Russian-speaking buyers of overseas real estate – 2023
As of the beginning of 2023, the activity of Russian-speaking property buyers in various foreign countries has more than doubled compared to activity levels at the beginning of 2022. In countries where Russian-speaking buyers and individuals from other CIS countries are active, real estate agents have forecasted more optimistic market developments in comparison to countries where Russian-speaking buyers choose to invest less.
These are the key takeaways of Tranio’s eleventh annual survey among real estate agents, developers, and other experts of the international property market. The survey was conducted in early 2023 by 189 respondents from 32 countries.
Russian-speaking buyers remain active in the international real estate market
Almost half of the respondents (49%) believe that in the country they represent, Russian-speaking buyers were amongst the most active group of the foreign customers in 2022, alongside European buyers who also made up 49%.
Additionally, respondents noted that property buyers from Israel, China, the Middle East, and the USA are also active in the markets that they represent.
The survey findings suggest that in 2022, Russian-speaking buyers were more active in buying property in the international real estate market compared to 2021, which respondents noted as a 7-percentage-point increase. In comparison, the activity of buyers from European countries decreased significantly, by 13 percentage points less than was estimated by survey participants in 2021.
Comparing the findings of the survey with previous Tranio’s studies, it can be concluded that in 2022, the international property market saw the highest activity of Russian-speaking buyers in the entire history of Tranio’s research (beginning 2012).
In 2022, the international property market saw the highest activity of Russian-speaking buyers in the entire history of Tranio’s research.
In Tranio’s 2021 Study, a growing trend was identified whereby the more active Russian-speaking buyers are in purchasing real estate in a particular country, the less active European buyers are in the same country, and vice versa. This trend has continued throughout 2022. In Georgia, all the respondents (100%) indicated Russian-speaking buyers as the main category of buyers, and not a single respondent mentioned European buyers.
In some other countries, Russian-speaking buyers were indicated to be notably more active than European representatives: Turkey (94% of respondents noted the activity of Russian-speaking buyers), Cyprus (73%), Montenegro (71%). (The survey participants were allowed to choose more than one answer, so the sum of votes cast for Russian-speaking and European buyers may exceed 100%).
The more active Russian-speaking buyers are in a particular country, the less active European buyers are in the same country, and vice versa.
On the contrary, all the respondents from the Czech market noted that in the Czech Republic, property transactions were conducted mainly by European buyers, and none of the respondents mentioned individuals from Russia and other CIS countries as active buyers. European buyers are also more prominent in Germany (according to 89% of respondents), Bulgaria (83%), Spain (82%), and Italy (77%).
Greece was suggested to be a favourable property purchase destination for Europeans and Russian-speaking buyers alike. European representatives were deemed to lead Greek property transactions with 39% of the vote, with Russian-speaking buyers not far behind at an indicated 26%.
From an investment point of view, Greece is one of the most interesting destinations in Europe. Real estate in Athens is growing in price: in four years, housing prices in Attica have increased by 32%.
At the same time, prices are still 20–25% cheaper than the peak values of 2007. Now is the time to buy property relatively inexpensively, and the projected yield from a long-term rental of an apartment in Athens is 4–4.5%.
In Greece, in 2022, the activity of Russian-speaking property buyers was approximately on a par with the activity of buyers from European countries.
The activity of Russian-speaking buyers has especially grown in Turkey and the UAE
In 2022, according to the survey participants, Russian-speaking buyers increased their activity mainly in countries where they had previously played a dominant role in the real estate market, whilst making even fewer purchases in countries that had previously been unpopular. At the beginning of 2023, Russian-speaking buyers purchased 1.3 times more property in the UAE and 1.9 times more property in Turkey than at the beginning of 2022.
According to the Turkish Statistical Institute, Russian citizens concluded 2.3 times more real estate purchase transactions in February 2023 than in February 2022. This increase in real estate activity is in line with Tranio’s survey findings; the small difference may be attributed to the fact that Tranio’s research covered not only Russian citizens, but other categories of Russian-speaking buyers as well.
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Several countries have also become less popular areas for property purchase. Among them, Bulgaria, where respondents note a 5.8-fold decrease in the activity of Russian-speaking buyers over the same period. The Czech Republic was also deemed less popular, with a 5.3-fold decrease, as well as Italy with a 5.0-fold decrease.
