The fallout from Russian economic and political troubles is transforming the buying habits of the country's international property investors who are turning from the residential sector towards higher yielding commercial real estate deals.
The reason, says leading Russian website, Tranio.com, is that they are searching for higher yields from buy-to-let residential property or commercial real estate, predominantly in Europe.
As a result, there is set to be a significant switch in 2016 for Russian buyers of international property and a possible 30% fall in volume according to Tranio.com's managing partner, George Kachmazov.
"The recession in Russia has forcibly transformed buyer habits and transaction volumes. Market players should expect interest in personal dwellings to dwindle but plan ahead as demand increases for income–generating property".
"The number of Russian-speaking buyers for overseas residential property will shrink by another 20-30% in 2016. We also expect to see 30-40% more Russian nationals trying to sell their foreign property as a weak ruble induces higher maintenance costs. Nevertheless, the amount of Russian-speaking investors for commercial property should grow by 20–30% in 2016".
Tranio has just published its Russian and CIS Overseas Commercial Property Buyer Report 2015, which features the views of 561 real estate agencies from 37 countries and 153 Russian-speaking potential and actual investors.
Foreign property purchases by Russian buyers were halved following the successive Russian ruble devaluations in 2014–2015. However, the percentage of commercial property investments increased, the study discovered.
Most of the top 10 destinations according to search results by Yandex – Russia's largest search engine – for commercial property in 2015 were all in Europe. The United States and Turkey were the exceptions.
Germany on 22.1% of all foreign commercial property searches in 2015 was the clear winner, followed by Spain on 6.5%, the United States on 6%, the Czech Republic on 4.9% and Italy on 4.8%. User requests for foreign commercial property in 2015.
Tranio survey results confirm the popularity, though not necessarily the rankings, of these countries. The top twenty destinations as reported by participants in the survey are mostly in Europe with the exception of Turkey and the USA as well as Thailand and the UAE.
Wealthy Russian investors are likely to continue their foray into commercial real estate, seeking the the security of income-generating real estate assets.
"Most Russian-speaking investors are successful entrepreneurs, owning and operating businesses in Russia and/or CIS countries. Due to the volatile financial situation in the region, they are looking for income-generating property with moderate yields and stable returns in a dependable currency," explains George Kachmazov
"Russian nationals frequently buy commercial property where they already own residential property. This is because they know the features of these locations well and are familiar with the local market. Usually they spend time in their homes abroad and find it more convenient to manage commercial property located nearby".