Residential Real Estate in Russia: Overview CEREAN Annual Conference 2008, Istanbul Residential Real...
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Residential Real Estate in Russia: Overview CEREAN Annual Conference 2008, Istanbul Residential Real Estate in Russia: overview of the affordable housing market in progress Russian Investors Requirements to other Markets preferable directions, types of properties, attraction of CEREAN countries Tatiana Rodionova, “Bulletin of Real Estate” St Petersburg
Residential Real Estate in Russia: Overview CEREAN Annual Conference 2008, Istanbul Residential Real Estate in Russia : overview of the affordable housing
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008, Istanbul Residential Real Estate in Russia :
overview of the affordable housing market in progress Russian
Investors Requirements to other Markets preferable directions,
types of properties, attraction of CEREAN countries Tatiana
Rodionova, Bulletin of Real Estate St Petersburg
Slide 2
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008, Istanbul 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 2010
Slide 3
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008, Istanbul
Slide 4
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008, Istanbul 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 hard
currency property market formed in Russia
Slide 5
Residential Real Estate in Russia: Overview
Slide 6
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008, Istanbul The price of 1 square meter of
residential real estate in the beginning of 1992 found to be only
$150-200 in main cities of Russia This sum of money was enough to
satisfy all the basic needs of a standard family during 3-4
month
Slide 7
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008, Istanbul Progress and current situation in the
Russian real estate market. So what are the main characteristic
features of the development of the affordable real estate market in
Russia? Progress of -housing construction -Russian economy in
general -Government housing policy - Mortgage mechanism -
Legislation, devoted to property market - Role of the professional
organizations
Slide 8
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008, Istanbul
Slide 9
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008, Istanbul HG
Slide 10
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008 Istanbul
Slide 11
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008 Istanbul In 2005 the Government of the Russian
Federation proposed the priority national project Affordable and
comfortable housing for the citizens of Russia. The results of this
project should become visible by 2011. The President of Russian
Federation has defined 4 main priorities for the period of
2006-2008. 1. Further expansion of mortgage crediting 2.The growth
of housing affordability factor through the government support of
the young families in buying apartments & building houses
3.Growth in housing construction industry and modernization of
communal infrastructure 4. The obligations of the state in
providing housing for eligible citizens
Slide 12
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008 Istanbul
Slide 13
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008 Istanbul The number of the deals with mortgages as
compared to the total volume
Slide 14
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008 Istanbul
Slide 15
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008 Istanbul Citizens, eligible for the state support:
1.Young families. 2.Public service employees (dependant on the
state budget) 3.Families,requiring the improvement of the living
condition (with dwelling space less than 9 square meters per
person) 4.Families living in slum & emergency houses 5.Families
living in communal apartments And thanks to this program a lot of
additional budget money come to the market!!!!
Slide 16
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008 Istanbul And now some words about
Slide 17
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008 Istanbul
Slide 18
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008 Istanbul So, today the middle price of 1 square
meter of residential real estate is 2000-4000 EURO in main cities
of Russia This sum of money is enough to satisfy ONLY the basic
needs of the standard family during 3-4 month What changed during
15 years? A lot, but not this proportion!!!
Slide 19
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008 Istanbul Main questions of the potential investor:
If the prices are growing quickly Is there the bubble? And can it
burst?
Slide 20
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008 Istanbul
Slide 21
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008 Istanbul Arguments against it. Stable economic
growth & political situation. The growth of average incomes of
the citizens Existing deficit of housing space Satisfactory rate of
growth in housing construction. Migration of the population to
urban areas. Seasonal labor migration from abroad. Reasonable
prices for realty in comparison to main cities of Europe.
Comparably small volume of the mortgages in purchasing properties
(not more than 15-20% during 2008 in main cities. Less- in the
regions). Allocation of state funds into the market.
Slide 22
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008 Istanbul What happens today- when the financial
crisis started all over the world? What we are waiting for
tomorrow? So, we are waiting for some soft landing and stagnation
analytics proclaim the possible slow decrease of the prices for
residential property market - but not more than 10-15% during 2009.
