Where are Russians Investing in Overseas Property?

Unlike many of the European partners, we know the Russians have the cash to invest, but would you like to know where the smart Russians are snapping up their real estate? Then Read on…..

We list four regions where currently Russians are active in the real estate market.

1. ENGLAND

Russians are moving to English Countryside

A nine-bedroom house on sale at Henley on Thames, in Berkshire County outside London.

Russians wary about Vladimir Putin's return as president and weary of London's crowded metropolis are plowing their cash into greener pastures outside the British capital, driving up prices for the best country homes.

Data from property consultancy Knight Frank showed that Russians accounted for 26 percent of sales of country homes worth over £5 million ($8 million) in the first half of 2012, up almost 17 percent from the same period last year.

"The general pastoral feel of the chocolate-box England is very appealing when compared to the political and economic turmoil back home," said Elena Norton, head of Knight Frank's Russia desk.

While Russians have been buying homes in London for over a decade, political uncertainty over the outcome of this year's presidential election spurred more to seek British property as a means of protecting their cash, Knight Frank said.

That buying has spilled out to areas close to London as luxury home prices in the city skyrocketed over the year, boosted by a spike in interest from Middle East and Far East investors also seeking a safe haven amid global economic uncertainty.

Demand for country houses has helped the price of £5 million-plus properties rise 3.5 percent for the year ending in June. By comparison, the same period saw a 4.8 percent decline in the broader country home market, Knight Frank said.

“There are more Russians than any other nationalities bar the British buying such homes,” said James Cleland, a partner in Knight Frank’s country home department.

Russians prefer country homes located within private gated estates, he said. The counties of Berkshire, Oxfordshire and Surrey were most popular, being an hour by car from London.

“Many already have a central London home but see that property in the country is cheaper by quite some margin,” said Andrew Langton, managing director of high-end estate agent Aylesford. “They are fed up sharing a lift with a load of other Russians they are trying to avoid in Moscow and decide they now want some outdoor space, privacy and the good schools of the country.”

2. USA

California here I come…

The super-rich investors responsible for London’s prime real estate bubble are now adding California to their wish lists, lured by bargains offering crisis-defying returns as an overdue churn in the United States property market finally gets under way.

Wealthy European and Asian investors who have dominated the market for addresses in London’s most fashionable neighbourhoods are frequently outbidding locals for assets in the Golden State, U.S. real estate brokers report – and banks, long shackled by the volume of distressed property on their books, are in the mood to cut deals.

“It is now London and Los Angeles, not Shanghai or Moscow, that interests the cash-rich international investor,” said Simon Lyons, managing director of global property group Enstar Capital, who is making regular trips to the U.S. in search of bargains.

In Silicon Valley, Russian billionaire and Facebook (FB.O) backer Yuri Milner shelled out $100 million in March 2011 on one of the most expensive single-family U.S. homes ever sold. Moscow-based Milner is expected to use the French Chateau-style mansion as his second home, Parnes said.

As uncertainty stifles global financial markets, real estate with strong rental prospects in key cities across the United States is again becoming an asset of choice for the yield-hungry international investor.

Data released this week by the National Association of Realtors showed that international sales reached $82.4 billion in the year to March 31, up from $66.4 billion in 2011.

Adam Fenner, an executive at California’s Skyline Wilshire Investment Partners, which sources overseas capital for high-quality US real estate operators and funds, said that overseas investors are again viewing the U.S. as “a safer haven”.

“The very existence of the euro zone is now in doubt, whereas investors believe that the U.S. is fundamentally stable,” he said.

Parnes agrees. “From an investment standpoint, the view is even more positive: people are searching for returns which aren’t available with other investments, and real estate yields are now looking very attractive, given recent price adjustments.”

3. Bulgaria

Russian Investors Continue to Buy Bulgarian Property

Appreciating Assets have been selling Bulgarian property to Russian investors since 2005. During the past 7 years they have seen a change in the type of Bulgarian properties their Russian Investors are buying.

From 2005 up to 2008 the interest came from Russian property funds, who were buying land banks and commercial buildings in Bulgaria. From late 2008 this changed and Russian Estate Agents entered the market, who was concentrating on sourcing individual properties for their clients.

This new surge in interest came about because Russians did not like buying off plan and now that so many developments were completed, they now wanted to buy. Because there was a decline in property prices in both Ireland and the UK, they felt that there were in a great position to negotiate good deals with Irish and British clients who now wanted or needed to release money from their Bulgarian property.

To date Appreciating Assets and their partners have found buyers for over 400 Bulgarian properties and this trend is set to continue for the foreseeable future. They are constantly trying to source new properties to meet the demand from our Russian buyers.

The boom for Bulgarian Developers selling to Russians is continuing at a fast pace, and the Bulgarian Home Exhibition will return to Moscow on February 8th-9th 2013. The event provides a professional opportunity for Bulgarian property developers and specialists to meet with substantial numbers of interested Russian investors.

4. Spain

The Russian market now represents 20 per cent of sales of residential holiday homes to foreigners in The Costa del Sol region of Southern Spain. According to Chairman of the Costa del Sol Tourist Board, Elias Bendodo and the president of the Malaga Developers Associations, Jose Prado, they expected to see increased sales of between ten and 12 per cent in 2012.