What Kind of Real Estate Russian Investors Buy Overseas? Promising Trends 2022

According to official data of the Central Bank of the Russian Federation, at the end of 2021 the volume of Russian investments in foreign real estate increased by 61% compared to 2020 and amounted to $1352 million.

In 2022, this tendency is keeping to gain strength, but with serious amendments from the Russian government.

The matter is that a Decree on new rules on monetary transactions with foreign currency, real estate, securities and other foreign assets for Russian residents came into force on the territory of the Russian Federation as of March 1, 2022. According to the new Decree, it is prohibited for Russian people to buy real estate in foreign countries that "commit unfriendly actions" towards the Russian Federation. Most particularly, it affects the countries that have imposed economic sanctions against Russia and restricted access to their markets for Russian investors.

However, the Decree does not prohibit Russian citizens from buying real estate overseas in other regions that continue to work with Russia in the "standard" economic regime.

In this regard, other relevant areas have appeared for Russian investors in the real estate sector such as Turkey, the UAE, interest in which has been growing for several years, as well as Georgia and Serbia. Whilst the USA, most European countries, Canada and Australia have become inaccessible markets for Russian people due to the above mentioned circumstances.

RMAA marketing agency experts have conducted their own research of real estate markets in these regions to determine reasons why, in addition to amendments to Russian legislation, they have become in demand among Russian investors.

UAE And Dubai, "The City Of The Future”

One of the most popular real estate markets at the moment is the United Arab Emirates. Of course, Russian investors promptly reacted to this situation and rapidly began to acquire commercial and non-commercial property in Dubai.

Moreover, the topic of real estate in the UAE is considered to be the most discussed one in Russia in 2022. Many bloggers call Dubai the "City of the Future", and Youtube gives thousands of video discussions on this subject for the query "Dubai Real Estate".

Photo by Timo Volz: Pexels

Why is the UAE real estate market so popular with Russians seeking to purchase foreign real estate?

To begin with, the UAE government does not require to pay an annual property tax, as in many other countries. In addition, while concluding a purchase agreement, you do not to think about additional fees as there are also absent, apart from the registration state fee.

If we calculate all the above mentioned costs, it turns out that, on average, an investor saves 30-70% compared to the costs of acquiring commercial/non-commercial real estate in other regions. And, moreover, icing on the cake will be the right to obtain the UAE Residence Visa with the purchase worth at least 272,000 USD.

The higher rental yield is another significant factor which favours the investments in the UAE. Experts have estimated that it is 5-8% of the total purchase price, which is much higher than, for example, in European countries.

Where did this indicator come from? It's actually rather simple: every year the population of the country is growing and so far Dubai is ready to receive approximately 25 million visitors and new residents. In other words, the high level of attendance of the country provides investors with a good financial profit, including from renting real estate.

Also, Russian citizens, who have residential real estate in the UAE, note quite significant advantages of living in the country, including:

• safety;
• developed infrastructure;
• high level of service for citizens and tourists;
• reasonable prices for food, medical care, etc.;
• "fascianating views” of the city, clean streets and a "pleasant" atmosphere of a modern city.

The most popular districts to have residence in Dubai are meant to be Dubai Marina, Businnes Bay, Jumeirah Village Circle, Mohammed Bin Rashid City and Jumeirah Lake Towers. Other ones will probably appear in 2022, since the pace of development of the city will only keep growing by 2040 in accordance with the state plan for development of the real estate sector in the UAE.

Put it in other words, the demand for real estate in the UAE among Russian citizens can be explained by many factors. Some people want to change their place of residence while others want to receive passive income from the rent, and still others want to have their "own corner" to relax. And in this regard, the UAE is ready to offer many options at favorable price.

Turkey And Prospects Of Development Of Business In Istanbul

Another real estate market that is in great demand among Russian investors is Turkey. At the end of 2021, the number of commercial transactions in this region increased by 75% compared to the previous year (2020).

In this regard, experts from the Turkish Institute of Statistics estimated that a new record was set: Russians purchased 5.4 thousand apartments and houses in the region, taking the 3rd place in the list of foreigners who buy residential property in Turkey.

Photo by Selcuk Teke: Pexel

It is not just a place to relax but the country with business opportunities!

Of course, sunny Antalya and Alanya remain popular regions for buying real estate in Turkey so far. However, Russian entrepreneurs have become actively interested in property in Istanbul due to the great prospects for development of their own business and government support in this sector.

The matter is that any foreigner who purchases real estate worth at least 250,000 USD gets the right to entrepreneurial activity. He can register himself as a legal entity, LLC or JSC, as well as register the company officially (the registration period is up to 14 days). Moreover, the government offers various benefits for foreign businessmen and supports domestic markets to stimulate investment growth in this area.

