When investing in housing, whether for personal, family or rental use, the expectation is that the value of the property will continue to increase over the coming years; This is what is known as surplus value.
Fernando Marroquín, president of the Association of Real Estate Developers of Guatemala (ADIG), commented that the areas of capital gains delimited to the capital city “are very clear” and are normally located around the urban center of the respective jurisdiction.
For Marroquín, the typically urban and residential areas are, for example:
- Zone 11: specifically the Mariscal neighborhood, which historically has been a 100% residential area
- Zone 10: St. Ignatius, Diagonal 6 and Oakland Colony.
- Zone 15: Vista Hermosa 1 and 2.
- Zones 2, 3, 14, 16, 18 and 21.
These areas/sectors have in common that they are purely residential, a factor that causes a home to gain capital gains over the years, since the risk of it undergoing any change of use is minimal or non-existent.
Because when it is a mixed-use area or sector or an area mixed with commerce, entertainment and also residences, there is no way to guarantee the added value of the sector because the changes are unpredictable; and for this to happen it would have to be more residential.
For example, the housing projects developed in zone 12, around areas that are more industrial such as Avenida Petapa and Calzada Atanasio Tzul, have managed to establish themselves and have a certain market, but the capital gain over the years depends a lot on what happens around them. .
“It is important that the area where you are purchasing, depending on the product, in this case residence, is going to be maintained as is. What kills capital gains the most is the change of use, which is why homogeneity is important.”
Fernando Marroquín, president of ADIG
The interviewee pointed out that the world trend is towards mixed uses but in denser cities and in smaller sectors to solve all the needs. But for him, the evolution of the capital city of Guatemala “still has a long way to go” and when that starts to happen, the pattern will change.
Dynamo Real Estate, a company focused on offering exclusive investment solutions in the real estate market, agrees that in some sectors of zone 10 and 15, housing prices have experienced constant growth in recent years and are expected Let that continue, so they are good options for investing in real estate.
“I bet that the clearest capital gain is in the areas where it is clearly evident that the use is residential”
Fernando Marroquín, president of ADIG
More profitability
For Marroquín, the return per square meter becomes more interesting when the housing unit is smaller. Because the rental cost scales are not linear to the size of the apartment or house.
For example, between an apartment of 50 square meters and one of 60, there is a 20% difference in square footage and you cannot charge 20% more rent.
If the 50-meter apartment can be rented for US$800 or even US$875, for those 10 more meters it cannot be rented for US$960, for example.
“It is not linear because the rental price level is set by the market and those scales in footage are not the same in rental scale, that is why the smaller the profitability, the more interesting”
As a crude example, the interviewee brought up the shampoo rule: if you buy a bubble or sachet, the milliliter is extremely more expensive, compared to going to the supermarket to buy a gallon of this product. “Because small units, when broken down to their unit value, are more expensive.”
Therefore, the most interesting returns are found in smaller products. “However, it will be necessary to see if a 50 square meter housing solution satisfies the basics for a couple with one or two children, with two bedrooms, two bathrooms and a social area.”
Recommendations for investing
- Understand/know the product and the project where you are purchasing.
- What type of governance does the residential complex implement, because there are cases in which a significant percentage of the representation in the assembly belongs to one person for having several properties. So, governance will not depend on everyone who bought but on this single person or developer.
- The design of the building is also important, as are the materials to ensure proper maintenance.
- Investigate the market and consult with professionals on the subject.
- Define objectives, such as whether the property will be rented to obtain regular income or whether it will be sold in the future, for example.
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