Russians, purchasing second homes abroad: budgets, motivation, preferences. Trends for 2012

Russians, purchasing second Russians, purchasing second homes abroad: budgets, homes abroad: budgets,

motivation, preferences. Trends for motivation, preferences. Trends for 20122012

63 FFIABCI Congress St. Petersburg, 12-16 May 2012

Tatiana Rodionova – President for FIABCI-Russia

Tatiana Rodionova – past president of FIABCI-Russia

Residential Property market in Russia: Overview 2008-2009Tatiana Rodionova, President of FIABCI-Russia

www.prian.ruwww.prian.ru

www.prian.euwww.prian.eu

PRIAN.RU – the leading Russian Web-site, PRIAN.RU – the leading Russian Web-site, devoted to Overseas properties, is devoted to Overseas properties, is searching Russian customers market searching Russian customers market since 2007since 2007

The absolute figures can be different, as The absolute figures can be different, as compared to other sources, but the compared to other sources, but the tendencies and trends show the picture in tendencies and trends show the picture in dynamic very welldynamic very well

PRIAN.RU – Недвижимость за рубежом

63 World FIABCI Congress St. Petersburg

Questions:Questions:What had happened with What had happened with

budgets after crisis?budgets after crisis?What motivates Russians to What motivates Russians to

buy properties abroad?buy properties abroad?What kind of properties are What kind of properties are

preferable? preferable? What are the main popular What are the main popular

destinations? destinations?

FIABCI 63 World Congress St. Petersburg

How much are you ready to invest How much are you ready to invest in purchasing property abroadin purchasing property abroad


0

5

10

15

20

25

30

35

40

lessthan 20

000

up to 50000

up to100 000

up to200 000

up to500 000

up to 1000 000

morethan 1

000 000

2007

2012

Residential Property market in Russia: Overview 2008-2009

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

200000

Moskow St.Petersburg Ekaterinburg

20082009(B)2009(E)

15%

22%

17%

0

1000

2000

3000

4000

5000

6000

7000

Moskow St.Petersburg Ekaterinburg

20082009(B)2009(E)23%

28%

24%

Prices in rubles Prices in US dollars

Prices in rubles Prices in US dollars

Residential Property market in Russia: Overview 2008-2009

0

10000

20000

30000

40000

50000

60000

70000

Habarovsk Vladivostok

April 2008

Febr. 2009

Sept. 2009

11%

+1%

0

500

1000

1500

2000

2500

3000

Habarovsk Vladivostok

April 2008

Febr. 2009

Sept. 2009

30%

35%

You are looking for the opportunity to You are looking for the opportunity to buy property abroad with the purposebuy property abroad with the purpose


2009Increase of

prestige 2%

Constant residing

(Relocation)

37%

Seasonal residing (Second home) 32%

Other3%

Profitable investment

14%

Keeping (storage) of

money 12%

You are looking for the opportunity to You are looking for the opportunity to buy property abroad with the purposebuy property abroad with the purpose


24%

14%

9% 5%

48%

To relocate permanently (to get residence status) in the nearest time or in future

To use your second home for the season vacation

To get preferences for visa support

To invest for protecting money from inflation

To work or to study abroad


24%

14%

9% 5%

48%






2009Increase of

prestige 2%

Constant residing

(Relocation)

37%

Seasonal residing (Second home) 32%

Other3%


14%

Keeping (storage) of

money 12%


24%

14%

9% 5%

48%






2007-2008

Constant residing (Relocation)

48%

Seasonal residing (Second home)

21%


15%

Other4%

Keeping (storage) of money

7%

Increase of prestige

5%

Significant factors for Russian buyers (range) Significant factors for Russian buyers (range)

Easy transportation from Russia (availability)Easy transportation from Russia (availability)Proximity to the sea (lake), resort areaProximity to the sea (lake), resort areaEconomical and political stability in countryEconomical and political stability in countryComparably low price per m2 Comparably low price per m2 Well-developed Infrastructure of the area Well-developed Infrastructure of the area Easy application of visa for the property ownersEasy application of visa for the property ownersInterior, furniture, equipment, swimming- pool, Interior, furniture, equipment, swimming- pool, Possibility to get mortgage, while purchasingPossibility to get mortgage, while purchasing Profitability of investment: Rental yieldProfitability of investment: Rental yield