What other bright sides are there?

In addition to significant business prospects, we should not forget that Turkey is a top holiday destination among Russian citizens. Many of them are much more comfortable and cheaper to have their own real estate in the region.

Besides, the pandemic in 2020 “made" significant changes to work schedules, providing most people with a remote format of work from anywhere in the world. In this regard, Turkey with its visa-free regime has become for Russians not just a place to relax in the "all inclusive" mode, but also a promising region for emigration.

It worth to mention separately the other advantages of acquiring Turkish real estate which are highlighted by many investors in Russia:

• simplified system for execution of transactions related to acquisition of property that allows to conclude a purchase and sale agreement within a few days;
• the right to obtain a residence permit for a period of 1 year and the possibility of extension an unlimited number of times, as well as the right to obtain citizenship provided permanent residence in the country for at least 6 months per year for 5 years;
• relatively low property tax - 0.2%/year of the cadastral value of the property;
• accelerated procedure for obtaining citizenship by investing in other sectors of the economy.

Having analyzed all of the above, it seems fair to say that Turkey is one of the most popular regions for real estate acquisition with Russian investors. However, compared to the UAE in the same sector, Russians see different prospects here.

Turkey "attracts" by its small business opportunities within the region as well as comfortable conditions for emigration for permanent residence, whereas real estate in the UAE is attractive because of the prospects of additional earnings from renting out real estate.

Georgia As An Option “For The Soul” And Not Only

Real estate in Georgia has become incredibly “saleable” over the past 4 years, including to Russian investors. According to the Georgian government, 40% of foreign real estate in the country belongs to Russians. And, most likely, the demand for real estate in this region will grow by the end of 2022, because interest in Georgia is merely on the rise.

"15,133 real estate items have been acquired by Russians in Georgia since 2016”" - Experts of the Government Migration Agency comment, based on official data of the State Register of Georgia at the Ministry of Justice.

Photo by Rudolf Kirchner: Pexels

What kind of real property assets Russians acquire in Georgia?

Tbilisi, Borjomi, Kakheti, Adjara have become the most in-demand regions for Russian citizens.

This is quite reasonable, because many Russians purchase real estate in Georgia in order to change their permanent residence to a new one with more comfortable conditions for themselves. Of course, Georgian resorts and climate meet these requirements.

In addition, it's worth to mention rapid development of infrastructure in Batumi and appearance of modern residential estates on the coast. By the way, they by no means differ from the similar buildings in the UAE in terms of design and level of service and are in demand not only with Russian but also with European investors.

In addition to comfortable apartments and flats of premium/luxury segments, Russians often buy "secondary" real estate in Georgia. It is quite simple to figure out the reasons for this trend, which are the relative low cost compared to the prices of "primary" construction projects.

Particular attention should be directed to the purchase of land plots, as some Russian investors see this trend as promising for their own business. The reason here is also quite obvious: Deep and Comprehensive Free Trade Area Agreement is in force within Georgia, that allows working for export with European markets without additional duties.

And of course…

As well as the UAE and Turkey, Georgia provides foreign investors with easy real estate registration, with no need to submit certificates of income and other bureaucratic procedures during registration. What is more, you get an added bonus of residence permit with the prospect to receive citizenship, especially if the investor further "invests" in economic sector (in this case, you can receive the citizenship in fast forward).

For these reasons, Russian citizens have become not just "tourists", but permanent residents of the region. Perhaps, the Georgian real estate sector is not developing at the fastest pace, but, nevertheless, it was not affected by either the closure of borders or the pandemic of 2020. Russians still see Georgia as one of the most attractive countries for emigration.

"Stable" Serbia

Serbia is one of the few European countries that has not restricted Russian citizens in the economic sector. It should be mentioned that Russians are not as actively interested in buying real estate in this region as in the rest of the above. But taking into account the new legislation within Russia, which we mentioned above, and unstable economic relations with other European countries, real estate in Serbia has good prospects of becoming popular with Russian investors in 2022.

Photo by Stevan Aksentijevic: Pixabay

Main reasons to acquire real estate in Serbia

Firstly, it is the economic stability of the region. Indeed, Serbia has no access to the sea and the same "resort" opportunities as Greece and Spain, but nevertheless, stable economic growth in the country provides its citizens with high level of salary and wages and prospects for development of their own business.

Note that for foreign citizens, these prospects are also relevant when buying real estate. Moreover, it is not important for the Serbian government which real estate will be purchased: commercial or residential. In both cases, a real estate owner has the right to a residence permit not only for him, but also for his family (spouse, parents, children).

Consequently, the second reason, which induces the investor to purchase real estate in Serbia is a simplified system of registration and additional "bonuses" from it.

