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Selling to Russians News: Russians buy international real estate, 2009 in review
April 17, 2010
Russian independent real estate analytic center IRN published the year-end report "Russians buy international real estate, 2009 in review". The report draws a major conclusion that the trend will grow.
The analysis is based on the transactions that Russian buyers of international real estate completed in various countries with the help of Russian real estate agencies that offer foreign properties to buyers in Russia.
We have to keep in mind though that there is no way to summarize those transactions worldwide that were completed by Russian buyers with the direct help of real estate agencies in the countries where the properties are located, or just entirely on their own like buying properties sold "by owner" or being advised by relatives or friends in foreign countries. This means that such transactions were not included in the report of course.
Anyway this report is interesting as it evaluates the market of Russian buyers of international real estate properties in general.
Here are the major points of the report "Russians buy international real estate, 2009 in review" for your information in English in a nutshell:
Russians were buying foreign real estate properties approximately in the same quantities in 2009 as in 2008 (while at the same time statistics show that the inside real estate market volume in Russia suffered a decrease of about 35% in 2009 in comparison with 2008)
Market volume of international real estate was estimated at 10.8 billion in 2009 vs. 11.9 billion in 2008
Average estimated price of an international home purchased by Russians abroad was $210,000
Russians bought approximately 50,000 foreign homes in various countries
45% of Russian buyers came from Moscow
Approximately one in ten Russian real estate buyers bought properties internationally
In some countries Russians were the most active real estate buyers in 2009: in Cyprus 55% of all properties sold were bought by Russians, in Montenegro - 52%, in Egypt - 45%, in Israel and Croatia - 40% in each. Experts say this trend has been very strong for the last several years
Reasons for Russians to buy international real estate properties
Most real estate market experts agree that the majority of Russian buyers of international real estate properties buy vacation homes. But in 2009 this reason became less popular - just 40% of Russians bought vacation properties while a year ago this number was 60%.
The second reason - investing with the goal to get real estate income - on the other hand became more popular, and in 2009 25% of international properties were acquired for this reason in comparison with 15% a year ago.
Russians use more and more various types of real estate investments such as condo hotels, residential properties with guaranteed rental income from developers, lease-back, buy-back, rental income properties, student properties. Also experts notice the popularity increase of investing in medium-priced foreign commercial properties among Russian buyers.
The third reason for Russians to buy real estate properties in various countries is the possibility to become a resident of the country or get a multi-entry visa - it was 20% of all purchases in 2009, up from 10% a year ago.
There was no change since the last year with 10% of international real estate purchases for all kind of family reasons like a condo for children to use while at the university or retreat for the future retirement years, etc.
Some 5% of real estate properties abroad were acquired by Russians for other reasons including exotic ones like collecting properties all over the world.
Most popular among Russian real estate buyers foreign countries
This section of the report is based on the data from Gordon Rock, a huge real estate agency specializing in selling properties from a wide variety of international developers to Russian buyers all over the country.
Here is their list of 15 top countries where Russians bought residential real estate properties through the above mentioned agency in 2009:
The list was more or less the same for 2008, but the agency says the most notable increase in popularity of residential real estate properties in Germany and the USA happened in 2009 in comparison with 2008.
Here is also their list of 5 top countries where Russians bought commercial real estate properties through the above mentioned agency in 2009:
Most active Russian regions in buying international real estate
As it was mentioned earlier the most active Russian buyers come from Moscow, but in 2009 St. Petersburg which comes second, increased its share by 33% in comparison with 2008.
Here is the international real estate buyers' market share by Russian regions:
Moscow - 45%
There are also some regional Russian buyers' preferences: St. Petersburg and North West of Russia are more attracted to Finland than others; Volga region - to Turkey, Egypt and UAE; Siberia and Far East - to Thailand and Philippines. Bulgaria is a favourite resort destination for all of Russia.
As real estate experts all agree, a huge parallel trend can be noticed as more and more developers from various countries become interested in Russian buyers.
In 2009 real estate developers from Germany, Cyprus, UK, USA, Montenegro, Israel, Australia and many other countries started to market their properties directly to Russians with attractive offers in terms of discounts, mortgages, guaranteed income and management services.
New developers started their offices in Russia in 2009; and many of those who already were represented there expanded to more regions starting new offices in St. Petersburg, Novosibirsk, Yekaterinburg and other Russian cities with population of more than a million. Regional real estate exhibits in Russia are getting more and more popularity among foreign developers and real estate agencies.
So, the analysts come to the conclusion that Russians are getting more and more interested in acquiring international real estate properties.
There are some psychological reasons for that. During the last ten years Russians have become active travelers around the world and have developed interest in other countries where they can see lots of new possibilities for vacationing, studies and living.
Russians have acquired more hands-on knowledge about various countries including real estate. Just some ten years ago speaking about foreign real estate people in Russia thought of a luxury villa somewhere in an expensive resort for celebrities that only financial elite could afford, but now Russians have discovered lots of possibilities in various price segments.
There is some economy reasoning as well – Russians have learned to calculate and discovered that purchasing real estate abroad can be profitable. At the time when the real estate market inside Russia and especially in Moscow is overpriced and overheated, Russians know there are many real estate properties in the world that are underpriced now and have a potential as investments.
To your best business success,
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