The prices were still growing till September for today there is
fluctuation +- 0,5 -0,7% each week on the secondary market,
+-0,3-0,5% on the housing construction market (www.bn.ru)
Slide 23
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008 Istanbul Are there some difficulties in the
purchasing procedure in Russia? No, it is absolutely clear: You
need not register a company You need not buy shares of the
joint-stock company or look for assistance of any trust funds any
foreigner can buy any number and kind of property the rules are the
same as for Russian citizen you just sign an agreement (better in
Notary office) with the seller & register the Title in the
official structure
Slide 24
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008 Istanbul Are there some specific aspects of the
deals on Russian market? Yes, a lot of: -Payment in cash is
traditional and preferable, if you deal with physical persons
(currency is negotiating in each deal) -The price in the agreement
can be symbolic and it can bring you some troubles in future - No
legal mechanism to study title in details - 85% of deals include
relocating of the tenants to another flat (so, few deals are to be
combined chains) - A lot of wild agents & uncontrolled
agencies, who can provide unqualified service
Slide 25
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008 Istanbul So, if you are looking to buy some
property in Russia & your Russian colleague says: I have an
agent she is a nice girl! it means only, that he knows some nice
girl with SOME KIND of experience at property market and nothing
else!!! Realtors activity IS NOT regulated by the state since 2002
so you are to deal with a company, but not with a person
Slide 26
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008 Istanbul Is it possible to overcome the mentioned
problems? Sure- if you deal with companies according to the
recommendations of Russian guild of Realtors (RGR) - the unique
Nationwide Association of Real Estate professionals in Russia,
founded in 1993
Slide 27
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008 Istanbul The members of RGR are the companies
members of the local Associations, working on the market according
to some specific rules & conditions: Code of Ethics Standards
of professional activities System of professional education System
of public control over the activities of its members Insurance of
the professional responsibility, etc. You can find them at
www.rgr.ru
Slide 28
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008 Istanbul But, in any case, Russian people are
creditable enough to buy properties abroad priority of foreign
markets permit them, by the way (and also in case of crisis
prices), to exchange their property in Russia to a lot of variants
on different markets all over the world. Are they ready to do
that?
Slide 29
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008, Istanbul Russian Investors Requirements to other
Markets preferable directions, types of properties, attraction of
CEREAN countries
Slide 30
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008 Istanbul The number of Russians, who invest into
International property market, grows quickly during last 2-3 years.
The purposes for the purchasing property abroad are presented at
the next picture there are 4 comparably equal groups 1)profitable
investment, 2)season vacation (second home), 3) immigration (for
some period mostly), 4) mixed ones (now 1 or 2, later (in old ages)
3) - Survey of 2008, March at www.prian.ru (English version
www.prian.eu)www.prian.ruwww.prian.eu
Slide 31
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008, Istanbul Main purposes of potential Russian
customers to purchase properties abroad (groups of needs)
Slide 32
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008 Istanbul The results of another survey show the
price categories of the properties, which potential Russian
customers are interested to purchase abroad: 77,3% are looking for
economy-class of affordable market properties with price less than
150.000 Euro Properties with price 300.000 1.000.000 Euro are the
dead zone for Russian customers And there is a still existing
strong interest for properties with price more that 1.000.000 Euro
and the practice proves that So, for today we have a great army of
Russians with comparably small money, but they can buy a lot and
this demand needs good supply
Slide 33
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008, Istanbul
Slide 34
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008 Istanbul The list of the most popular countries
between Russian customers was formed according to the number of the
visits on the pages with information about property markets &
purchasing procedures in different countries, presented at
www.prian.ru the main International Web- site for Russians, looking
for properties abroad with daily audience more than 5000 original
visitors (summary data for September,2008)www.prian.ru We show the
Top10 countries congratulations to Bulgaria the absolute leader of
the International property market in Russia! Another diagrams show
the demand to concrete searched objects Top10 countries for
different types of objects
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Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008, Istanbul
Slide 36
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008, Istanbul
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Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008, Istanbul
Slide 38
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008, Istanbul
Slide 39
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008, Istanbul
Slide 40
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008, Istanbul
Slide 41
Residential Real Estate in Russia: Overview CEREAN Congress
2008, Istanbul Demand for the CEREAN countries info and properties
- As compared to Bulgaria (100%) Demand for the CEREAN countries
info and properties - As compared to Bulgaria (100%)
Slide 42
Residential Real Estate in Russia: Overview CEREAN Annual
Conference 2008, Istanbul Supply of the International market CEREAN
countries at www.prian.eu Number of the offered properties
Slide 43
Residential Real Estate in Russia: Overview Conclusions:
1.Foreign buyers (investors) are welcome at Russian property market
for profitable business 2.Russian buyers (investors) are interested
and creditable enough to purchase abroad 3. Great deficite of the
supply from Romania, Georgia, Poland and Lithuania where are you,
dear friends?!!!! 4. Lets do good business together, dear CEREAN
colleagues !
Slide 44
Residential Real Estate in Russia: Overview Thank you for the
attention, if any questions you are welcome! Sincerely yours
Tatiana Rodionova, General director of the International property
agency Planet Property Ltd. Coordinating director and the Head of
International Projects department of the Group of Companies
Bulletin of Real Estate, FIABCI-Russia the member of the Board,
Russian Guild of Realtors the member of Coordinating & National
Councils, etc. [email protected] +7 921 992 92 88 Scype:
planet_property CEREAN Annual Conference 2008, Istanbul