Real estate market changes leaders
Recently, the structure of demand in the most popular foreign markets has changed, note experts interviewed by Gazeta.ru. Russians, who for a long time led in the number of properties purchased, are giving way to Asians.
Russians are refusing to buy real estate in the United States due to fears of new sanctions from Washington in connection with events in Ukraine. For example, Russians have stopped buying expensive apartments in Manhattan, and their place has been taken by Chinese investors. According to experts, it is representatives of Asia who are now the main buyers of real estate worldwide.
The impetus for entering foreign markets for them was a loss of confidence in the reliability of their own. "Asian markets were attractive while there was growth, but the crisis showed that they are unsafe. As a result, local investors lost faith and moved to safe markets," says Igor Indriksons, real estate investment manager and founder of the portal Indriksons.ru.
The Chinese are now actively looking, in particular, at Moscow real estate. As Gazeta.ru notes, recently real estate companies have recorded an increase in requests for property searches from Chinese. And if earlier they were considering buying several apartments on the same floor, now they are focusing on more expensive housing – one- or two-bedroom apartments in a good area in central Moscow, costing about $1.5 million.
London, traditionally attractive in terms of real estate investment, is now being bought up most not only by Russians, investors from China and the Middle East, but also by Ukrainians. "In 2014, the always active participants in the London real estate market from China, the Middle East, and Russia were joined by representatives of Italy, Spain, and Greece. One of the main factors driving investors to invest in London real estate is precisely the political situation in the world. For more than 20 years, the London real estate market has benefited from the situation in regions popular among high-income immigrants," says Inessa Falina, head of the real estate department at Oracle Capital Group.
According to her, due to the tense situation in the world, an even greater flow of investment into London real estate is expected. "Most investors from Russia and the CIS countries are the so-called self-made upper middle class," the expert clarifies. However, according to the company, overall in London, the majority of transactions are still made with local buyers.
At the same time, in central London, where the most expensive real estate is sold, the situation is different. According to the UK Land Registry, over the past 16 years, only about 15% of transactions in central London were made with local buyers. Meanwhile, 80% of foreign investors are from European countries, and 20% from Asian countries.
However, despite the influx of buyers from Asia, Russians still have one advantage – they are willing to buy the most expensive real estate. "In the traditionally most expensive real estate markets – Monaco, London, Geneva, New York – the number of our compatriots has increased due to a reduction in the volume of other solvent foreign buyers of super-expensive properties costing over $15 million," explains Lyudmila Aksenenko, head of the foreign real estate department at Knight Frank.
Currently, according to Knight Frank, among buyers of luxury real estate, Russians rank first in Monaco and Munich, and second in Geneva, Zurich, and London. Buyers from Asian countries are most interested in residential real estate in London and Dublin, and to a lesser extent in purchasing properties in Paris. Interestingly, the British prefer to buy real estate in Europe – top destinations are Barcelona, Rome, and Florence, followed by Venice and Dublin.
In Moscow, the most real estate is purchased by representatives of CIS countries, second are the French, and third are the British. In addition, as Igor Indriksons notes, after the 2008 crisis, Russians revised their approach to buying real estate abroad. Before that, they were interested in buying housing mainly for summer vacations in resort countries – Spain, Bulgaria, Egypt, and Thailand. Now, the expert notes, the destinations have changed: Russian investors prefer to invest wisely, choosing markets with stable economies that have proven themselves as safe havens for investment. Among them are the UK, Germany, France, Switzerland, Austria.
"Moreover, Russian citizens have started buying in countries where they really want to live themselves or for their children to live, following their personal preferences, rather than spending a couple of weeks a year at resorts," adds Indriksons.