but keep hearing all these things about the market crashing. Should I wait? Nonsense! You have no idea when the right time is going to arrive. Meanwhile, you’re losing money and opportunities every day. The truth is, there’s no better time to invest your money than right now. Nothing good comes from just sitting on money. It will depreciate or you will end up spending it over time. The only real way to save that money and make it grow is by investing it in projects with high yield. If there’s something all the millionaires in the world have in common, it’s that they all invest their money. And they do it wisely!

You can’t know for certain when the market fluctuation is going to stop

The right time is always obvious when you have an opportunity, the price seems fair and there’s nothing stopping you. The in between moments are the ones which are hard to predict. Are prices going to go up tomorrow? Or are they going to keep going down. Unfortunately, you’ll never know until it’s too late. That’s why it’s always a risk. Depending on your risk tolerance, you’ll either dare to take the plunge (and potentially succeed) or you’ll wait, in which case you’ll definitely lose.

You’re losing money by waiting

There is always a cost involved with waiting to invest. Time is money, right? If only we could predict the future. Then we would all be making passive income. But unless you’re a market expert, you won’t know when the market has finished dropping and when it’s the perfect time to start investing. Meanwhile, every day, month and year that you wait, you are missing out on passive income opportunities. And sometimes market corrections take years! Your risk tolerance may be low, but by being scared of losing your money, you’re actually really losing your money.

Research agrees

Bloomberg (the leading software company delivering market news) even runs simulations on whether it is more profitable to invest right away or wait for a market downturn. The results show that you definitely lose more by waiting and holding on to your cash, in comparison to those who invest their money and hold on to their assets.

Furthermore, with the current inflation rates, the money you’re holding on to will continue to lose value over time. Research has shown that by waiting, instead of investing, you’re actually losing more money than you could be making. For example, between 1926 and 2016 the US stock market returned 6.3% over cash. The research compared investors who waiting 5 years to invest after a market crash (followed by a market correction) compared to investors who held on to their stock throughout the entire period. The research showed that the returns of those who waited were only half of those who held on to their stocks. This is the chart from the research. Excess returns are returns over cash (whereas the buy and hold average is 6.3%).

Hence, it doesn’t matter if you wait for a 10% market correction or 50%. By waiting, you are still losing out on money you could be making, either way.

There’s no such thing as ‘the right time’

Keep investing at all times! To secure your money and make sure you take advantage of all the moments when the market is at its lowest, you should invest constantly. As often as you can, and obviously whenever you find a good opportunity or project. This way you get to benefit from every part of the cycle, going up and coming down. Every day is an opportunity. You just need to realise what kind of an opportunity.

Trust the numbers

Whenever you make an investment, it’s important to figure out what the projections are. The media and society will always have an opinion on how high or low the market is. What’s important is to figure out the yield of your investment and base your decisions on actual figures (rather than opinions). It is also important to check how your investment is protected over time.

In conclusion, waiting for a long time is never good for your money. You should always do your research and due diligence, but there’s no such thing as the perfect moment to invest. This depends on so many things. The best moment to invest your money is when you have it available and when you find the right opportunity. That’s it!

Do you think it might be a good time to become a real estate investor? Discover your investment opportunities right now!

The post Should I invest now or wait for the next market crash? appeared first on .

Investing in real estate is the perfect way to create passive income. You buy a property and you rent it out, receiving a monthly yield without having to worry too much. But things get even better when you use short-term rental platforms like Airbnb and Booking.com to maximize your rental income. By choosing to invest in short-term rental properties, your real estate will be making money daily instead of monthly. These platforms have a plethora of properties on offer, ranging from studio apartments to large mansions. All trying to make as much money as possible. So, how profitable is to invest in a short-term rental property? Keep reading to find out.

Short-term rentals mean higher rental yield but also more work

When renting out your property daily or weekly you can charge around 30% higher rates. However, you can’t really count short-term rental yield as ‘passive income’ . Because you actually need to constantly take care of property maintenance, guests and daily upkeep. Fortunately for real estate investors, they can hire a property management company or invest in real estate investment platforms like Reinvest24 who take care of all the property management needs while you enjoy your passive income passively (without breaking a sweat).

Dealing with short-term rental properties requires more knowledge

Unless you rely on professional real estate experts, you will need to stay on top of rental contracts, taxes, short-term pricing, competition and all the laws that apply to short-term rentals. This is no easy task as the regulation of the short-term rental market is constantly changing. Booking platforms have been largely opposed by the hotel industry since the very beginning. However, now many metropolitan residents are blaming such sites for the shortage of affordable long-term housing. Hence, many governments are now deciding to ban or restrict short-term rental platforms in popular cities and holiday destinations.

Reinvest24 provides investors with passive income from rental yield and capital gains

Short-term rental yield is great but Reinvest24 goes one step further by providing its investors with additional profits from capital gains. Our team’s competence, market insight and real estate knowledge ensures only the best investment properties are selected. This way, investors get the best of both worlds; rental yield from short-term rent as well as a profits from capital growth over time.

Furthermore, receiving passive income means not needing to worry about the property management of your short-term rental. Reinvest24 takes care of every property need, handling all the daily management, upkeep and maintenance. This way, you can just sit back and enjoy your passive income from rental yield and capital gains.