Tatiana Rodionova, President of FIABCI-Russia

Evolution of demand in % (TOP-TEN countries)during the period 08/08 - 08/09 according to PRIAN.RU visitors

0

5

10

15

20

25

%

30.08.2008

30.11.2008

30.01.2009

30.03.2009

30.05.2009

30.06.2009

30.07.2009

Popularity of properties for Popularity of properties for Russian potential customers in Russian potential customers in

April, 2012 (top 15)April, 2012 (top 15)


23,01

12,3311,38

5,685,144,483,73 3,5 3,213,192,582,512,381,921,17

0

5

10

15

20

25

How do Russians prefer to How do Russians prefer to purchase?purchase?

What is the specific of What is the specific of Russian customers?Russian customers?

How to attract them?How to attract them?


Who are you going to ask for assistance Who are you going to ask for assistance in purchasing property abroad in purchasing property abroad


44%

16%

22%

18%

Directly the foreign Real Estate agent (agency)Real Estate agency, located in RussiaDirectly the Developer of the projectDo not need any assistance

Investment for today:Investment for today:Long-term investment instead of Long-term investment instead of short-termshort-termProtection of money instead of high Protection of money instead of high profitprofitImportance of liquidity factor risesImportance of liquidity factor risesAvailability of mortgages is more Availability of mortgages is more important, as like as:important, as like as:Economic stability & legislative Economic stability & legislative protection of investmentprotection of investment


But there is some difference between But there is some difference between Premium & Economy segment buyer.Premium & Economy segment buyer.For Economy segment buyer is also For Economy segment buyer is also important:important:Comparably low price of the offer Comparably low price of the offer inside regioninside regionLow costs for exploitation & taxes Low costs for exploitation & taxes Cheap life in the country and Cheap life in the country and connection with Russiaconnection with RussiaVisa preferences for senior agesVisa preferences for senior ages


Specific of the Russian buyers of second Specific of the Russian buyers of second homes:homes:Polarity of opportunities - 2 different Polarity of opportunities - 2 different groups, looking for:groups, looking for:-economy segment (from 30 to 150 -economy segment (from 30 to 150 thousands Euro) thousands Euro) Bulgaria, Spain, Montenegro, Turkey, Bulgaria, Spain, Montenegro, Turkey, Czech Republic, Baltic countries, etcCzech Republic, Baltic countries, etc- premium segment (from 1 to 5 million - premium segment (from 1 to 5 million Euro) Euro) France, Italy, Switzerland, USAFrance, Italy, Switzerland, USA

Tatiana Rodionova – FIABCI-Russia Past President

All are interested in:All are interested in:Friendly atmosphere & political stabilityFriendly atmosphere & political stabilityEasy visa regime and preferences to the Easy visa regime and preferences to the home-ownershome-ownersAll have traditional inert choice of preferable All have traditional inert choice of preferable places places (it is hard to promote new regions of the (it is hard to promote new regions of the country)country)The price is to be discussible (negotiable)The price is to be discussible (negotiable)

Tatiana Rodionova – FIABCI-Russia President

But there is some difference between But there is some difference between Premium & Economy segment buyer.Premium & Economy segment buyer.For Economy segment buyer is also For Economy segment buyer is also important:important:Comparably low price of the offer inside Comparably low price of the offer inside regionregionLow costs for exploitation & taxes Low costs for exploitation & taxes Cheap life in the country and connection Cheap life in the country and connection with Russiawith RussiaVisa preferences for senior agesVisa preferences for senior ages


For Premium segment buyer is important:For Premium segment buyer is important:Only very prestigious places (plus “first Only very prestigious places (plus “first line”)line”)Some of them do not want publicity and Some of them do not want publicity and Russians around, Russians around, but majority prefer places with Russian & but majority prefer places with Russian & International “high society”International “high society”Unique properties with own history or Unique properties with own history or design (highest level)design (highest level)Quality service and all the amenities Quality service and all the amenities The ability to conduct business & obtain The ability to conduct business & obtain the residence permitthe residence permit


