When considering property purchase in Russia, many buyers will be encouraged to know that the country offers a large number of economic advantages to overseas investors.
Economy Firmly in Recovery
After a fall of 7.8% in 2009, Russian GDP grew 8.6% over the next 2 years (4.3% in 2010 and 2011) according to the IMF. This more than recoups the losses. According to the Federal State Statistics Agency (Rosstat) the Russian economy grew 4.9% year on year in Q1 2012 and 4% inQ2. The IMF is predicting 4% growth for the year ahead, but the Economic Bank for Reconstruction and Develpment predicts growth of 3.1%.
Property Prices Low but Growing
According to Rosstat the average price of all apartments across Russia was 52504 rubles (£1,059) per sqm in 2008, in 2011 this price had fallen to 43686 rubles (£881) per sqm. Luxury apartment have fallen even more sharply from 69,612 rubles (£1,404.11) per sqm in 2008 to 49,042 rubles (£989.201) per sqm last year.
But the market has started to turn this year. According to Rosstat the price of all apartments in Russia grew by 7.88% in the year ending Q1 2012.
Strong Stable Macro-Econonomy
Russia is the world's 7th largest economy by purchasing power parity (2010). It has the world's 2nd highest gold and foreign exchange reserves (US$479.4 bln – 2010) and Significant Government Reserve (US$60.5 bln - 2009) and National Welfare (US$91.6 bln – 2009) Funds.
Upcoming Sporting Events
Russia is due to host the World Cup in 2018. This has proven not to have a massive effect on the property market, but on the economy it can have a sizeable impact in the positive.
Huge Consumer Base
Russia has over 139 million people, whose incomes are increasing every year, making it the 9th biggest consumer market as ranked by the World Economic Forum in 2010-2011. Within that only 14.4% of the adult population have a credit history, which makes it a huge and largely untapped consumer market.
Unsurprisingly then, Russia was ranked tenth among developing countries in the A.T. Kearney Retail Trade Index 2010. In a statement accompanying the report Kearney said: "Russia remains Europe's largest consumer market, with rising disposable incomes and an expanding middle class, and it offers massive growth opportunities for retailers with a long-term approach."
According to a PricewaterhouseCoopers study sales of foreign brands produced in Russia grew by 73% in unit terms and by 100% in monetary terms in 2010, and by a further 40-80% in unit terms the following year.
Vast Natural Resources
Investor Incentive Schemes
Becuase of its vast natural resources, Russia doesn't have the same desperate need to entice foreign investors as other nations, however, in recent years it has begun to make more of an effort in this area, including the creation of 15 Special Economic Zones, 4 for the tech ind., 2 industrial, 6 tourism, and 3 port zones.
Get the latest property and investment opportunities direct to your inbox for FREE (you can unsubscribe anytime)
Up to 30% Decline in Russian Buyers of Overseas Property Expected
Russia's Tourism Boosted by Weak Rouble
Russians pip Brits to the post in Spain
Russian and French buyers causing property price rise in Spain
All property news from Russia
Subscribe to our RSS Feed
Subscribe to our newsletter and keep up to date with the latest and best investment opportunities around the world!