What impacts will the coronavirus have for investors?

I usually post feature articles on this blog instead and not news articles. But I decided on this Thursday, March 24, 2020, in full confinement, to make an exception to answer a question that some people are asking. Does Coronavirus risk, after the stock market crash, cause a fall or even a crash in the real estate market? Of course, I am not a diviner, but I will try to offer you a detailed argument.

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 Effects on the stock market and crypto currencies

The stock marketand Bitcoin have suffered a sharp and brutal decline as everyone knows. Some stocks have experienced a 30 to 70% decline. It must be said that these supports are speculative and it was already several months that we were worried about a stock market bubble (the markets were rising more than reason and were disconnected from the real economy). We must not forget that behind the stock exchange, unlike crypto currencies, there are companies and their market value depends on their value perceived by investors.

 The stock market reacts based on economic data, announcements from governments, central banks, and companies themselves. It is therefore quite logical that the stock market broke its face at the dawn of a possible major economic crisis. It is also quite logical that it has gone back a little to the announcements of governments and central banks to massively support the economy, and in particular today with a nice rebound. But what will happen in the coming weeks or months? Bad news is likely to continue to arrive and therefore the markets may fall further for the sectors most affected by this crisis. While there may be opportunities to invest in some companies today when the markets are lower than a few months ago, you should be careful because they are probably not at the bottom.

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The economic crisis factor

It is difficult to compare this crisis to other past events. That of 2008 had nothing to do. It was a financial crisis that had more impact on American households than Curacao. Today we are living through a health crisis which is turning into a global economic crisis.

Robert Kriyosaki predicted in his book A Second Chance: For Your Money, Your Life and Our World (released in 2015) that an economic crisis much bigger than that of 2008 was going to occur. He was not the only one to speak about it and was only a few years wrong about its date of occurrence. He presents the crisis as an opportunity to build new things.

It should be noted here that what happens on the stock market is in principle totally different from what can happen on the real estate market, which is not speculative.

The 2008 crisis had an impact on the Curacao real estate market. The rise in rates had reduced the budget of buyers and therefore blocked sales volumes and then lowered prices. It was a small drop however (nothing to do with what happened in the USA).

A probable slight drop in prices in the short term on the real estate market

Currently the real estate market is totally on hold. Real estate agencies are closed and private sellers can no longer visit. The current compromises will be delayed because of the longer time to obtain financing but also the time to have an appointment with his notary. This is bound to have an impact on sellers (who put up for sale before containment) who will likely be more inclined to accept a low bid. They will have seen their time to sell extended by confinement and will probably be more concerned about finding a buyer quickly given the economic context which is likely to deteriorate.

And the longer the confinement lasts, the more it will be true. Scientists have just recommended 6 weeks in total.

 Then a real estate crash?

It is too early to say, but what is certain is that the market will suffer in sales volume in 2020. Many people risk postponing their purchase or sale plans. Lowering prices is not impossible. Once again, it is difficult to compare this crisis to other crises because it is an unprecedented situation!

But from there to talking about a crash? Unlike the stock market, a few months ago no one spoke of a real estate bubble, but rather of a possible downward correction in the market. The real estate market has a big asset in its sleeve: there is nothing safer than stone! Are investors going to take refuge there? Did this recent stock market crash just publicize real estate Invest in Curacao?

The real estate market, which is made up of primary residences as well as rental properties, also has black spots:

The real estate market is directly linked to the ability of banks to grant loans. However, we know that there is a tangible asset that the bank can seize if you do not repay your loan.

The real estate market is directly linked to the health of the economy and this crisis could lead to unemployment and bankruptcies. And it is in my opinion that this will all play out.

I have just learned that notaries anticipate a fall in the property market of around 10-15%.

 To conclude this article, keep in mind that any market is made up of 2 opposing forces, supply and demand and that they are the ones that make market prices! We are only at the beginning of the crisis and it is difficult to give forecasts but we can anticipate possible trends. My feeling is that there will probably be good opportunities to invest in the coming months on the stock market as in real estate for people who will know how to seize the opportunities or create them! So be positive. Do not see the crisis as a danger but rather as a way of taking a step back and reconsidering things from another angle. And take advantage of the confinement to study future investments.

 What did you think of this article? Do not hesitate to leave me your opinions on the question of the evolution of the real estate and stock markets in the comments below… and let us move forward together towards your financial freedom  !

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How to buy a house during Coronavirus?