Investment for today:Investment for today:Long-term investment instead of short-termLong-term investment instead of short-termProtection of money instead of high profitProtection of money instead of high profitImportance of liquidity factor risesImportance of liquidity factor risesAvailability of mortgages is more important, Availability of mortgages is more important, as like as:as like as:Economic stability & legislative protection of Economic stability & legislative protection of investmentinvestmentSo, according to these factors most popular So, according to these factors most popular countries are:countries are:Germany, Britain, France, USA, etc.Germany, Britain, France, USA, etc.Budget: 150-300.000 EurosBudget: 150-300.000 Euros


Important factors:Important factors:Political and economic stability of the Political and economic stability of the country;country;Level of legislative protection of Level of legislative protection of investors;investors;Availability of projects with a Availability of projects with a guaranteed rental income;guaranteed rental income;The liquidity of real estate;The liquidity of real estate;The availability of mortgages for The availability of mortgages for Russians.Russians.


Financing: Financing: before the crisis, almost 90% of Russian before the crisis, almost 90% of Russian buyersbuyershave invested their own funds (cash), and have invested their own funds (cash), and only 10% used bankonly 10% used bankfinancing.financing.Now the situation has changed: for Now the situation has changed: for example, to buy property in UK 30-40% of example, to buy property in UK 30-40% of Russians use mortgage, property inRussians use mortgage, property in in Spain - over 65%, in France –approx. in Spain - over 65%, in France –approx. 50%,50%,

Tatiana Rodionova – FIABI-Russia President

Migration purposes:Migration purposes:The possibility of obtaining a The possibility of obtaining a residence permit or visaresidence permit or visaFacilitation IS VERY IMPORTANT for Facilitation IS VERY IMPORTANT for today for all today for all categories of Russian buyers;categories of Russian buyers;But let us hope, that political stability But let us hope, that political stability and growing prosperity of Russia in and growing prosperity of Russia in future will protect the most popular future will protect the most popular countries from 125 millions of countries from 125 millions of Russians immigrants!Russians immigrants!

Tatiana Rodionova – FIABI-Russia President

All of them prefer to buy second homes:All of them prefer to buy second homes:in the countries with good climate, better on the in the countries with good climate, better on the sea coastsea coastin places with highly developed infrastructure in places with highly developed infrastructure (no any offers in “beautiful peaceful village”!)(no any offers in “beautiful peaceful village”!)Good accessibility (better direct transportation Good accessibility (better direct transportation from Russia)from Russia)Already constructed & equipped homes or Already constructed & equipped homes or apartments apartments (no land plots, projects under first stage of (no land plots, projects under first stage of construction, construction, or ones, which need serious reconstruction)or ones, which need serious reconstruction)


Residential Property market in Russia: Overview 2008-2009Tatiana Rodionova, President of FIABCI-Russia

March, 1992: free market of Real Estate as a private property appeared in Russia, when the Privatization Law has been accepted. According to that law every Russian tenant got the right to privatize his rented from the State residential real estate – free of charge. The right to privatize real estate may be used by a Russian citizen of legal age (after 18) only once in a lifetime – and only till 03.2010 1992 – hyperinflation and economic crisis made hard currency extremely expensive and purchasing capacity extremely low and so since people got their real estate free of charge – the property appeared to be extremely unvalued. The price of 1 square meter of residential real estate in the beginning of 1992 found to be only $100-200 in main cities of Russia

Tatiana Rodionova, Past President of FIABCI-Russia

Middle price of 1 sq.m during the period 1992-2008 (in Saint-Petersburg) in US $

$0,00

$500,00

$1 000,00

$1 500,00

$2 000,00

$2 500,00

$3 000,00

$3 500,00

$4 000,00

$4 500,00

Ряд1

Middle prices in regions

$0,00

$1 000,00

$2 000,00

$3 000,00

$4 000,00

$5 000,00

$6 000,00

$7 000,00

2004 2005 2006 2007 2008 2009

Novosibirsk

Krasnoyarsk

Rostov/Don

Ekaterinburg

St.Petersburg

Moskow

Thank you for your attention, welcome with Thank you for your attention, welcome with any questions!any questions!

Tatiana RodionovaTatiana [email protected]@mailbn.com

Skype: planet_propertySkype: planet_property+7 921 992 92 88+7 921 992 92 88



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Russians, purchasing second homes abroad: budgets, motivation, preferences. Trends for 2012