In early 2023, Russian-speaking buyers were purchasing 1.9 times more property in Turkey and 1.3 times more property in the UAE than in early 2022.
Golden visas remain the main incentive for Russian-speaking property buyers
In 2022, obtaining a residence permit or citizenship by investment remained the main incentive for property buyers from Russia and other CIS countries, according to 52% of respondents. Despite sanctions and other restrictions, the popularity of golden visas and golden passports has remained virtually unchanged from the 2020 survey findings, when purchasing property for the purpose of obtaining a residence permit or citizenship was also in the lead with 56% of the vote.
In the spring of 2022, some clients from Russia considered package deals: for example, buying property in Turkey, getting a golden passport, and further investing in Western countries. In particular, Turkish citizens have access to a residence-for-investment programme in Greece and an E-2 visa to the USA, which Russians cannot apply for.
In 2022, Russian-speaking buyers continued to purchase real estate for residence purposes in the same countries as in 2020. 89% of respondents from the Turkish market deemed that residence motives were also the main factor for purchases in Turkey, as well as 85% in Greece.
This was also found to be a leading incentive behind purchases in Spain, Cyprus, and Montenegro, as estimated by over 50% of local respondents, and remains much unchanged from 2020 findings. In 2022, Georgia experienced a notable increase in the number of Russian-speaking buyers investing in residence-for-investment programmes, with 60% of survey participants deeming this the primary reason behind the activity of Russian-speaking buyers in real estate.
Russian-speaking buyers are particularly interested in the residence by investment programmes in Greece, Turkey, and Cyprus.
According to the survey respondents, the number of Russian-speaking buyers interested in residence by investment increased by an average of 1.7 times in 2022. Interest in investment residence grew the most in the UAE (by 4.8 times), Cyprus (4.4 times), and Turkey (4.3 times). However, this trend was not seen universally, as some countries saw a decrease in the activity of Russian-speaking buyers in investment residence. In Bulgaria and Latvia, the popularity of residence-motivated transactions in 2022 fell by 2.25 and 4.75 times, respectively.
In second place among the leading incentives for Russian-speaking buyers purchasing real estate is the motive to protect themselves from political, economic and other risks in their home country. This was indicated overall by 29% of respondents as a purchase incentive, and by 55% of survey participants in Spain, followed by 50% of participants in Bulgaria and Montenegro.
Choosing to purchase property for the purpose of capital preservation was deemed a less dominant factor: only 21% of respondents noted this as being the reason for Russian-speaking buyers purchasing property in 2022, which is 1.6 times less than in 2020. Only in Germany was this purpose deemed significant, where it was noted by 78% of survey participants as the primary reason for property purchase.
Russian-speaking buyers see Germany as the top priority country for capital preservation.
Finally, the purpose of capital increase came in last place, with only 8% of survey participants mentioning this motive, compared to 26% in 2020. However, Thailand proved a popular yet anomalous investment location, where this motive led with 67% of the vote.
The average transaction budget is 290,000 euro
The survey findings show a notable decrease in the average transactional budget of Russian-speaking buyers of residential property from 2020 to 2022. In 2022, the average budget was estimated to be 290,000 euro. This is 18% less than the 350,000 euro average recorded in 2021 and less than half of the average budget of 620,000 euro recorded in 2020.
Over the past two years, the average budget of transactions with Russian-speaking buyers of residential property abroad has decreased from 620,000 to 290,000 euro.
This decrease in the average purchase cost was not universal across all countries. In Italy, purchases became 27% more expensive: an average of 800,000 euro in 2022 against 630,000 euro in 2021. In Germany, the growth was 18%: from 510,000 euro in 2021 to 600,000 euro in 2022.
According to the study, the «cheapest» countries in which to purchase residential property are Bulgaria and Georgia: respondents estimated the average budget of transactions with Russian-speaking property buyers in these countries in 2022 at 90,000 and 94,000 euro, respectively.
Buyers expect a rental yield of 5.25% per annum
Russian-speaking buyers who purchased residential property in 2022 expected an increased average yield of 5.25% per annum. This is higher than in 2020, when the average expected yield was 5.0%, according to Tranio’s survey participants.