How do you buy a house during Coronavirus? And how will you buy once the epidemic is eradicated? According to the Therealestatecuracao Real Estate Observatory, one of the most accredited sources in the real estate sector, less than 50,000 house sales will be recorded in 2020 alone (compared to 2019) and the price of real estate will drop by 4-5% between 2020 and 2021.

The Coronavirus pandemic has hit the real estate sector hard. Home sales have collapsed and job losses have increased. This was the immediate fallout that the epidemic had.

The longer the crisis continues, the more Coronavirus can transform buyers' development patterns and preferences. Below, I have decided to show you what the consequences that the Coronavirus pandemic may have on the real estate sector.

1. Purchase choices will change

Urban growth has been a widespread phenomenon in recent years. Many people have moved from peripheral areas to the center of cities to be less isolated and to have all the most important services at hand.

However, with COVID-19 striking especially in crowded areas, population centers may lose some of their charm. This crisis is the right time for the world to reconsider the conventional wisdom that higher density cities are better.

People living in the city may wish to return to the suburbs. In fact, it is expected that there will be a great demand for properties that have gardens and outdoor spaces and less for apartments located in the streets of the town.

A move to telework would play into that trend. If workers continue to work hard from home, as they did during the pandemic, rather than going to the downtown offices, living in the suburbs would make more sense.

If you need help with your purchase or sale project, do not hesitate to contact me by clicking here

2. The rising rents trend?

With wages declining and rising unemployment, Curacao may find that buying a house is beyond their reach.

A weak economy tends to lower home ownership rates as potential buyers choose to rent rather than take on the heavy financial commitment that accompanies the purchase of a home (if you want to know more you can read this article).

3. A bigger house?

Before Coronavirus, most Curacao slept at home and then went to school or work. We moved to go to the gym, to the cinema, to bars and restaurants. Now we spend most of the time in the house which seems cramped and small. Having the space for your home office is very important. So also the space to train and do some sport.

If today's desire for more personal space is transformed into tomorrow's trend, buyers will prefer larger houses, perhaps in low-cost cities and in more distant suburbs.

4. The second home: more than one option!

For those with financial means, having a second home seems to be a suddenly more attractive alternative. Owning a second home is not an economic option: taxes are generally higher, as are maintenance costs.

The Coronavirus crisis could concretely raise the trend of second homes. In fact, if in other times those who wanted to escape from the city could rent a holiday home, contact platforms such as Airbnb or stay in the Hotel. Today this alternative does not seem to be the best solution due to travel restrictions.

Therefore, the second home becomes a valid and attractive option for those with financial resources. It could be a choice to move permanently to take advantage of the free air and detach from the gray of the city apartments (if smart working should take hold definitively).

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If you need help with your purchase or sale project, do not hesitate to contact me by clicking here

5. Technology and real estate: which combination?

The real estate sector is recognized by everyone for being an "old" market. Anyone interested in buying a house organizes a meeting with the real estate agent, sees hundreds of houses and then decides to make his purchase. Technology is hardly integrated into this process.

Coronavirus has upset the real estate market as you have always known it. Nowadays, it is no longer possible to visit the properties and it is difficult to meet in person to sign a proposal. The sector is large but far behind from a technological point of view. For example, you need to physically go to the notary and make an inspection of the house to find out if it is the best choice. This epidemic could be the time to take a step forward and digitize many aspects.

Many agencies have adapted by showing the properties from the PC with virtual 3D that allow potential buyers to navigate inside the property and look around as if they were actually on site. This is not a new technology but it would seem to take hold in the real estate sector.

While no one expects virtual tours to replace physical walk-throughs, the transaction process, heavily influenced by the "card" factor, appears to be ready for an update. In recent years, some real estate agents have embraced an increasingly virtual process.

Industry experts say that digital transactions and electronic signatures can be the tools used as flywheel in a sector, the real estate sector, which has not always gone hand in hand with technology.

Conclusions

Coronavirus is a universally recognized tragedy, but could it be an opportunity to digitize some sectors? It is a phenomenon that we are seeing with the school which, necessarily, has had to adopt technology to guarantee students the continuation of teaching activities.

The real estate sector is certainly one of the markets most affected by this pandemic. The total freeze on the activities has certainly not benefited the hundreds of activities involved in real estate. However, not all misfortunes come to stay. This could be a real opportunity to review some factors, rethink them and make them more human-friendly.

Virtual visits to real estate in Curacao, meetings and consultations via Skype, digital transactions and electronic signatures are elements already widespread in other areas. The real estate sector must be able to grasp the change and intercept it without falling behind in this technological revolution that, willingly or unwillingly, is already taking place.

