Housing has turned to the East – Kommersant FM
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Russians have become less likely to invest in real estate abroad. According to Prian.ru, which Kommersant reviewed, the demand for the purchase of such housing in 2023 decreased by 45%. Experts attribute the cooling of interest to the weakening of the ruble and the recovery of the market after record figures in 2022.
As Intermark Global told Kommersant FM, the most popular destination is Southeast Asia; a third of transactions were completed in this region. In addition, Russians bought a fifth of the lots in the Middle East, and about the same in Europe. Mostly, real estate is purchased for the purpose of obtaining a residence permit, notes Elena Marinicheva, vice president of Russia Sotheby’s International Realty: “The five leaders in real estate sales in 2023 are the United Arab Emirates, Turkey, Thailand, Cyprus and Spain. First, we saw an increase in cost. This was especially noticeable in Turkey, where in 2022 the average transaction price was $300 thousand, and the next year it increased to $500 thousand. In the UAE it is $400 thousand, in Cyprus – €350 thousand, the highest figure in Spain is this is €550 thousand.
About 70% of all real estate transactions were carried out in order to obtain migration status, that is, people purchased housing to obtain a residence permit, permanent residence or second citizenship. 25% is for investment purposes, either to preserve the property or to gain value and generate rental income. And only 5% of clients bought real estate for the purpose of moving.”
If we are talking about a small investment, $100 thousand, Russians prefer to buy real estate in Bali or Phuket. There is a trend towards purchasing villas, says Mila Grebenshchikova, Deputy Chairman of the Board of Directors of Mayalanya Group: “If we are talking specifically about Russian buyers, then interests have changed. Bali remains popular, although demand has decreased slightly. In Dubai, the type of housing purchased has changed, now there is greater interest in ready-made projects, people want to move. Real estate prices in Thailand and Bali are $50-70 thousand and above. As for passive annual rental income, in Thailand it is 10-12% in local currency, in Bali it reaches 15%, in Dubai it is consistently 7-9%, and in Turkey – 5-6%.
In all areas, demand for villas has increased among Russians. This, of course, has to do with lifestyle. Some are moving from America and Canada to low-rise studios with access to the sea, a pool and a garden in Thailand and Bali.
The cost of such housing there is approximately $200 thousand, the price of townhouses is $250 thousand and above. In Turkey now there is mainly a secondary market, the cost is about $400 thousand, a new building is $600-800 thousand, and the price of detached private houses is up to $2 million. In Dubai, townhouses cost at least $500-600 thousand, and in accordance with quality, level and scale, pricing policy is changing.”
According to Tranio, demand for real estate in Greece and Italy decreased by almost 20%. In Spain and Montenegro – by 40%. Experts attribute the trend to the political situation and the reluctance of local realtors to cooperate with Russians. In 2024, interest in the European direction will decrease even more, says managing partner of the Intermark Global agency Irina Mosheva: “The general vector of the Asian turn is also reflected in the interest of real estate investors.
Middle East figures will be lower than in 2022-2023. This is due to the overheating of the market; demand here will stagnate or decline. Demand for Europe will continue to fall. Cyprus and Hungary will probably remain in the field of interests of Russians, but financial navigation with these countries is getting worse every day. And this is the first barrier to increasing and completing any type of transaction. Of course, there are still ways. Some European developers open representative offices, and it becomes possible to pay in rubles. But these are rather isolated cases, and they are unlikely to affect the demand for European real estate. Perhaps Latin America will grow a little, but still it is quite far away, and this also limits the demand and interest of Russians.”
According to statistics from Prian.ru, the median budget for a transaction with foreign real estate in 2023 was 24 million rubles. This is almost a quarter higher than in 2022.
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