To acquire an apartment building in Paris, you need to shell out at least €2 million
Apartment buildings are multi-unit residential buildings where all apartments are rented out. In Moscow, this type of housing was very popular in the 19th century; apartments in them were typically rented by people in creative professions, students, workers—those who could not afford to buy their own housing. Now there are almost no old apartment buildings left in Russia that function as they did in the past, although in pre-revolutionary Moscow they accounted for nearly half of all housing.
Recently, Russia decided to revive the culture of apartment buildings. In Europe, however, this type of housing and business never died out.
Germany as a Model
Among European countries, the market for apartment buildings is most developed in Germany, experts say. "In Germany, 57% of the population rent housing. The leader in this indicator is Berlin, where 85% of residents rent apartments. Apartment buildings in Germany and generally in Western Europe are a very common business," says Natalia Kuvaeva, marketing analyst at the strategic development department of NAI Becar.
Apartment buildings are popular among both local and foreign investors, including Russians. There are many such properties in Germany, but the most interesting ones—those that can bring the highest income—rarely reach open sale.
"Local brokers offer such options to their established contacts among investors, and as a rule, such options sell within a week. Therefore, Russian investors are not in the most advantageous position here," Anna Kuryanovich, investment consultant at Tranio.Ru, told Gazeta.Ru.
In Germany, people live in apartment buildings for years: contracts are concluded for terms from three to 30 years.
Apartment buildings are a separate type of real estate; they are entered in the land register as a single property. To sell one or several apartments separately, one has to go through a special legal procedure. Of course, the cost per square meter of an individual apartment will be higher, but those who acquire apartment buildings view them as a ready-made business that can generate decent profits.
"The better the property—the newer, higher quality, closer to the center—the lower its yield percentage. A renovated but not new house in the suburbs of Düsseldorf can yield 6–8% annual rental income, a new house in central areas of the city 3–5%," says Sofia Latypova, sales manager at Tranio.Ru.
In Berlin, prices for apartment buildings start at €3 million—this would be a small house, not in the center. In a good district of Düsseldorf, you can buy a building with 10–20 apartments for €1.5–2 million.
Apartment buildings are rarely located in popular tourist areas—they are primarily aimed at local residents. "Some new apartment buildings are being built in places popular among tourists, but such buildings would belong more to the class of apart-hotels, which are characterized by short-term and medium-term stays, usually up to one month," explains Natalia Kuvaeva.
Experience of Spain and France
The German approach to apartment buildings is more or less common in Europe, but there are exceptions. In Spain, for example, apartment buildings in their traditional European sense have not become widespread. Here, apartment buildings have been replaced by apartments that are purchased in tourist and central areas of large cities for the purpose of renting them out. Most often, investors enter into a management contract for the apartments, which includes obligations to find tenants and maintain the property in good condition.
In France, the German and Spanish approaches to apartment buildings have mixed. There are buildings where apartments are rented out long-term, there are tourist apart-hotels with short-term rentals, there are retirement complexes with medical care, there are student dormitories—all of these are considered varieties of apartment buildings.
In Paris, the minimum threshold for the cost of apartment buildings is €2–3 million. In the provinces, real estate of this type can be purchased for less than €1 million. "Profitability depends on the location of the property. For example, in the center of Lille, there are buildings for sale with a yield of about 5% per annum. Investments in buildings on the periphery yield up to 12% profit per year, but there are high risks of vacancies," says Yulia Kozhevnikova, leading expert at Tranio.Ru.
Where Russians Invest
Russians who purchase apartment buildings in Europe pursue one of two goals (or both): investment or obtaining a residence permit. But while any European country is suitable for an investment purchase, obtaining a residence permit is possible far from everywhere.
"About 40% of real estate purchased abroad is bought to generate income. This could be resale, not just rental; some use the Timeshare system—they live in the property themselves during a certain period, and rent it out the rest of the season," says Vadim Tkachenko, partner at vvCube Group of Companies. At the same time, according to the expert, about 80% of those purchasing real estate in Europe want to obtain a residence permit there, but this is not possible everywhere.
For example, according to Tranio.Ru, 100% of realtors working in Switzerland consider apartment buildings in that country the most popular commercial real estate among Russians. But in Switzerland, buying real estate does not entitle one to apply for a residence permit—one must establish a business, provide jobs for Swiss citizens, and pay taxes.
Some apartment buildings in Europe are sold as a ready-made business, and if it is maintained, this can be a basis for obtaining a residence permit.
In Germany, the conditions are the same. To be eligible for a residence permit, one must run their own business. There, 72% of realtors working with Russian clients consider apartment buildings the most popular type of commercial real estate among our compatriots.
Also in the top 5 countries in terms of Russians' interest in rental properties were the Netherlands and Hungary.
Ekaterina SAKHAROVA.
«Gazeta.ru»