Over the past two years, rental yield expectations have risen in many countries where they were previously deemed to be above average, and declined where they were previously below average. Thus, in Turkey, Russian-speaking buyers of residential property expected an increase in rental yields of about 5.75% per annum in 2022, in comparison to 2020 where they expected yields of 4.90%. In Thailand, expected rental yield grew even more dramatically, with an expected rental yield of 8.0% per annum in 2022 compared to 6.0% per annum in 2020.
In 2022, compared to 2020, rental yields expected by Russian-speaking buyers increased in countries where these yields were previously deemed to be above average and decreased where they used to be below average.
In Germany, Russian-speaking buyers experienced a mild expected rental yield decrease of 0.32 percentage points in 2022 compared to 2020 and stood at 4.5% per annum.
These findings show a moderate trend: buyers expect higher yields in countries where they chose to purchase for the purpose of «to withdraw capital from Russia or other CIS countries». Conversely, lower yield expectations are indicated in those countries where a significant share of respondents chose the answer «to relocate to another country» as the purpose of the purchase, and therefore deemed the purchase a personal property investment.
The main difficulties in closing deals are complicated money transfer procedures and low price expectations
Tranio’s survey also explored the reasons that participants believe to be behind failures of deals conducted by Russian-speaking buyers. The respondents identified the two main reasons for deal failure in 2022 as the following:
- Buyers expected an unrealistically low price (37% of respondents)
- Problems with money transfers to the country of purchase (38% of respondents)
Whilst participants deemed these two reasons to be almost of equal importance in preventing deals from concluding, buyers expecting an unrealistically low price was generally a more dominant factor in countries where Russian-speaking buyers are most active. An analysis of the survey findings shows that this problem also correlates with the interest in residence by investment and is more typical for those countries that are considered «cheap» rather than «expensive.» In the UAE, 100% of survey participants indicated that in 2022 Russian-speaking buyers were expecting an unrealistically low price. In Thailand, Georgia, and Turkey, this reason for deal failure gained 83%, 75%, and 72% of the vote, respectively.
In Tranio’s previous surveys, the issue of low price expectations has also consistently ranked first or second among the reasons for deal failure with Russian-speaking buyers.
Issues with money transfers to the country of purchase is a primarily relevant reason for deals failing in countries where Russian-speaking buyers are less active than buyers from Europe and/or other regions of the world. This reason for deal failure was indicated by 56% of respondents in Spain and 50% of respondents in Italy.
In Bulgaria and Cyprus, these factors came out of almost equal importance: at 40% and 38% respectively.
The issue of low price expectations manifests itself primarily in countries where Russian-speaking buyers are most active, whilst issues with money transfers manifests more in countries where these buyers are less active.
In Germany, deals fell through primarily because banks refused service due to the client’s connections to Russia: this was noted by 71% of survey participants. This was also the dominant issue behind deals failing in Spain (67% of respondents).
Online deals are popular in countries where Russian-speaking buyers are active
The average share of transactions concluded remotely via the Internet in 2022 can be estimated at 9%, which is significantly lower than 2021, where this share was estimated at 23%.
However, this decrease in online transactions is not universal, as other countries noted an increase in online transactions. Online deals are popular primarily in countries where Russian-speaking buyers are most active. In the UAE, respondents estimate the share of online deals at 50% of total transactions, while in Thailand this share is estimated at 44%. Remote purchase of real estate is also common in Greece (17%), Georgia (15%), Cyprus and Turkey (13%).
Experts predict market growth in 2023
The participants of Tranio’s survey have optimistic predictions about the future of real estate market development for the coming year: 73% of respondents believe that the real estate market will grow in 2023, and only 3% of respondents fear a market crash.
As in 2022, based on the survey findings, an «optimism index» is calculated. The index value is set from 0 (if all the respondents give the most pessimistic forecast) to 1 (if all give the most optimistic one). On average for all countries, this index, as in the previous year, amounted to 0.8, which indicates generally positive expectations of market players. The greatest optimism is shown by the survey participants in Georgia (with an index of 0.96), as well as in Thailand (0.94), Montenegro (0.94), and Cyprus (0.93).
Conversely, respondents in Austria (with an index of 0.38) and Bulgaria (0.50) give pessimistic forecasts for 2023.
Positive forecasts for 2023 are given mainly in those countries where Russian-speaking property buyers are most active and where their activity has increased during 2022. Conversely, in countries where Russian-speaking buyers play a secondary role in the real estate market, respondents tend to anticipate negative scenarios for 2023.
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