Published on 28 November 2005 at 04:24 pm
Filed under: Europe:- Russia Property Guides » Russia Real Estate Investment Potential
As Russia develops so does its real estate sector and property economy and there is definite long term appeal for real estate investors considering Russia. The appeal lies in the future economic expansion of Russia and the majority of real estate investment potential is currently located in the major towns and cities in the west of the country.
In terms of the investment potential available in Russia it stems primarily from the residential letting market with secondary activity in the commercial property market.
Despite the fact that the majority of Russian citizens are intrinsically very poor, properties for sale in Moscow and St. Petersburg in Russia are incredibly pricey! Prices are on a par with Western European cities already and they are continuing to rise - this is because the majority of Russia’s wealth is generated in these two cities alone and it is in Moscow and St. Petersburg that the majority of Russia’s billion and millionaires live.
Aside from the super rich both of these cities are home to Russia’s professional core and these individuals have substantial purchasing power and are currently able to afford rising rental yields and in certain cases, rising property for sale prices. The mortgage market in Russia is also limited to these two cities at the moment although it is expected to expand country wide gradually. The fact that mortgages are available for property purchase and also for buy to let property investment in Moscow and St. Petersburg means that more money is pouring into the real estate market from domestic buyers and investors and pushing up prices.
St. Petersburg is an incredible beautiful city and one that attracts international second homers as well. If the city becomes the centre of Russia’s governmental and political operations as has been predicted, property prices will rise even more substantially than they have in recent years and it is based upon this speculation that a lot of international real estate investors are committing to St. Petersburg currently.
In terms of the commercial opportunities in Russia these are not limited to the creation of office spaces as they are in some other developing and emerging markets. In Russia there is potential for developers to bid to construct hotels, retail centers, warehouses and even industrial premises and there’s the chance for real estate investors to buy into the development phase or to buy commercial properties after completion and enjoy rental income.
Other Russian cities worthy of a real estate investor’s attention are Ekaterinburg, Kaliningrad, Samara, and Ulyanovsk for example and investors should be aware that they will be limited to the local economy and market for both rental and resale returns in the majority of Russian cities for at least the medium term.
Property investment opportunities in Russia are plentiful but they are restricted to Western towns and cities and investors should apply acute caution when making an investment in Russia because the property market lacks some transparency and clarity. Because of this it is important to have good legal representation and to conduct due diligence on any real estate agency before electing to use their services as well.
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