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Selling to Russians News: New investment strategy of Russian buyers
February 10, 2013
The most influential Russian business newspaper Kommersant published an article on new investment strategy used by Russian buyers of international real estate. Here is a short summary in English for you.
For over a decade from the beginning of 1990s till the beginning of 2000s Russians have been buying properties internationally mostly for cash, without doing much of a research and with the main goal to legalize their money. Until the crisis of 2008 Russians preferred moderately priced residential properties in tourist areas of Spain, Bulgaria, Cyprus, Turkey, Montenegro, Dubai and Egypt. Oligarchs were buying very expensive properties in London and French Riviera.
Cyprus was attractive because of its easy visa policies. Spain experienced such price growth that any property looked like a very good investment. Developing resort real estate markets of Dubai, Montenegro, Bulgaria, etc. promised huge profits. But a newcomer to the real estate field can't usually get the moment of getting out right; so many Russians actually lost their investments and were left with illiquid properties in these countries.
No wonder that the world financial crisis, as a result of which real estate markets fell in so many countries, made Russians think differently about investing in real estate internationally.
Now about two thirds of Russian buyers of properties around the world care first of all of getting stable profits from renting out their properties. Before the crisis 80% of Russian buyers hoped for the price growth of the properties they acquired, but nowadays this is not a major goal any more.
The investment climate is defined by volatility of world currencies and economies such as Greece, Spain, Italy, Portugal, and Cyprus and of course fears of the second wave of crisis. (A note: It doesn't mean that Russians do not buy properties for their own use in the above mentioned countries, but they are looking for bargains there of course).
In this situation the most attractive countries are the most economically stable which would allow Russian buyers to preserve their investments at least. Such goals are in minds of the wealthy Russian investors with more than 400,000 Euro to spend. They aim at putting their money into reliable properties that can be easily unloaded when needed as soon as the financial situation in the world stabilizes. As a result there is a growing activity in investing in economically strong countries where properties were highly liquid historically. These are Great Britain, Germany, Monaco, France, Switzerland and the USA.
Less wealthy Russian investors in the range of 50,000 up to 400,000 Euro intend to earn rental profit more than preserve money. They are looking for properties with a reasonable level of rental income.
As rules of bank financing have tightened all over, more Russian buyers prefer not to wait for months to get mortgages, but to purchase outright instead.
Another trend is some 20 to 25% larger budgets for purchasing international properties by Russian buyers while at the same time they buy less of real estate in Russia.
The geography has changed a lot lately. Germany is the most preferred country for investing now due to rather low real estate prices. Austria, Monaco and Netherlands are popular due to their stability. Those who do not believe much in Euro prefer Great Britain and Switzerland. The USA real estate is attracting a growing attention from Russian investors as the country is getting out of the real estate crisis now, new construction is still slow and rental income is on the rise.
Russian investors choose stability and strategically diversify currencies between Euro, pound, dollar and franc.
Anyway there are still Russian investors who hope for the best and invest in developing markets of Dubai, Qatar, Bahrain, Singapore, Thailand, etc.
Countries of Southern Europe and Balkans are interesting for those Russian investors who think long term and willing to buy now at a reduced price for their children or grandchildren to benefit in the future.
This is a recent general picture of Russian investments in international real estate, the view from Russia based on Russian realtors' opinions. We also know that many Russian buyers go directly through local realtors in countries where they want to buy properties, and such purchases are not covered by this article. I am welcoming readers of this newsletter to share your local data on Russian real estate buying trends in your countries.
To your best business success,
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