Real estate vs. gold
Where to invest to preserve assets?
Gold or real estate?
With its unspoiled nature, beautiful coastline, rich history and unique cultural heritage, Slovenia has always been a country deeply rooted in real estate investments. For decades, Slovenian citizens have shown a strong tendency to buy apartments, real estate (especially on the Croatian coast), holiday homes and land for various purposes. This tradition, which dates back long before joining the EU, has played an important role in how Slovenians protect their property. Owning real estate is considered a stable, tangible investment that can withstand inflation and economic instability of almost any kind (except for bad weather, which we have also experienced).
However, in recent years, gold has proven to be a viable alternative investment that is becoming popular along with Slovenia’s growing awareness of global investment trends. Although real estate has traditionally been the main investment for most Slovenians, the growth of gold investments is an interesting option for those looking to diversify their portfolios and preserve the value of their money.
We explored why investing in gold today might be more profitable than investing in real estate.
Source: Freepik
Why Slovenian citizens prefer real estate: a historical view
Slovenian citizens traditionally believe in real estate as a way to protect and increase their wealth. The reasons for this are cultural and economic:
Tangible assets: Real estate is a physical asset that can be used, rented, or developed. Owning an apartment or holiday home by the sea offers a double benefit – both as a potential source of rental income as well as a safe place to stay or vacation.
Historical protection against inflation: During periods of economic uncertainty, such as hyperinflation in the early nineties and financial instability before joining the EU, Slovenians considered real estate to be a reliable protection against currency devaluation. Property prices often rise over time, maintaining value and even offering an appeasement.
Cultural attachment to property: Ownership of land or a house has a deep cultural significance in Slovenia. Property is often passed down from generation to generation and is considered a key part of a family’s wealth. The high rate of homeownership on the Slovenian market – one of the highest in the EU – reflects this cultural attachment.
Positive impact of EU membership: Slovenia’s accession to the European Union in 2004 stimulated foreign interest in the real estate market, which further strengthened real estate as a safe investment.
Source: Freepik
Growing Interest in Gold: A New Way of Thinking About Investing
Although real estate is still the dominant investment choice, there has been a change in the Slovenian market in the last decade as more and more citizens begin to explore investments in gold. The growing interest in gold is influenced by several factors:
Gold as a global store of value: Unlike real estate, gold is a widely recognized store of value. It has been a reliable form of wealth preservation for centuries, especially in times of financial crises, inflation and geopolitical instability. Slovenian investors, aware of this trend abroad, began to look to gold as a safe haven in uncertain economic times.
Diversification: Investors who are aware of the risk of concentrating their assets in one asset class, such as real estate, are increasingly looking to precious metals such as gold for diversification. Gold provides protection against currency fluctuations and economic downturns, and balances portfolios that are heavily invested in real estate.
Liquidity: One of the main advantages of investing in gold over real estate is liquidity. Gold bars can be sold quickly and easily in markets around the world, providing instant access to cash when needed. On the other hand, real estate sales can take months or even years, especially in less liquid markets or during times of recession.
Hedging against inflation: Although real estate is often considered a good hedge against inflation, gold has historically performed even better during periods of high inflation. Gold typically rises in value when a currency’s purchasing power decreases, making it a reliable and inflation-resistant asset.
Source: Freepik
Gold compared to Real estate
Affordability: Historically, investing in gold could be considered an elite option that was only available to high-net-worth individuals or those with specific knowledge of global financial markets. In recent years, however, gold has become increasingly accessible to Slovenian investors through local traders, specialized platforms, such as Valores Metal Account and even banks.
Maintenance: Owning gold bars requires a little skill from the investor regarding storage, which can be organized already in the company from which the gold is purchased, but it can also be through individually organized storage, such as private safes or safes in banks. Compared to the maintenance of real estate, this is really an extremely advantageous item, as the property loses value over the years, and the cost of maintenance increases. In today’s time, and especially in the future, the lack of manpower and expertise to maintain properties – will be a growing problem.
Maintenance costs: Properties have ongoing costs – potentially imposed property taxes, maintenance, insurance, and rental management costs. These costs can reduce profitability, especially if the property is not rented or is in an area with lower demand. Gold, on the other hand, has no maintenance costs once acquired, making it an easier investment.
Prav tako pa za zlato in nepremičnine velja…
Protection against economic downturns: During an economic recession or recession in the real estate market, property values can decline as demand for real estate and buyers’ ability to finance purchases decrease, which in turn puts downward pressure on prices. Conversely, the value of gold often increases during a recession as investors see gold as a safe investment in times of economic uncertainty. When confidence in financial markets and currency systems falls, the demand for gold increases, which leads to a rise in its price.
Capital growth: In the last decade, both gold and real estate on the Slovenian market have shown capital growth, but in different ways. Property values have risen due to increased demand, low interest rates and limited supply, which has put pressure on prices, especially in major cities and tourist-attractive regions. Gold, on the other hand, has been gaining value due to rising global demand and economic uncertainty caused by geopolitical conflicts, trade tensions, and occasional financial turmoil. Investors have been looking for safe investments, which has led to a rise in gold prices, as gold has traditionally been seen as a haven in times of crisis. Gold yields during this period often outperformed those in riskier financial markets.
Source: Freepik
Gold as a new safe haven for Slovenian citizens
In a country where real estate has long reigned supreme, investing in gold may seem like a new concept. However, there are strong arguments for considering gold as a key part of any diversified investment strategy. Liquidity, inflation protection and global visibility make gold a viable alternative to real estate, especially in times of economic uncertainty.
For Slovenian citizens, gold is a reliable option for preserving assets that require little maintenance. Although real estate remains a widespread investment, especially in desirable Slovenian areas, the growing popularity of gold indicates a change in the way Slovenian citizens think about their financial future. As more and more people accept gold as a form of investment, it could play an increasingly important role in preserving and growing wealth in Slovenia.
In short, the choice between real estate and gold depends on individual financial goals, risk tolerance, and investment strategies. However, with the advantages of diversification, liquidity and inflation protection, investing in gold bars can be a more profitable and safer option for Slovenian investors who want to keep their money in today’s uncertain economic conditions.