Russian buyers: who, what and where
Cash clad Russians have arrived on the international property scene with a bang and they are looking to buy prized property throughout the world...
The headlines speak for themselves. "From Russia-with Cash," waxes the Wall Street Journal. "Russians snap up Australian luxury," declares the BBC. "You are not imagining that Russian buying spree," confirms The New York Observer. "Despite crisis, wealthy Russians are buying up coastal Montenegro," writes The New York Times.
The economic slowdown has only raised the Russian interest in property investment. The RTS, Russia's stock exchange, has lost 75 per cent of its value in 2008, "making Russian shares the cheapest in the developed world," according to a recent article by Overseas Property Professional.
"One can hardly trust in the Russian stock market. Low oil prices ruin all the business indexes in our country despite the formidable government aid. I believe that, in these troubled times, people think about more solid investments, such as real estate," said Alexey Konovalov, the Editor-in-Chief of Prian.ru, the leading Russian overseas property portal.
Bulgaria seems to be garnering interest from more Russian property investors
Investing in property in Russia not only costs a pretty penny, but there are fears that the markets are ready to collapse.
Analysts believe prices have risen to unsustainable levels in major cities such as Moscow and St. Petersburg and supply outstrips demand in some segments. The instability of the country's stock market coupled with fears of a real estate meltdown at home has sent well heeled Russians abroad in search of safe havens around the world. "We expect more Russian investors to go overseas," said Mr Konovalov.
Who is buying
Hardly surprising, then, that property agencies are scrambling to market to them. There is a lot of interest in just who these newly minted wealthy Russians are and what exactly they are looking for.
In reality, however, it is hard to pigeonhole the Russian market. "Wealthy Russians are mostly interested in luxury properties in London, Cote d'Azure, Paris, Tuscany or New York," according to Mr Konovalov. "Our middle-class nationals are looking for affordable apartments or houses up to 100,000 euros in Central, Eastern Europe and Middle East," he said. Even senior citizens, who don't have much in the way of spare cash, can afford a property abroad after selling "their houses or their rooms in communal flats," according to Mr Konovalov.
What they are buying
Russians owning real estate abroad have become more and more common in the past five years, according to Mr Konovalov. Their reasons for internationally purchasing property are as diverse as their real estate destinations.
According to a survey made by Prian.ru, 20 per cent of Russian buyers are purchasing property in resorts for vacation homes. Another 20 per cent are looking for a place to retire.
An even larger portion, 27.5 per cent of survey respondents, stated their desire to immigrate to the country of their purchase. A small slice, just 5.4 per cent, see owning property overseas as a status symbol.
The rest buy for investment- and business-related purposes, some planning to make money by renting their properties out and others hoping to resell.
"Russians are buying mostly homes and land. Commercial properties are not so popular," according to Mr Konovalov. "The number of requests to the Prian.ru property database increased by 15 per cent in October," he said. It went up from about 500,000 in September to about 580,000 in October.
Where they are looking?
Most Russians are searching for properties close to home, in Europe, though a small per centage look in places as far as Egypt and Thailand.
This number may increase now that several Eastern European countries have recently seen a drop in their credit ratings. Prian.ru breaks down the top 10 countries visitors to the website inquired about last month as the following:
Some U.S. real estate markets have already seen an influx of foreign buyers
Bulgaria: 14.53 per cent
Germany: 8.02 per cent
Finland: 7.87 per cent
Spain: 7.85 per cent
USA: 5.19 per cent
France: 4.78 per cent
Czech Republic: 4.61 per cent
Italy: 4.33 per cent
Egypt: 3.17 per cent
Turkey: 3.00 per cent
Montenegro and Greece are in the top 15. Also, interest in Thailand has shown a strong increase while Cyprus has seen seasonal decline.
Russians are part of a relatively new and bigger trend. Increasing global wealth will continue to make new millionaires and billionaires.
Nowhere is this more true than in places such as Russia, China and India. The diversity of international property buyers is likely to continue to evolve as national borders fall to the wayside under the irresistible charm of the rich.
Written by Yemisrach Kifle for www.nuwireinvestor.com
Picture by saxon