Russian commercial property investment to grow in 2016?
Photo credit: John Leach
Russian investment in overseas commercial property could growth by as much 30 per cent this year, according to brokers.
Tranio's fifth Russian and CIS Overseas Commercial Property Buyer Report, which surveys 714 respondents across 37 countries, arrives after a bad year for the country's currency, with political turmoil and economic sanctions, in addition to the falling price of oil, combining to devalue the Russian ruble.
In the wake of the currency's fall, foreign property purchases by Russian buyers halved.
The percentage of commercial property investments, though, increased.
"The most important aspect of Russian investments after the ruble crisis is the search for yields via individual buy-to-let residential property or commercial real estate, predominantly in Europe," explains the online broker.
"The recession in Russia has forcibly transformed buyer habits and transaction volumes. Market players should expect interest in personal dwellings to dwindle but plan ahead as demand increases for income–generating property."
According to Yandex, Russia's largest search engine, the Top 10 destinations for commercial property investment were all in Europe, except for US or Turkey. Germany was the most popular, accounting for 22.1 per cent of all foreign commercial property searches in 2015.
Tranio's own data, echoes those findings, with the Top 20 destinations all located in Europe, save for Turkey, the USA, Thailand and the UAE.
The average amount invested in buy-to-let residential property in Europe is €200,000 and €1.2M in commercial property, although this figure varies across countries and property types. Russian investors spent 70 per cent less than average in the UAE, for example, but 40 per cent more in Spain - a trend that Tranio attributes to the availability of bank loans. Indeed, the UAE rarely gives loans to foreigners, while financing in Spain is far more accessible.
George Kachmazov, managing partner at Tranio, comments: "Russian nationals frequently buy commercial property where they already own residential property. This is because they know the features of these locations well and are familiar with the local market. Usually they spend time in their homes abroad and find it more convenient to manage commercial property located nearby."
Apartments and houses are the most sought-after investment, with demand particularly high in Bulgaria, Hungary and Portugal. Residential buy-to-let, on the other hand, is not as popular in leading destinations such as Germany, Italy and the UK.