by Abumaajid 
Why Real Estate in Somalia is considered to be a prudent investment at this time? Professor Rosling Hans, a Swedish expert believes that the best investment in real estate in the world is Beachfront Huts in Somalia. He anticipated that the Indian Ocean will be the Atlantic of the next generations. As a result, the surf-beaten golden sands that stretch north from Mogadishu can be transformed to holiday territory for many people around the world. He continued “Somalia is a colourful example of an unlikely long-term real estate investment, but it is not the only one.” (Financial Times, 2015). Therefore, investing real estate in Somalia has many advantages: it is a cash flow that can be forecasted, brings high returns, and hopefully will leverage the wealth of the investor. So, if you are contemplating about investing in real estate in Somalia, you should read more in this article and discover what you require to know about the real estate benefits and why real estate is considered to be a crucial part of your investment portfolio strategy.
Key words:
Cash flow: the cash inflow or the money coming in and out of your account
Equity: the amount of money you receive after paying your loans
Appreciation: the increase of the value of the Real Estate Property
Leverage: Borrowed capital to invest in your Real Estate Dream – whether it is from family or friends
Key Takeaways
- Real estate investors earn money through rental income, appreciation, and profits generated by their business activities which rely on their properties.
- Among the benefits of investing in real estate in Somalia are: passive income, stable cash flow, diversification, appreciation, and leverage.
Cash Flow
Cash flow is the net income from a real estate investment after payment of your debts and operating costs. The key benefit of real estate investment in Somalia is that, it has the ability to generate cash flow. As time goes on, cash flow becomes strong as you pay the loans to the debtors and it will build your equity.
Appreciation
The good thing about real estate investment is that, you can make money through rental income, profits generated by property-dependent business activity, and it appreciates (meaning its price goes up). Real estate values increase over time, and with good investment, you can turn a profit when it’s time to sell the property for profit. In addition, the rent increases most of the time, which can lead to higher cash flow…
Build Equity and Wealth
As you buy a property, you build equity – an asset that’s part of your net worth. And as you build equity, you have the leverage to buy more properties and increase cash flow and wealth even more.
Portfolio Diversification
The other benefit of investing in real estate business in Somalia is that of its diversification potential. Real estate has a low – and in some cases negative – correlation with other assets. Evidently, the addition of real estate to your portfolio of diversification assets can lower the volatility and will gain higher return on investment (ROI) per unit of risk.
Real Estate Leverage
The definition of Leverage is the use of several financial instruments of borrowed money (Example: family members, friends, or a bank – financial institution). It helps you invest in your dream house and payoff the loan later as agreed and required by law.
Inflation Hedge
In relation to GDP growth rate, the demand for real estate increases and drives rent higher; which leads your income to increase as well. Surprisingly, that is what is happening in Somalia right now, because there is rent inflation that can accumulate and increase investors’ income and possibly will make them better off, than those who do not take advantage of the current opportunities.
The Bottom Line is:
Regardless of its benefits, investing in real estate (whether in Somalia or in any other part of the world), has its drawbacks. The main problem is the lack of liquidity – the difficulty in converting an asset into cash and cash into an asset. What I mean by that is if you need your money back and urgently want to sell the property, you won’t be able to do so. You have to wait till it sells and your time is valuable I guess…
If you have any queries related to real estate investment in Somalia, please do not hesitate to contact us at Solia Real Estate; either online @ www.solia.so or call our office at any time – 25261 3455557. Our dedicated customer service colleagues will be happy to assist you. At Solia Real Estate: YOUR SERVICE IS OUR PRIDE!
