In undertaking our property investments, we aim to avoid risks and ensure a long-term increase in value. For this reason, we work with established systems like Yardi!, Sharepoint, TCAV and Risk Analyser. Moreover, DREF applies strict criteria covering not only the selection of investments – we also consider the factors that affect the value of a property and thus the return for investors. Among others, these include the interest level, the flow of funds on the market, the general demand for accommodation in relation to the available supply and maintenance costs.
The absolute interest rate and the interest rate structure on the market determine the demand for property in numerous respects. Falling interest rates generally increase the value of real estate. The same applies to falling inflationary expectations. Inflows and outflows of capital additionally show which asset class is preferred by investors at any given point in time. The overall macro-economic picture, shaped by gross domestic product, exchange rates or political changes, for example, generally plays a role here, along with investor-specific requirements such as the need for greater diversification.
The demand for student accommodation and the given supply influence the return on a property investment. The demand for accommodation is dependent on the current and expected performance of the economy, socio-economic trends and decisions in economic policy, for example. The corresponding supply is influenced by construction activity, available building land or regulatory requirements. The level of demand for housing in a region is expressed in the vacancy ratio.
The rate of return on a property investment is determined not only by the supply and demand situation on the property market. The maintenance costs pertaining to a property also play a role. These are substantially important in determining what remains to the investor below the line. A key difference applies here in comparison to other expenses: maintenance costs are comparatively stable and thus more readily calculable in advance.