The question “buy or rent?” is no longer just about feeling secure in your own property. In the reality of today’s prices, low rental yields, demographic trends and available investment alternatives, it is a complex economic and strategic decision. In Highgate Talks Podcast #37, we looked at this dilemma with Peter Varga and Roman Zavodsky without the real estate platitudes, purely through numbers, law and investment logic.
Real estate has traditionally formed the basis of wealthy people’s portfolios. Even today, real estate has its place in the portfolio, but the question is how.
In Bratislava today, the net rental yield is often 2-3% per annum. This is a number that stands on its own:
The “I will buy a flat and prices will rise as in 2015-2022” model is no longer a realistic expectation. Today’s decision-making must be based on net after-tax returns, not on the hope of capital appreciation.
Demographics cannot be ignored when investing in real estate. Slovakia is ageing, the number of economically active people is decreasing and the demand for housing is increasingly concentrated in large cities.
The difference between Bratislava and smaller regions is not only in the price of the apartment, but mainly in:
A higher nominal yield in a smaller town may be redeemed by having no one to sell the property to. This is why many investors today accept a lower yield in Bratislava in exchange for greater certainty.
For owner-occupied housing, the dilemma is even more sensitive. From a purely economic point of view, renting + investing spare capital can give a higher long-term return than buying your own property.
However, the deciding factor is often not the numbers, but the availability of quality rental housing and the legal certainty of the tenant. The market for long-term, stable rentals is still weak in Slovakia, which naturally pushes many people to buy.
From an investment perspective, however, the following is true: tying up most of your assets in one property, on one street, in one state is concentrated risk.
Increasingly, Highgate Group’s practice is seeing clients who:
The result is a portfolio spread across regions, asset classes and legal structures with greater predictability of net returns.
The question “buy or rent” does not have one right answer. However, there is a wrong approach, to make a decision without numbers, without taxes, without law and without a long-term strategy.
That’s why at Highgate Group we combine legal, tax and investment perspectives. We help clients set up decisions that will stand up not just today, but 10 or 20 years from now.
For more information on real estate and investing, listen to our podcast Highgate Talks #37. The full interview can be found here:
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Alternatively, you can address your specific questions in a consultation with our partner Peter Varga, who specialises in financial regulation and tax law. You can book a consultation here:
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