Dose 4. What does it
really mean to have a market with short and fast cycles (Liquid markets and why
they are the most interesting?)
Do it right in Real estate
investment; wealth creation at its best
Cycles are evidence of
evolving, growing, moving, thus are some of the most important elements of
life.
Some of the property
markets globally have matured into very slow long cycles, mostly investors
refer to them as dead markets. Slow growth if any, saturation which results in
below average returns, none or difficultly liquid and many more of the dynamics
that tell us; invest elsewhere.
On the other hand young,
vibrant markets, far from maturity or saturation are known to have faster,
shorter cycles. High growth and giant drops, good annual returns, very liquid.
The same reasons that make this market appealing make it scary to few.
Let’s pause a question to
ourselves:
Do you prefer to earn 1.5%
annually in rental returns, and make 4% capital appreciation annually, while
when the drop comes prices go down by 10% only. While this cycle takes place
once every ten years.
Or would you rather earn 6
to 9% annually in rental returns, and 10 to 30% in capital appreciation
annually while when the market drops it goes down by 20 to 40% and this cycle
takes place twice during the same period.
Mathematically it makes
more sense to be part of the second scenario. Logically liquid markets with
fast cycles are better in sustaining and increasing wealth if held for the
right reason and right period.
As a conclusion investors
always consider the following elements when investing and all show a bigger
opportunity in markets with fast cycles:
Properties are of higher
liquidity
Higher growth ratios
although the bigger drops the final result still keeps an investor with descent
returns
Taking into consideration
faster cycles recover after drops faster more often generally
Those are all elements we
will deal with in this series:
Dose 1. Real state a
component of every portfolio.
Dose 2. Step buying to
crunch busts and booms (Afloat in a cyclical industry)
Dose 3. Opportunities
within every part of every cycle
Dose 4. What does it
really mean to have a market with short and fast cycles (Liquid markets and why
they are the most interesting?)
Dose 5. Have your money
work for you.
Series by Makram Hani ©
Copyright Arms &McGregor International Realty. All Rights Reserved.
