Investment vehicles: how to get high yields in Europe
Investors often compare European real estate with other
Public bonds are among the most popular capital maintenance vehicles for affluent investors. They yield
Bonds compete with rental real estate. Such properties in Europe yield a comparable return
Bank deposits have low yields (up to 1.5%) and are only suitable for capital maintenance.
Value Added projects allow investors to maintain their funds, but also boost their capital holdings. The point of the strategy is to buy a land plot or property at a price below market rates, build real estate on it or repair their property and sell it at a higher price. Such investments yield
With a €400,000 investment, one can earn up to €6,000 with bank deposits, €12,000 with public bonds, €24,000 with a property rental business, and up to €60,000 with a Value Added project (Table 1).
Table 1: Expected returns with a €400,000 investment
| Deposits | Rental property | Value Added projects | ||
|---|---|---|---|---|
| Goal | capital maintenance | capital maintenance and accumulation | ||
| Yield per annum | up to 1.5% | 0.5–3% | 3–6% (4–8% with a loan) | 10–15% |
| Downside risks | low | medium | high | |
| Asset volatility | high | low | ||
| Management | not required | simple (a management company can be hired) | complex (a management company is required) | |
| Liquidity | highest | high | low | |
| Transaction costs | none | Up to 0.2% | 5–15% | |
| Transaction closure time | instant | several months | ||
| Maximum annual return on investment for €400,000 own investments |
€6,000 | €12,000 | €24,000 | €60,000 |
Tranio recommends investors have diversified portfolios, with 70% of kept in a reliable and secure asset such
George Kachmazov, managing partner at Tranio
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