Removing the riddle from russia
Much is said about cash rich Russian investors swooping in and snapping up prime property here in the UK and abroad, so let's turn the tables and check out Russia's investment potential...
So is Russia really a ‘riddle wrapped in a mystery inside an enigma,' as Winston Churchill said?
Whilst we hear a lot about what Russian investors are buying, we hear less about what investors are buying within Russia.
Traditionally, Russia fell under the radar for most international property investors, due to economic instability (a legacy from its previous era) and high levels of corruption making it appear an unreliable and risky market in which to invest.
But, fast forward a few years and Russia has become far more appealing prospect to investors and, whilst the risks have not disappeared altogether, the appeal has started to outweigh them.
Whilst Russian natives were busy putting their money into other property markets, the Russian one was slowly gathering momentum. Buyers from the UK and other western European countries came along, hoping to make a fast buck out of Russia's market, which they saw as a potential goldmine.
A shortage of property and the population's steadily rising incomes meant that demand was high and potential returns on investment were strong. Transaction costs are also lower and, as the market remains relatively undiscovered, there is still the chance to get your hands on a bargain if you buy outside one of the main cities.
But, before you get too carried away and book the next flight out to Moscow, remember that investing in a market such as Russia still carries risk elements. The potential huge returns on investment go hand in hand with investment risk.
Older properties may be unregistered so it is possible that you could have someone else knocking on the door of the property you have bought, claming ownership. Communally owned flats, which used to be very common, should also be avoided as it confuses ownership rights and could be hard to rent out if you are buying as a buy-to-let investment.
Bear in mind that property purchase in Russia must be done in front of a notary, who will charge up to 1.5 per cent of the property value. On resale, non-residents are liable to pay a 30 per cent tax on any profits, but they can currently transfer funds into or out of Russia without restriction. This may Change in the future though.
Russia has managed to escape the sub-prime mortgage issue as a lot of properties are purchased with cash due to the lack of established lending on offer. Unlike other Eastern European markets, mortgages in Russia only started in 2005 with the publication of the new mortgage law, so remain relatively un-established.
Saying that, some foreign buyers will be eligible for a mortgage with Russian and foreign banks to help with their purchase.
Moscow
The capital city, Moscow, has been the focus of investor attention and as a result has witnessed some of the most impressive investment gains with some city-Centre flats more than trebling in value over the last five years.
Off-plan flats are amongst the most popular purchases, with investors keen to get in on the action fast. Prices range from £55,000 on the edge of town for a one-bedroom apartment, running into millions in the city Centre.
One of the most exclusive areas of the city is Tverskaya Ulitsa, which is true city living- lots of Bars and restaurants but nothing in the way of green space and many of the apartments available are tiny.
The areas around Kropotkinskaya and Ostozhenka are also very popular, thanks in part to the line of luxury construction between Ulitsa Ostozhenka and the Moscow River.
If you want some green space, consider Frunzenskaya, or, if it's peace and quiet you are after, go for Zamoskvorechye.
Patriarch's Ponds is strong on the restaurant front.
Whilst the Sokol area, 30 minutes from Moscow city Centre, has Chapayevsky Park, it is rather busy and congested with several enormous ten lane roads.
The area of Chistye Prudy is popular with foreign buyers looking for some classical Russian charm, as many of the buildings are old and full of character.
Moscow Region (outside the MKAD - Moscow's motorway) is being developed quickly with detached houses so foreign buyers have been looking for off-plan bargains there.
St Petersburg
Many international buyers are keen to buy in St Petersburg historic city Centre. Prices obviously fall dramatically the further away from the Centre you get.
Buyers are often keen to buy near the canal, near Nevsky Prospect and Bankovsky Bridge.
Away from the cities, the well known Black Sea Coast has become hugely popular with foreign investors, especially now that the 2014 winter Olympics will be held in nearby Sochi.
Picture by John Leach