Russia Investment Growth

Russia Investment Growth

As an investor it is important to consider the growth potential of your chosen property in Russia and understand exactly what drives this growth.

Russia Economy

The Russian economy has proven extremely resilient to the financial crisis. After only a short recession that cost it 7.8% of its GDP the economy has grown by over 9% since, including full year growth of 4.3% in both 2010 and 2011 according to the IMF, and 4.9% 4.0% in Q1 and Q2 of this year respectively according to the Federal State Statistics Agency (Rosstat).

Resources and Exports

Exports in Russia increased to 44100 USD Million in October of 2012 from 44045 USD Million in September of 2012 as reported by the Central Bank of Russia. Exports reached an all time high of 51338 USD Million in December of 2011 after falling sharply in 2009. The country is the world’s largest oil producer and the biggest exporter of natural gas, nickel and palladium. Energy sales contribute almost half of Russia’s budget revenue.The Russian fishing industry is the world's fourth-largest. Main export partners are Netherlands, Germany and Italy. Below is a chart of Russian export levels in the last decade

Capital Appreciation

The capital growth of Russian potential of Russian property has proven phenomenal. Data from Rosstat shows an incredible 436% growth in secondary market prices between 2000 and 2007, while primary market prices grew 362% during the same period. Prices took a heavy hit during the financial crisis, but indications are that a bottom is being found. Indeed according to Rosstat data apartment prices across the country grew by an average of 7.88% during the year to end Q1 2012. If this is indeed the start of a new growth cycle then investors could be in for some serious capital gains, especially as the economy is firmly in the recovery.

Reasons Why Russia is an Intelligent Property Investment Location:

  • Foreigners can invest in property without restriction
  • Favourable tax regime and numerous government incentives for investors
  • Economy recovering strongly, after 7.8% contraction in 2009 growth returned at 4.3% in 2010 and the same in 2011.
  • The World Cup in 2018 will be a further boost to the economy, and also a chance to make exceptionally high yield short-term lets depending on the property.
  • Property market looks to be on the turn, with apartment prices up 7.88% on average in the year ending Q1 2012.
  • USD based economy
  • Weak construction in recent years means low stock levels in the property market
  • Huge consumer base of over 139 million people all with annually increasing incomes
  • Vast natural resources
  • 32% of explored world reserves of natural gas (1st place)
  • 35% world gas production and exports (1st place)
  • 1st place in oil production and 2nd place in oil exports
  • 18% of world reserves of oil (7th place)
  • 23% of explored world reserves of coal (1st place)
  • 47% of world reserves of peat (1st place)
  • 23% of world forest resources (1st place)
  • 1st place in sodium salt reserves and 2nd place in potassium salt reserves
  • 1st place in drinking water reserves and 2nd place in fresh water reserves
  • 1st place in the stocks of pollacks, crabs and sturgeons in the 200 mile economic zone and 2nd – 3rd place in the stocks of codfish, herring, capelin, polar cod, salmon, etc.
  • 1st place in world explored reserves of tin, zinc, titanium and niobium
  • 1st place in world reserves and production of nickel ore and refined nickel
  • About 28% of explored world iron ore reserves (1st place)
  • 1st place in steel exports and 3rd place in exporting rolled metal products
  • 1st place in primary aluminum production and exports
  • 1st place in nitrogen fertilizer exports, 2nd and 3rd place in the exports of phosphate and potash fertilizers, respectively
  • 1st place in world diamond reserves and 2nd place in world diamond production
  • 1st place in actual volume of diamond exports
  • 1st place in explored world silver ore reserves
  • 2nd place in explored world gold ore reserves
  • 2nd place in explored platinum ore reserves and 1st place in exports of platinum ore
  • 3rd place in explored world copper and lead reserves
  • 3rd place in explored world wolframium and molybdenum reserves
  • 10% of world reserves of uranium (9th place)
  • 40% of world reserves of nickel
  • One of the biggest world reserves of fresh water
  • 1st place in the world in per capita natural resources

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