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Real Estate

The real estate sector in Russia is witnessing rapid growth with the advances of Russian economy. The property economy and real estate investors consider Russian real estate sector attractive for investment. The major investment potential in this sector lies in major cities and town in the west of the country. The investment potential exists primarily in residential market and secondary in commercial property market.

Properties in major cities such as St.Petersburg and Moscow are costly and in par with Western European cities. Both these cities are major industrial hubs and individuals working here have significant purchase power and have the ability to afford increasing rentals and property sales prices. The demand for rental accommodation will likely grow in future, as employment opportunities in these cities will be more in comparison to elsewhere. Investors can get a typical annual return of 15% to 25& on this type of investment. Real estate investment holds a strong long-term potential in purview of rising rental prices and soaring resale prices. Workers and local resident are acquiring personal wealth from the high salaries and increase in their purchase power means high resale price in the near future.

Several foreign companies and their Western employees are preferring purchase of apartments instead of renting it. The return of investment is less than 4 years and the investment in real estate can prove profitable considering the current cost of savings and future appreciation of property prices. Russian and foreign banks functioning in Russia have simplified the mortgage process that has given boost to real estate investments.

The real estate investment opportunities in commercial sector are not limited to creation of new office spaces. There are abundant opportunities in the construction of hotels, warehouses, retail centers. Investors can buy commercial properties after completion and get rental income or buy properties during their development phase.

Several other Russian cities such as Kaliningrad, Ulyanovsk, and Ekaterinburg are also attracting investor’s attentions; both resale and rental returns are good in these Russian cities.

Russian real estate sector has registered high growth in the last five years, consecutively. This has resulted in soaring prices of Real Estate and the cost of a three room apartment in Moscow has surpassed the million mark. The real estate prices have risen by 253% in the primary market and 288% in the secondary market. Big cities like Moscow are now feeling a desperate need for new offices, housing and commercial space.

Real Estate is one of the three sectors that give the highest contribution to Russian economy. Building affordable and comfortable housing for Russian citizens is one of the Kremlin’s National Projects. Billions of dollars are poured in to the real estate sector to fulfill the demand for new housing. Residential real estate is expected to drive the real estate sector for the coming decade and there is a high speculation in investors that growth in Russian economy will take the real estate prices to a higher level.

 

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