Cracking the valuable Russian investment market overseas

Russian’s are currently spending a staggering US$12 billion a year on overseas real estate.
Each month we will try to explain how your company and in particular your delopments can succeed in this lucrative market.

Kim Waddoup is the CEO of the aiGroup, one of the most influential companies operating within the Russian property industry. In 2003 he created the first Moscow International Property Show, in 2004 established Russia’s first overseas property magazine and in 2005 Russia’s first specialised overseas property portal.

The expos are now held in Moscow and St Petersburg several times a year and are sold out on a regular basis. 35,000 copies of International Residence magazine are sold twice year making it the top property magazine in Russia and 1-property.ru is the leading portal for Russians to source overseas property.

British born Waddoup is in an excellent position to explain what steps you need to take to gain access to selling overseas real estate to Russian investors.

We hear a lot about the Russian market. What is actually happening?

It is now estimated that the Russian overseas property market is worth $.12 billion annually, so I am not surprised that you are hearing quite a lot about this fast expanding market. The Russian middle class is emerging quickly, there is a great deal of disposable income available and property abroad is becoming very popular. There are many developers and specialists well established in Russia and there are still tremendous opportunities for other companies.

So these established companies make it difficult for newcomers?

Yes and no. The spectrum of the market is widening meaning that more potential clients are coming into the marketplace every day. This widening is creating a lower entry level for first time buyers whilst also promoting overseas property to all levels of society. Property prices in Russia remain very high and the lure of a dream home abroad is encouraging a larger number to by overseas. This offers opportunities for the established players and also opens the market to developers and agents now considering Russia.

What does a ‘newcomer’ have to do to get started?

To be successful in Russia you need to be creative. Russia is a different market with different priorities. Forget what you have learnt from other markets and approach Russia with an open mind. You will have to learn to think outside the box! It will take time, you will require tenacity but the rewards are high.

Time and tenacity – how long/how much?

Authenticity and trust are essential for successful business in business. Many developers arrive in Russia and expect that their reputation in other markets will be recognised here. Not so, it has to be earned by hard and conscientious work. There is a lot to learn, for example does a Russian require a visa to visit your country? If so can you assist him to obtain this? You would be surprised how many professionals fall on this first fence but not being able to answer! From experience I know that it can take up to 18 months before results are visible, so a sensible and well planned budget is essential.

How do recommend developers or agents to start in Russia?

They should commence by looking to create ‘recognition’ which leads to authenticity. The ideal is to commence advertising in the leading overseas property magazine. The phones will not start to ring immediately but more than 100,000 potential Russian investors will see the initial advertisement. Follow this up later with either visits or participation at one of the major overseas property shows. By showing you advertisements in several issues, creates the authenticity that is needed for Russians to start to trust.

You mention phones starting to ring. Will they be speaking only Russian?

This is Russia so there is a good possibility that potential clients will only speak Russian, however many also have a great command of many languages. If you are serious about the Russian market it is essential to respect the need for Russian speakers.

So I need to employ Russian speaking staff?

Essentially yes, but it is a chicken of the egg scenario. My advice it to research Russian speakers in your area. Once calls start to come in, this person can be either called in to the office or at least given a mobile phone to answer. A sort of Russian hotline! Initial written enquiries in Russian can be quickly translated by on-line translation services. These will give you an idea on what the client is looking for. However never write a reply and then translate with an auto translator as you never know what might be interpreted by the result!

Your last piece of advice for today

Start to learn about Russia, subscribe to the English version of a Russian newspaper. Start to learn the requirements of the Russians and observe them in your area. It’s a great market and it will grow to a vast potential. My last piece of advice for today? Don’t delay, get started now by placing advertisements as you initial actions.