There’s money to be made as occupancy keeps increasing with global travel

The travel industry has skyrocketed with globalization and the increase of low-cost flights. As a result, the number of flying travellers (many of which are looking for short-term rental properties instead of hotels) is close to 4 billion compared to just over 1 billion tourists back in 1990. Rising cities like Tallinn are also seeing an increase in short-term rentals. According to AirDNA, the short-term rental market in Tallinn has a 55% annual growth rate. Furthermore, the vacation rental data shows that Estonia’s capital city has a 70% occupancy rate on average, with 56€ being the average daily price for a short-term rental.

If you’re looking to invest in property in Tallinn, and you’re wondering whether to choose short-term or long-term renting, consider this: the rent for an average 1-bedroom apartment in the city centre is 503.75€ for long-term periods. That’s your rent for 31 days. Now, let’s imagine you rent out that same 1-bedroom apartment for 21 days (70% occupancy) charging 56€ per night. That would mean 1,176€ per month from short-term renting, which is 133% more yield just by offering your property as short-term accommodation. With a short-term rental property you also need to take into account that you might not always have such a high occupancy, and your management costs are also higher.

Booking rates can be increased with the development

Things like location and nearby amenities can increase the daily rates of your short-term rental property. The biggest return on investment, however, comes from developing or renovating your property to boost its appeal and demand. For example, Reinvest24 is currently looking to invest in short-term rental apartments in an up-and-coming area of Tallinn. The investment project involves developing and then renting the apartments as short-term accommodation.

This project’s development stage will include finishing the construction of the apartments on offer and renovating the building itself, which will increase the value of the property to approximately 2100 eur/m2 (considering the current market situation). The estimated capital growth from the development is 20,3%. Investors will also receive an annual return of 8.01% from short-term rent.

Invest in short-term rental properties

In conclusion, short-term rental properties definitely provide more rental yield, especially when the property is developed and is located in an attractive area. On the other hand, the higher rental yield also comes with added responsibilities when it comes to maintenance. Many governments and institutions are also looking to regulate the short-term market, which means you need to stay up-to-date with the constant market developments.

Reinvest24 is a real estate investment platform that also invests in short-term rental properties to create higher rental yields for our investors. By offering some of our investment properties on rental platforms like Airbnb, we can create the best return on investment for our clients. Reinvest24 takes care of all the property management and legal issues, allowing our investors to enjoy their passive income. Check out our real estate investment platform and become a real estate investor today.

The post How profitable is it to invest in short-term rental properties? appeared first on .

When things are too good, people start to panic and ask questions. That’s exactly what is going on with the housing market in Estonia these days. Everywhere you go, you see large development projects and construction going on. The Euribor interest rates have been negative for some time now, which has increased the attractiveness of borrowing, but for how long will all the building and buying last? The leading Nordic-Baltic banking company, Swedbank, recently conducted a macro research showcasing some interesting points about the current and future housing market.

Is the housing market overheating?

In the research, conducted by economist Marianna Rõbinskaja, it clearly points out, “Although housing affordability in Estonia has improved, compared with the peak of the last real estate boom, it has stayed at the same level for the past four years.” This statement suggests that the real estate market is at a stable point. People can afford more, yet purchases aren’t fluctuating.

Households have more purchasing power

This is a good thing. Estonia’s economy has prospered over the years, and average salaries have increased. When people are doing well, it generally means they spend more. The study pointed out, “Households’ confidence in purchasing or building a home has improved in recent years.” However, it’s also important to point out that, “Households are more responsible in lending than ten years ago, and their risks are lower than in the last boom period.” This suggests people have learned from past mistakes, making today’s buyers more cautious.

Housing prices in 2017 exceeded the 2007 peak

Swedbank’s study said, “Last year, prices of apartments in Estonia exceeded the peak of the 2007 real estate boom. However, compared with the peak of the last real estate boom, housing affordability in Estonia has improved. Ten years ago, the average net wage growth could not keep up with the average apartment price growth, which was more than twice as rapid as the growth of the average net wage making the purchase of real estate for consumers less affordable. Currently, the overall situation on the housing market is more favourable for homebuyers and their risks are lower than ten years ago. Households’ confidence in purchasing or building a home has improved in recent years, and we expect that demand for housing should remain high, at least in the near future.”

In other words: Prices are at an all-time high, yet things are definitely better than 10 years ago. People can afford more. So it looks like the demand for housing will continue… for now.

Could this be the calm before the storm?

We’re not implying something bad is about to happen, on the contrary, we think this might be the calm before great activity. Things have been so stable for the past 10 years that things are bound to change in the future. Swedbank’s research states, “Although, market interest rates are expected to move upwards soon, they will remain quite low. Thus, the favourable interest rate environment will continue to encourage borrowing.” So, maybe people are just waiting for the right buy as opposed to the right time?

The future looks bright for the real estate market

There’s never been so much on offer! The macro research highlighted how, “Activity in the construction sector is at the highest level in recent years – nearly 8,000 building permits for dwellings were issued, and almost 6,000 new dwellings were built last year. Nearly half of all the building permits and use permits for dwellings are being issued in Tallinn.” So, with an increase in purchase power and real estate offerings, it is safe to say that people will continue buying real estate as primary residences and as investments in the coming years.

In conclusion, the real estate market in Estonia is currently stable. Prices are high, buyers are in a favourable position and there’s a lot on offer… and it looks like things are going to stay like this for a while. Sounds like a great time to start investing in real estate!

The post What’s going on with the housing market in Estonia? appeared first on .