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Selling to Russians News: Russians invest in commercial properties abroad. Part 2 of 2
November 18, 2009
IRN, a Russian analytic real estate portal, conducted the online conference "Investing in residential and commercial properties abroad for Russians – what to choose?" in October 2009.
The portal analysts prepared the 2-part resume of the results, separately for residential and commercial real estate abroad that Russian buyers are seeking and purchasing. Here is my English summary for you of Part 2, Commercial Properties Abroad, while Part 1, Residential Properties Abroad, was published in the previous issue of this newsletter.
Demand for commercial properties abroad has seriously increased among Russian buyers lately. The international real estate company Gordon Rock with the strong presence in Russia reports on Russian buyers demand for commercial properties (in the price range up to 5 Million Euros) in the first half of 2009 in the following countries:
Germany - 24%
Czech Republic - 16%
USA - 12%
Spain - 11%
UK - 8%
other countries - 29%
The requests for commercial properties abroad come from the following regions of Russia:
Moscow - 50%
St. Petersburg - 19%
Ural - 15%
Siberia - 6%
Volga - 5%
other regions of Russia - 5%
The major reasons for Russians to invest in commercial real estate abroad:
-35% purchase properties with a huge discount now hoping for the price growth in the future (which is very popular during the crisis times)
-30% are looking for a stable rental income
-18% want to receive residence rights in foreign countries
-10% diversify their existing businesses
-7% buy for other reasons
The most popular among Russian investors are the following commercial properties abroad:
Retail - 32%
Hotels – 28%
Offices – 18%
Other – 22%
The average "image" of a foreign commercial property in the highest demand among Russian investors would be a retail property under 2 Million Euros with 7% to 8% annual income before taxes.
The research also shows that Russian investors who are looking for commercial rental income prefer properties in the top five countries:
Germany - with the average income of 11%
USA - 10.2%
UK - 8.6%
Spain - 7.9%
Czech Republic - 7.7%
Russian investors looking for distressed or REO commercial properties prefer the USA and UK.
In the USA the discount is up to 60% in comparison with the 2007 prices. In UK the discount is 35% to 40%.
At the same time during the first half of 2009 these same countries show the maximum growth in the number of transactions of commercial properties. New York, Florida, California and Arizona show 40% increase in comparison with the same period of 2008. The UK commercial real estate transactions are up for more than 30% in comparison with the last year.
Hope this information will be helpful for commercial real estate owners and agents in your marketing to Russian buyers.
To your best business success,
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