Russians have significantly less to invest in overseas real estate. Since the beginning of 2014, the volume of investments in the purchase of property abroad has fallen by 61%, to $ 189 million, in the first quarter of this year, follows from the calculations of the agency «Expert RA» on the basis of data of the Central Bank (available to Izvestia).
According to experts, the trend is connected with the geopolitical situation, stagnation of the total income of wealthy Russians, as well as tightening control over the declarations of officials. However, well-off citizens still allocate up to 60% in investment portfolios for real estate. But if earlier they bought living quarters, now they switched to commercial ones. The properties are acquired in Spain, Germany, Austria, Ireland, Romania, Portugal and Cyprus for subsequent leasing. According to expert estimates, such a business can bring an investor up to 6% of annual income.
According to Expert RA calculations, in the first quarter of 2014, Russians invested $ 484 million in foreign real estate, a year later — $ 281 million. In the first quarter of last year, the figure was $ 199 million, in the first quarter of 2017 — $ 189 million. Accordingly, for three The volume of investments in the purchase of real estate abroad fell 2.6 times.
«We can judge this by indirect evidence,» Sergei Kolosnitsyn explained. — If earlier people traditionally spent the spring-and-summer period in Europe, for the last two years we have seen an increased demand in the suburban rental market in Russia. In spring all rental villages of the premium class are turned over. Again, if Russians are afraid of long trips abroad, the purchase of real estate there seems to them even less attractive. A significant psychological barrier to the purchase of real estate, for example, in Europe are disorders associated with migrants.
According to Stanislav Volkov, head of the Expert RA Validation Department, the decline in investment in overseas property is due to the stagnation of the total amount of income that wealthy Russians have received domestically and are ready to invest in foreign assets.
In addition, in May 2014, President Vladimir Putin signed a law prohibiting Russian officials from having foreign assets, in particular accounts in foreign banks, as well as securities of non-resident companies. At the same time, state employees were left to own foreign real estate, but on one condition — they must declare it.
Nevertheless, the recommendation to wealthy customers to withdraw part of their investment portfolio for real estate is not losing its relevance. 10-30% of funds can be sent to these purposes for diversification of investments, says the vice-president of the Absolut Bank Konstantin Pavlov. According to the director of the department of foreign real estate of Knight Frank Marina Shalaeva, the share of foreign real estate takes 20-60% in the portfolios of the company’s clients.
«The crisis has changed the approach to such investments: Russians have become better at calculating possible risks, now they are more concerned with the investment component,» said Oleg Safonov, managing director of BCS Ultima. — If before the crisis, citizens bought housing abroad mainly for themselves, today a large part of buyers are obviously buying real estate for a rental business, which can bring an investor 4-6% per year in foreign currency. In addition, these investments allow to diversify country risks, give other valuable «bonuses». For example, the purchase of housing in Cyprus after reducing the entry threshold for participation in the passport program to € 2 million by many Russians is considered as an opportunity to obtain a residence permit.
Konstantin Pavlov confirmed that now wealthy clients acquire commercial real estate abroad, for example, shopping areas, small shops. Infrastructure facilities are also popular — say, parking at airports. Elite real estate «by the sea» involves financing its services. For example, the annual cost of a villa worth € 2-3 million in Italy can be € 10-50 thousand, Binbank’s investment director Roman Serpeninov reminded.
According to Dmitry Breitenbikher, head of the department for working with VTB’s wealthy clients, Cyprus remains one of the most popular destinations for Russians. The number of transactions for the purchase of real estate there in the period from 2015 to 2016 grew by 33%.
«In Bucharest, Dublin, Madrid, Lisbon, buying cheap real estate, customers are more often engaged in redevelopment projects, since prices there still have a lot of growth potential,» explained Dmitri Breitenbacher. — Interest in real estate in the UK declined due to Brexit and the accompanying changes in the country’s legislation.