The query "Russians have started…" is continued by the most popular search engines with three main options: "to vacation less abroad", "to drink less" and "to travel less to Europe". And what about buying foreign real estate?
Interest in purchasing foreign real estate arose among our contemporaries as soon as it "became possible", that is, about a quarter of a century ago. And all these years it remained consistently high.
"In the 1990s, people bought real estate abroad to avoid criminal lawlessness," says Maxim Raevsky, a member of the board of directors of the development company StroyInvestTopaz. "That is no longer the case, but practically all businessmen who have solved their financial problems in Russia are thinking about buying housing abroad as a kind of investment and hedging risks associated with doing business at home."
From this point of view, the richest EU countries with the most expensive real estate – Great Britain, France and Germany – are especially popular among large entrepreneurs.
"Among developed countries, besides those mentioned, Italy traditionally enjoys great demand among Russians," adds Dmitry Klenov, partner at UFG Wealth Management. As for less "respectable" countries, the expert notes Montenegro, Slovakia, Bulgaria and Cyprus. In addition, Spain, Portugal and Greece are extremely popular among Russians.
"Countries of Eastern Europe and the Baltic states are traditionally welcoming to investors from Russia," adds Maxim Raevsky, "regardless of the political relations with Russia. At the same time, cheap mortgages (at three percent per annum) make housing in these countries sought after not only by business owners but also by top management with salaries of about 10 thousand euros per month."
The fashion for buying foreign real estate is not related to its investment attractiveness, emphasizes Ekaterina Batynkova, commercial director of the Insigma group of companies. "They bought mainly due to the climatic conditions of the place of residence (to relocate parents or to go on a long vacation themselves), with the aim of obtaining a second citizenship or as a super-reliable investment.
"The situation has now changed," the expert says. "Russian real estate has become a more reliable way of investing funds than most offers abroad, especially when it comes to EU countries and the USA. In our opinion, due to the general economic situation, this trend will continue for another four to five years."
Investing in foreign real estate is becoming riskier – as, indeed, in domestic real estate. Demand for some domestic projects, including those located in the always in-demand Moscow region, will fall by 40-50 percent in the foreseeable future, predicts Natalya Tikhonovskaya, partner at Metrium Group, and even the most liquid Moscow residential complexes will likely lose about 20 percent of demand. Not to mention investments in real estate located in countries with which relations are rapidly deteriorating.
"Sanctions from the West have led to Russians reconsidering their priorities in terms of investing money. It is not surprising that interest in American real estate has fallen, and not only among us. Chinese investors are anxiously assessing the current situation (it is possible that China could be next). It has been noticed that their presence in the USA is decreasing.
"As for our compatriots, we see that business has changed its vector and moved east," says Alexander Khrustalev, general director of NDV-Real Estate. "The reason is the risks associated with placing funds in foreign assets. No one wants to face a freeze on funds, and such scenarios are quite likely."
Irina Mogilatova, managing partner of the real estate agency TWEED, also does not advise investing in foreign real estate: "I think an investor today is better off playing on their own turf," the expert advises. "Look at France, where the tax burden has been tightened, resulting in property owners suffering, or Spain, where investors bought apartments that later depreciated, and now they cannot sell them. Buyers who invested in real estate in these countries found themselves in a bad situation."
According to Mogilatova, many Russians are now changing their plans for long-term stays abroad precisely because of the worsened attitude towards them.
From the point of view of investment attractiveness and simply for preserving funds, Russian real estate now looks more interesting than foreign, agrees Anna Chizhova, general director of Domus Finance: "Even after the crisis, the price dynamics in our country are higher, and the protection of Russian apartment owners from political circumstances, especially in EU countries and the USA, raises serious doubts in light of recent events."
However, foreign real estate is bought not only for investment purposes. Dmitry Klenov provides his data: in his opinion, the events of 2014 – Russia's geopolitical activity and the West's reaction to it – did not have a significant impact on demand for foreign real estate. Neither demand from civil servants nor the number of "educational" purchases for children studying abroad decreased noticeably.
"But the number of transactions is falling, and this is due both to the fact that banks have become much more picky about buyers from Russia, assessing whether funds will arrive on time, how great the risk of freezing them is, and so on, and to the fact that buyers themselves have become more cautious about large expenditures," says Yulia Ovchinnikova, director of the foreign real estate department at IntermarkSavills.
That is, in most cases, the reason for the reduction in the number of transactions lies outside emotions: politics is one thing, but guarantees for a credit institution are another. Everything is strictly according to the saying: 'nothing personal, just business'. And in the current conditions, Russian buyers interested in purchasing foreign real estate should be prepared to prove their solvency.