A home opening onto the waterfront in West South Beach, Florida.
Whether seeking a vacation home, a safe place to put their money or a riskier, higher-yield investment, Russian buyers are once more looking to foreign residential real estate.
Although the level of deals has not reached pre-crisis levels, demand for foreign residential real estate is increasing, according to several Russian agencies offering properties abroad.
In interviews with realtors, REQ found that Russian buyers' most common destination is Europe, although an increasing number are buying in the U.S. now that prices there have fallen after the crisis. The reasons include more affordable real estate in the U.S. and Great Britain, the stability of established markets and the ever-present lure of sunnier climes.
"If we speak about investment purchases of foreign real estate as a whole, then we're seeing a sharp jump in demand," said Yekaterina Rumyantseva, director of Kalinka Realty.
Real estate purchases are again being made after a pause during the crisis, but the overall volume nonetheless lags behind pre-crisis levels, said Sergei Shevchenko, head of DOKI Real Estate Agency.
"In general, we are seeing an insufficiency of liquidity among the population; there are a lot fewer deals than in 2007-08," Shevchenko said.
"Despite this, many Russians consider foreign real estate to be a safe harbor for investment," he added.
The typical Russian buyer of real estate abroad is a businessman, oftentimes the owner of one or several enterprises, Rumyantseva said. He usually owns an apartment in Moscow, as well as a dacha in the suburbs, and is looking to buy a property for personal use abroad, said Pyotr Kovalenko, director of foreign real estate at Knight Frank.
Prime investment destinations for Russian buyers depend greatly on the customer and his goal. If the purchase is chiefly speculative, then the most interesting locations are those in developing countries, where the potential profit is higher, said Grigory Dzagurov, director of Penny Lane Realty.
"If you don't want to make money, but rather to save it, then it makes sense to invest in more developed countries such as the U.S., Great Britain, France and Italy," Dzagurov said.
Most often, Russians buy real estate in the countries they most often travel to, including Cyprus, Bulgaria, Montenegro, Spain and France, Dzagurov said. Many are simply seeking properties in warm, beachfront locations, Kovalenko added. Since the Black Sea coastline is short, overpriced and offers few opportunities to buy, they turn abroad, he explained.
"Russian clients are buying for obvious reasons: the climate in Russia is not the most pleasant, with long winters and rainy summers in central Russia," Kovalenko said.
The purchase of a property abroad is not only a question of prestige, but also comfort: Many clients simply want to live in their own house while on vacation rather than a hotel, Rumyantseva said.
A customer's budget also affects his choice, she noted. Cheaper destinations listed by realtors included Bulgaria, Montenegro, Croatia and Cyprus, with Bulgaria regarded as the most risky. The most well-off clients buy in London, where their budget for buying a residence can range from $2 million to $70 million, Rumyantseva said. Other high-priced locations, she said, include Switzerland and the French Riviera. For Russians, London is the most attractive destination for investment in foreign real estate, Kovalenko agreed. Great Britain combines the potential for comfortable relocation with political stability, he said.
"London has been a hit ever since GBP became softer and London real estate became more affordable," Kovalenko said.
Realtors have seen a similar story unfold in Russian purchases of U.S. real estate. With the drop in prices following the crisis, American real estate's "attractiveness and advantages became obvious to Russians," Dzagurov said. Overall, residential real estate prices in the United States continue to decrease, although the market may be starting to stabilize, Bloomberg reported in August.
One popular destination is South Florida, where the number of Russian buyers has increased over the past three to four years, said Vanessa Ballestas, director of international sales and marketing at ONE Sotheby's International Realty in Coral Gables, Florida. Many Russians own properties in Sunny Isles Beach, while elite clients gravitate toward private gated islands, Ballestas said.
"The Russian community is definitely one of Miami's leading markets because it is evident they enjoy the weather, beaches, shopping and attractive real estate prices," Ballestas said.
On the whole, Russian investment in foreign real estate will only grow, Rumyantseva said. She cited stock market instability and the threat of inflation as reasons for growth.