Bucking the global trend in both economic slow down and failing housing markets it seems are the Russians.
Russia have just
announced their lowest Consumer price inflation in Russia of 6.1
percent in 2011, the Federal State Statistics Service (Ross tat) reported
recently.
The Russian government has been struggling for
years to achieve low-digit inflation, in order to create a favorable investment
climate and lure foreign investment.
Russian
optimism comes from the fact that only 24 percent of Russians take out loans and only 18 percent
have deposits with banks, while most Europeans use two to four financial
products, and some, five to six, according to Ivan Svitek, chairman of the
board of Home Credit Bank.
Domestically Russian property is quite
buoyant. For example for months rumours were swirling that a Morgan Stanley
real estate fund was interested in Galeria, a swishy five-story shopping
mall in the centre of St Petersburg. Now the fund and the seller ââ¬â Meridian
Capital CIS Fund of Kazakhstan ââ¬â have agreed on a price, people close to the
deal tell it went for a staggering $1.1bn.
The seven-figure number will make the
Galeria sale Russiaââ¬â¢s largest commercial property deal ever – and
coincides with other possible good signs for the Russian property market.
According to data from Jones Lang
LaSalle, 2011 was a bumper real estate year for Russia with $8.2bn in
commercial property deals. The group includes yet-to-be-signed deals such as
the Galeria sale on its list. Real Capital Analytics, which counts only
finished deals, records just $6.4bn of sales in 2011 versus $7.5bn in 2010.
According
to Svetlana Andyryukina, the editor of International Residence,
Russiaââ¬â¢s leading Overseas Property magazine, ââ¬Ëalmost all Russianââ¬â¢s have low
outgoings and reasonably low income tax of just 13% on their declared earnings.
Their reluctance to also rely on their own banking system has fuelled a huge appetite
for overseas investments with an estimated US$12billion earmarked for the real
estate markets abroad.ââ¬â¢
ââ¬ËEither
buying personally or through an off shore account, Russians are taking
advantage of buying up distressed real estate in Spain plus countries including
Bulgaria, Turkey or Italy. Asia is expected to become their next targetââ¬â¢, added
Andyryukina.
Russian
Overseas Property Exhibitions are packed with middle class Russians hungry to
own their own bricks and mortar abroad.
According
to Kim Waddoup CEP of the aiGroup, the leading organizer of Overseas Real
Estate exhibitions business is booming. Waddoup said,ââ¬â¢ almost as soon as we
closed the doors to our 2011 series of eight property exhibitions, 90% of the
exhibitors rebooked. I only wish we could find more exhibition space to cope
with the large number of overseas companies wishing to join and exhibit in
2012.ââ¬â¢
Russianââ¬â¢s
are also taking to the internet in a big way. Internet penetration in Russia continues to grow fast. At the
end of 2010 there were 59,700,000 users, 42.8% of the population. The increase from
2009-2010 was in excess of 31%.
Russia has the second highest penetration of internet users in
Europe, only beaten by Germany with 65Million users.
Yandex Russiaââ¬â¢s leading search engine recorded a 37% increase in
searches for Bulgarian property in just four months up to August 2011. Spain
came second with a 23%increase with 70,337 searches. www.1-property.ru a popular real estate portal is
regularly getting over 5,000 visits a day from Russian property investors.
Another
statistic released this week by market research C9 Hotel Works announced that
Thailandââ¬â¢s island of Phuket saw a staggering increase of 109% in Russians
vacationing there in the first half of 2011. They now have direct flights and
travel there all year round.
According
to the pundits Russians are likely to pour over US$12Billion into overseas
investments and it would seem that the International Property Industry is
starting to take the Russian investor very seriously.
Can
they really afford to miss out?
Source: Mike Bridge mike @) aigroup.ru
