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Selling to Russians News: Alternate Airport - second home abroad
June 16, 2009
The Russian business newspaper Kommersant is the first and maybe the only so far Russian daily paper with a UK edition now. It reports that London has become a second home for so many Russians. What is happening on the market of Russian buyers now?
"The image of a wealthy Russian client has changed a lot from the point of view of London real estate agencies.
"At the beginning of the Russian boom realtors kind of laughed behind the back of Russian buyers. In 2004 – 2006 Russians were buying properties in London at any price asked, sometimes a million or two pounds more than the market price. Realtors always made up some 15 to 20% higher pricing especially for them. It was not only because of the lack of market and language knowledge. Inferiority complex of the first wave of Russian noveau riches made them prove their financial strength by purchasing the most expensive properties in the most prestige areas or historical castles.
"Their behaviour and property demand differed a lot from other foreign buyers and Brits. As a rule, Russians refused to purchase properties that were highly sought after, but in need of some repairs. They wanted it all shiny no matter what.
"This specific trend had been explained by their inability and unwillingness to hire local staff for restoration or repairs. Also they were pushed away by the low ceilings of most modern British homes, that's why mansions were preferred.
"Now there are changes – Russian buyers negotiate the price, order to conduct their own market research and use mortgages if possible.
"Russian expansion to London real estate market was impressive. In the year 2006 Russians bought 240 priced over GBP 1,000,000 homes in London. There are 9 Russians among the 50 wealthiest people in Great Britain. The beginning of Russian boom in London has been created by Abramovich and Berezovsky back in 2003.
"Roman Abramovich bought a house in Eton Square for GBP 28,000,000, penthouse in Kensington for GBP 36,000,000 and vacation home in Western Sussex for GBP 23,000,000. Boris Berezovsky bought a home in Chelsea for GBP 10,000,000 and in Wentworth Estate in Surrey for GBP 20,000,000. Oleg Deripaska, the youngest Russian billionaire, followed with the purchase of a Belgravia home for GBP 25,000,000; Leonid Blavatnik, the oil mogul – a home in Kensington, GBP 41,000,000; Vladimir Chernukhin, finance industry – the former Midland Bank HQ building, GBP 72,000,000.
"The last purchase of this calibre was in July 2008 – a 90-room home Witanhurst in Highgate for GBP 50,000,000. This is the largest private home in London except for the Buckingham Palace. Although the agency that closed the deal keeps it confidential, the Daily Mail newspaper revealed the purchaser's name – it's the Moscow Mayor's wife Elena Baturina.
"Now, Grace Margolis of the real estate agency Savills with a long experience of working with Russian clients in London, comments on the recent situation.
"Q. Do you have any statistics of real estate purchasing by Russian clients?
"A. It's hard to do as we have to maintain confidentiality and have no right to disclose prices and names of purchasers. To tell you the truth, the media get such information somehow anyway. Another reason is that Russian buyers often purchase real estate in the name of an offshore company and it's impossible to know whom the company belongs. Most of the time the money to close a deal is wired not from Moscow.
"Q. There is a rumour that Russians are leaving London real estate market, is that true?
"A. No, I wouldn't say so. It's a fact though that the super-expensive homes are really not in such high demand any more. We can understand that as Bloomberg reported recently that the 25 richest Russians lost more than $230 billion during the financial crisis... Nevertheless, our agency has many Russian clients to work with right now. But what they want is different.
"It's not the luxury that oligarchs bought in the past, but medium priced homes in the range of GBP 1 to 3 million. In most cases it's not a home to live in, but to invest in and rent away. They also require commercial properties such as multiunit residential and office buildings. We have many buyers for these types of properties from Russia, Kazakhstan, Poland and Baltic countries.
"If they want to move money out of their countries, they prefer real estate investing instead of dealing with banks that can go bankrupt. And one more thing to mention in this respect – no Russian owners sell their London properties in spite of their financial losses during the crisis."
Hope this knowledge of Russian buyers' changed preferences will help you with targeting your marketing.
To your best business success,
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