The owner has the right to get registered at the place of stay even with a tourist visa, as well as submit documents on solvency and apply for a residence permit for a period of 12 months if there is residential property. The registration process takes about three weeks. After 12 months, the residence permit can be extended for the same period with the right to receive medical insurance on an equal basis with the citizens of the country, and after 5 years of continuous stay in the region - to issue permanent residence with the possibility of obtaining citizenship.

You can also get a residence permit if you have a land plot with a long-term lease agreement. It should be understood that it is impossible to purchase land within the territory of Serbia because of the current legislation. The government permits to rent a plot with a lease term of up to 30 years.

And, of course, another important reason for buying real estate in the Serbian region for Russians is the "friendly union" of Russia and Serbia, as well as the advantages it gives to citizens of both countries. The fact is that according to Serbian law, the sale of real estate to foreigners takes place on the "principle of reciprocity". In other words, if a Serbian citizen has the right to freely purchase real estate within the territory of the Russian Federation, then Russians, according to the same principle, can do it in Serbia. Note that even the political situation in the world and amendments to the new legislation of the Russian Federation could not influence this agreement.

Which Serbian real estate regions are in demand among investors?

After the pandemic 2020, many investors began to pay great attention to real estate outside large metropolitan areas. Apartments in Belgrade, Novi Sad and Nis (the 3 largest cities in the country) have been replaced by detached houses in the autonomous province of Vojvodina, where a quarter of the country's population lives. This trend keeps to be relevant at the present time, but not only because of the general "isolation”, but also because of the significantly low cost of real estate compared to ”urban" offers.

But there is also a significant disadvantage

It is associated with the rise in prices in the real estate market, which has been observed in the region over the past few years. Unfortunately, Deloitt experts report that Serbia "overtook" all European countries in 2021 on this indicator. According to the Serbian Statistics Office, the highest real estate prices by the end of 2021 were recorded in Belgrade (2.5 thousand euros - the average purchase amount for real estate in a new building with an area of 56 sq.m) in the districts of Stari Grad and Savski Venac. And speaking on a larger scale, compared with 2020, the value of real estate in Serbia has increased, on average, by 21%.

It is difficult to say anything about the pricing policy in this sector in 2022, but most likely, the increase in value of real estate will remain high.

Despite this factor, Serbia can be considered one of the promising regions for acquisition of real estate for Russians in 2022. On the one hand, the country has a stable economic situation and business opportunities, allows citizens of the Russian Federation to obtain a residence permit as fast as possible, thanks to the "mutual union" of the countries. On the other hand, it is almost the only European region where a Russian investor can purchase real estate without violating the current legislation of the Russian Federation affecting transactions with foreign currency.

About Russian Investors

It is a mistake to think that only Moscow investors are interested in real estate abroad.

Tranio, Russian broker, having analyzed its own statistics of applications in 2021, came to the conclusion that the share of regional investors while buying property abroad has increased significantly.

At the same time, the percentage of applications from Moscow and the Moscow region for this request was only 43%. Below them, the majority of Tranio's clients was investors from St. Petersburg, Krasnoyarsk and Krasnodar Krai. Also, experts noted the high demand for foreign real estate of Russians who live in the Rostov region, Kaliningrad region and Perm Krai.

Source: Tranio, December 2021

In addition, in 2021, the median budget of applications for the purchase of foreign real estate in the Krasnoyarsk and Krasnodar territories amounted to 300 thousand euros, overtaken of the Moscow region (297 thousand euros).

According to the same research, Tranio summed up the most popular countries to acquire real estate among Russian citizens. It turned out that in 2021 Russians were actively interested in purchasing residential property in the resort regions of Spain and Greece, as well as Montenegro and Germany. Besides these countries, Russian investors acquired real estate in France, Italy and Turkey. But the number of applications for the purchase of real estate in the United States has significantly decreased compared to 2020: Russians living in Nizhny Novgorod are interested in this issue.

Key Conclusions

Firstly, the year 2022 has brought significant changes in the investment sector by Russian citizens of foreign real estate markets. Yes, the demand for foreign real estate is still growing among Russians, however, in a different direction compared to previous years, when the USA, European countries, Canada and Australia were popular.

The UAE and Turkey are becoming the most promising countries for investing in real estate for quite obvious reasons: a simplified version of transactions, more reasonable prices, as well as business development opportunities. In addition, Georgia and Serbia have been added to this list in the light of new political and economic realities.

Secondly, the audience of Russian buyers has also changed, giving way to regional investors.

All these factors should be taken into account when promoting real estate on the Russian market. RMAA specialists are ready to develop a marketing strategy for you that will allow you to bypass your competitors and attract the maximum number of buyers from Russia interested in purchasing real estate.