Abstract:

Among many investment options, the real estate market has always served as a safe and tangible capital investment. Hence, despite the high capital intensity, it is still popular among individuals. Interest from foreign investment funds has been increasing significantly in recent years. However according to the Evaluer Index Report [“Evaluer Index”, 2019], individual investors are still dominating the rental market in the largest Polish agglomerations. In turn, in the report “Emerging Trends in Real Estate. Creating an Impact” [“Emerging Trends in Real Estate”, 2019], the authors also point out the steady increase in the inflow of investment capital in the real estate market among private investors. The reason is in low yield on investment in the equity and bond markets, which no longer offer return as is finding at a real estate market [Benjamin, Chinloy & Jud, 2004].  The high rating of a real estate as an investment subject comes from, among others the following premises [Kucharska-Stasiak, 2016]:

• real estate is a source of income – this income is most often the result of rents or sale of the property while maintaining its increase in value;
• real estate is an investment protecting against inflation – this is connected with maintaining the real value of the property or even its increase, which is particularly an evident in the phase of increase in construction costs or loan interest;
• real estate is a basis for obtaining tax benefits - income tax is reduced by the costs of taking out a mortgage; hence the decrease in the effective cost of credit;
• real estate is a basis for defrosting capital - in the investor's opinion, this is one of the most important premises encouraging to invest in the real estate market; capital defrosting can take place through the sale of real estate, sale and leaseback and, in particular, the possibility of taking out a loan secured by a mortgage on the real estate;
• real estate is a basis for stimulating consumer demand - the real estate market through consumer spending can act as an accelerator of business cycles;
• real estate is an indivisible investment - the funds invested are usually indivisible, which means that it is difficult to recover their value partially;
• real estate is an investment with moderate investment risk - real estate is usually perceived as an investment with medium risk, between bonds and shares, which is perfectly confirmed by the rates of return obtained from investing in these three types of assets;
• real estate is an active investment that requires management - proper management of the value of the property may result in increasing this value; on the legal side, it protects the owner against failure in renting caused by incorrect selection of tenants.