Economic sciences / 4. Investment activity and stock markets

Tsygankova M. M. master’s degree student

Karaganda economic university of Kazpotrebsoyuz, Kazakhstan

Ways of increase of efficiency of use of investments: investments in real estate

Investments in real estate here already some hundreds of years are one of demanded forms of capital investments and are for domestic business by the new direction in the development. In this regard it is necessary to study not only the available foreign experience, but also accurately to define the contents, character, possibilities of investment investments and the available risks.

From economic literature it is known that there are two types of investments into real estate: institutional and private. Thus the last are the most widespread. Unlike other types of investments, investments in real estate have proportional dependence on an economic condition of the state. So, at the height of a world economic crisis of 2008 owners of real estate felt not really surely as the prices of objects promptly fell. Sometime the market was in a stagnation stage, trying to define further tendencies, construction was frozen [1]. The state put a lot of effort for assistance to enterprise structures. Joint efforts of society and state led to positive result. As a result, crisis passed, the situation in the branch markets gradually began to improve. Positive tendencies were outlined and in development of the market of real estate, demand for it began to grow and certain players of the market had an opportunity to earn the additional income.

The next devaluation in Kazakhstan took place in February, 2014 then many investors again took a waiting attitude. Despite a present situation in the country, today in Kazakhstan the real estate is recognized as firmest "currency". It is connected with fast depreciation of money, unreliability of financial institutions, discrepancy of a bank rate to a rate of inflation and with other factors. In these conditions of an investment in real estate allow not only to keep the capital, but also to receive some benefit. Today decrease in total number of transactions is observed, so, according to Committee on RK statistics, in January, 2015 the number of the registered transactions of purchase and sale of housing on the Karaganda region made 923 apartments. In comparison with the last month the number of transactions decreased by 11%, by January, 2014 — for 2,4%. Also the tendency of sure reduction of prices of real estate, despite growth of dollar exchange rate against tenge is observed in the secondary market of Karaganda, decrease is recorded in both currencies. In relation to January, 2015 change of the dollar price made minus of 1,6%, tenge — minus 1,8%. Annual changes since February, 2014 made in a dollar equivalent — minus 10%, in national currency — minus 4%.

Thus, in the market of real estate the situation which can be characterized as "the market of the buyer" is formed. It means that the offer prevails over demand. The market has to correct itself. Otherwise there will come the situation of construction crisis [2]. Such phenomena in domestic economy, force many to think of the best capital investments.

The Kazakhstan market of real estate is subject not only to influence of economic factors. First of all are essential geographical distinctions of the certain regions promoting formation of specific, economic, political and social features. It in turn, is the defining factor in investment appeal of real estate of different regions. So, the investor who doesn't have experience and special knowledge can be lost in a huge number of information on investment climate of this or that region.

Investments into real estate is a long-term project. Low liquidity, long registration of the transaction, big costs of change of option of use interfere with fast generation of profit from investments. It is also necessary to consider that the term of return of investments will be a miscellaneous for each segment of the market of real estate and to get profit on the investments, it is necessary after construction of a real estate object it favourably to realize. Now the commercial real estate is highly demanded: offices, warehouses, floor spaces and other. This type of real estate assumes not only sale, but also leasing that sometimes it is much more favorable. So, investments will pay off for some years, and already then the investor will get net profit from the investments. However, before making the decision on an investment of money in construction or purchase, it is necessary to find a suitable place, to make the competent business plan and to conduct research of the market. Only in that case it is possible to count on return of the investments and receiving profit [1].

The market of real estate consists of several submarkets one of which is the housing market. Having investigated foreign housing markets, we came to a conclusion that one of the main indicators of profitability of investments into real estate is the housing cost relation coefficient to rent cost. And, in those countries where the coefficient of a ratio is lower – there the "shortest" money at their investment in real estate and vice versa [3]. Within research the average cost of rent and average cost of square meter of housing for the last 12 months was considered. At calculation utility costs and other obligatory payments for the maintenance of the apartment weren't considered. Data of the conducted research show terms of return of investments into housing. Despite the received big payback periods, residential real estate was always and will the most attractive object. The great and stable demand, availability of this type of investment, and also accurate definition of the legal rights for housing provide sufficient liquidity of this type of investment. Also sure bet of an investment of financial means is the elite real estate. So, in the central regions of the large cities with unique views of vicinities crisis has no impact on the cost of penthouses, exclusive objects will be demanded always. Results of research are shown in figure 1.

Fig. 1. Terms of return of investments.

Today, to draw attention of the potential investor to possibility of receiving and increase in the real income, investing in real estate, it is necessary to use many methods of marketing of real estate, the most effective of them is advertizing. For example, for carrying out an effective advertizing campaign and involvement of buyers it is necessary to know, what types of marketing and advertizing and for what segment of the market of real estate are the most effective. Traditional methods and types of advertizing become less effective, and it is connected, first of all that consumers don't react to "advertizing noise" any more; secondly, in the conditions of optimization of marketing budgets it is necessary to invent and realize new receptions and ways of impact on target audience as investors at a choice of object of investment are guided by aspiration to gain the highest income at the minimum risks. Therefore, potential investors don't have enough confidence and guarantees that they won't lose the money invested in real estate.

Relying on experience of foreign countries in the field of investment into real estate, it is possible to allocate the following options of obtaining the guaranteed income from investment of capital in real estate:

- to buy not ready commercial or the residential real estate and which is under construction with degree of readiness of 75-80% as it combines in herself the credit of the builder and purchase of real estate that is even if the prices will fall to 20%, the investor will be able always to return the money;

- in the middle of crisis it is possible to buy cheap the real estate suitable under offices or warehouses. At the time of revival of the market it will become invaluable and will bring in the good income, for example, from leasing.

Thus, it is possible to allocate the next ways of extraction of advantage at investment into real estate:

- at delivery of real estate in rent the investor receives a certain money;

- because of constant increase in market prices of real estate, there is a gain of the passive capital of the investor;

- the real estate can bring benefit at its operation;

- at successful resale of a real estate object, the investor can gain considerable income [4].

In present conditions of high rates of inflation, investment activity in the domestic market of real estate isn't really active. The high cost of investments and high risks led to decrease in investment activity in this sector, but, despite it, the market of real estate remains attractive to investments on the following indicators:

- it allows to keep savings which are directly controlled by the investor;

- investments into real estate - one of the few types of investment which is based on the property right;

- investments in real estate allow to protect with high degree of reliability means from inflation;

- high risks are counterbalanced by high profitability of transactions.

Literature:

1. Business BePrime magazine. [Electronic resource]. – Access mode: http://beprime.ru/nedvizhimost-v-krizis-kuda-investirovat/.

2. A portal about real estate. [Electronic resource]. – Access mode: http://www.kn.kz/.

3. Great Era (The Epoch Times). [Electronic resource]. – Access mode: http://www .epochtimes.ru/content/view/38527/3/.

4. Finance and Investments portal. [Electronic resource]. – Access mode: http://investments .web-3.ru/introduction/realty/.