How has the ukraine crisis affected the property market?

Photo credit: John Leach

Since the annexation of Crimea, searches for property in the area have increasing "dramatically," according to aiGroup in Russia. President Vladimir Putin signed the annexation last month, legally formalising the country's takeover of the former region of Ukraine - bringing an end to a period of uncertainty but continuing political tensions between both countries, as well as the rest of the world.

The crisis has affected the property markets in each state, as well as those further afield. While property in Crimea now finds itself part of Russia, some buyers have evidently already begun looking for opportunities in their newly incorporated neighbourhood.

Indeed, Kim Waddoup, CEO of the aiGroup, who organise the Overseas Property Shows in Moscow & St. Petersburg, emphasises that appetite for real estate remains healthy.

Russia has long been a dominant force in overseas property markets, snapping up holiday homes on the continent, as well as wealthy estates in London for safe financial assets. Writing on Global Edge, Waddoup notes that while the number of property searches have decreased on their portal - www.1-property.ru - and the country's search engines, that demand is still there.

"In preparing for our Moscow Overseas Property & Investment Show last weekend, we were concerned for our exhibitors," she explains. "Not for their safety, but would there be enough visitors for them over the two days of the show."

Nonetheless, almost 6,000 visitors showed up to view properties from 160 exhibitors and 27 destinations over the two days, a "very small" decrease of 7 per cent on the last show in October.

"It was business as usual," she adds. "In fact, business was better than normal, as many are looking to move some assets out of Russia soon."

The same is true of foreigners in the Russian capital of Moscow, according to IntermarkSavills, who say that the political conflict has sent international clients to the market to sell - a rare event.

Foreigners only make up 3 per cent of deals made in Moscow's market, so the figures are negligible, but the trend is noticeable in the rental market too: foreign companies renting offices in the city may not be closing branches but are definitely reducing personnel, adds IntermarkSavills.

"The real estate market has reacted to the recent political developments. We have less foreign clients and the general mood on the market is not positive,"  Natalya Smolyaninova, executive director at Seven Hills Property, tells The Moscow Times.

"We were having problems even before the New Year, however the deepening political crisis has made things even worse. Some clients have put their deals on hold and are waiting to see how the situation is going to develop."

The impact in Ukraine has been even more apparent, with wealthy buyers from the country flocking to London, overtaking Russian investors as the new top buyers from central Europe.

Over the last 24 months, buyers from the region's top five countries of Ukraine, Russia, Kazakhstan, Azerbaijan and Georgia have purchased over £2 billion of luxury residential property in central London and the Home Counties, says a report by Beauchamp Estates.

The Rouble has been the biggest economic casualty of the situation, with the Russian currency weakening in recent months. While this might be expected to deter Russian buyers from looking overseas, though, Carlo Walther, COO of leading Russian property portal Idinaidi, says that appetite for real estate abroad has not diminished.

"We've not seen a slow down in overseas property searches," Walther tells TheMoveChannel.com. "In fact, searches for international property as a whole on Idinaidi increased by 25.6 per cent in the month, with snow still falling in Moscow this week and Russia still emerging from its long winter, Russians motivation for a place in the sun has not gone away."

Instead, Russian buyers are turning to more affordable destinations such as Turkey and Bulgaria, thanks to low prices and an established holiday appeal. Indeed, searches in Turkey have increased by 52.7 per cent.

Walther adds that even the strained relationships between Russian US governments have not had a negative impact on Russia's interest in American real estate, with searches also increasing over 50 per cent.

"Russian people are concerned with what is going on but they are not over-reacting to the media hype and life continues as normal!" notes Kim Waddoup.

For many, of course, that means continuing to acquire property and land in other countries. For some, Crimea included.