Investing in a farmhouse: here are 5 good reasons to do it

The rural farmhouse: new investment prospects

Investing in a rural farmhouse is an exciting and demanding mission: the charm of the ruin, the location in pleasant places and the retro aesthetics require important investments. Are you curious about the idea of ​​starting such a business? Why buy a rustic? Here are 5 reasons that will convince you of your purpose.

Living in a rural farmhouse: an experience out of time

Old farmhouses and imposing stables surrounded by greenery always arouse a certain charm. Who wouldn't want to have one available to retire during the holidays or to use as an investment? The majestic architecture, the typical construction of other times, techniques and materials no longer in use make up the identity of these buildings. A revival of country life and the focus on new design solutions have shed a new light on this type of solution and the availability of incentives for the renovation of the ruins makes them even more attractive. For many reasons, investing in farmhouses can be an excellent choice. These five reasons are enough to convince you to make your dream come true.

1. The irresistible charm of history

Curacao is a country dotted with fabulous rural landscapes very close to urban centers. The country house or rustic country house has its roots in tradition: these large buildings housed the activities of the peasants and were the theater of all their daily lives. Powerful architectures and austere aesthetics characterize its charm. Today that no longer host the teeming life of the peasants, they represent the ideal context in which to seek an experience of relaxation and proximity to the countryside . Because of their location outside the city center, they represent the ideal destination for rural tourism, the perfect solution for those who want a refined and non-conforming hotel standard of stay. Investing in a farmhouse is not only a possibility of earning, it can become a job but it can also be a valid alternative to get away from city stress. A farmhouse in the countryside close enough to the city center can become an oasis of serenity where you can take refuge with your family.

2. Rural housing and tax deductions: a winning combination

Invest in Curacao the renovation of a rural home is a very romantic and courageous undertaking, but is it worthwhile? Having abandoned all sentimentality and aesthetic considerations, one has to deal with one's wallet. What are the tax benefits for those who venture into such an enterprise?

Those who decide to buy and renovate a farmhouse can enjoy important reimbursements that are distributed over the next ten years and are configured as tax deductions for the purchase of appliances and furniture or for the renovation. Here are the details:

the costs incurred for the renovation of the architectural structure and for the adaptation of the systems are deductible up to a maximum of 96,000 Euros (higher costs are not counted):

starting from 2013 it is possible to deduct 50% of the expenses relating to the purchase of furniture and appliances up to a maximum of 10,000 Euros;

Investments aimed at the energy requalification of the property (thermal insulation, window systems) are financed with the deduction of 65% of the expenses incurred up to a maximum of 153,000 Euros equal to 10,000 Euros per year.

3. News and additions

In compliance with the municipal rules governing the intended use of the buildings (Technical implementation rules contained in the urban planning tools), it is possible to take advantage of the benefits of expanding the farmhouse by adding a new portion that varies from 20% to 70% of the total coverage. This opportunity allows to increase the value of the property or to make it more comfortable with the addition of appliances and other living spaces. It is not difficult to imagine that these country ruins, designed for different needs related to everyday life, place the search for solutions related to the usability and destination of the spaces.

4. Staying in a farmhouse, a new tourism trend

The data provided by the tourist associations are clear: the trend of rural tourism is booming. The renovation of a farmhouse is the perfect investment to ride the wave: a building to be used as a luxury resort, farmhouse, B & B able to offer tranquility and immediate contact with nature. This fashion has enlivened the real estate market of rustics and farmhouses especially in the Curacao regions with a strong artistic vocation.

If single travelers or young couples prefer the resort, families with children turn to experiential tourism proposals that involve, especially the youngest, in peasant activities and invite to contact with animals. These activities are encouraged and supported by the Gal. Farmers who are about to restore a farmhouse can also take advantage of the Rural Development Plan (PSR) which supports 40% of agricultural expenditure up to a maximum of 200,000 Euros.

5. Investing in brick is always a certainty

One of the reasons why investing in farmhouses and farmhouses is the usual Curacao tendency to resort to brick safety. Buying a country house can prove to be a good investment if it becomes the centerpiece of a production activity or it can be an excellent solution for hoarding family savings. Especially for non-experts it is better to contact a professional who directs, takes care of the purchase and suggests the most convenient resources for the restructuring. When deciding to invest in a country house , there are a few factors to consider:

The distance from the city center and the basic necessities, not only schools and hospitals but also supermarkets and other places related to leisure;

the size of the property and the housing needs related to the residents: if the farmhouse is intended for the family's relaxation needs, an important size is not required, on the contrary, if you do not want to close the future possibility of transforming it into an accommodation facility, it is preferable a wider and more articulated structure;

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