Russian Buyers Investing Abroad

The UK, France and Germany represent the safest places to own property that can also return a profit, with wealthy Russians already accounting for 20 percent of all non-residential property purchases in London and Paris with an average budget of 4.82€ () million-. Russians rank fifth in total investments in the Western European real estate market, according to a report by Knight Frank Russia & CIS.

While a stereotype of the Russian real estate buyer being one who spends extravagant amounts of money on property in the Western sunshine with the purpose of acquiring new citizenship remains, a more detailed analysis shows that this is not always the case.

Investment is the major reason that drives Russians to buy overseas, according to Gordon Rock international.

“What makes a country popular with Russian buyers depends on a number of factors,” said Stanislav Zingel, president of real estate agency Gordon Rock International, speaking to The St. Petersburg Times. “Buyers consider the historical and cultural similarities between the two countries, how many Russian speakers live there, ease of transport and accessibility and whether it is a popular tourist destination for Russians,” he said.

When it comes to location, affluent buyers tend to look for property in London, Manhattan and Monaco, said Alexander Romanenko, president of Advecs Real Estate Corporation, speaking to The St. Petersburg Times. “And those with an even greater income look to buy in the French Riviera, Nice, Cannes and Miami,” he added.

Despite topping the list when it comes to living, Bulgaria and Spain are regarded as the worst places to invest by Russian buyers, due to their economic uncertainty, reported Portuguese property website Meravista. The UK, France and Germany represent the safest places to own property that can also return a profit, with wealthy Russians already accounting for 20 percent of all non-residential property purchases in London and Paris with an average budget of 4.82€ () million.

“Russian buyers see foreign real estate as a safe way to maintain and increase their savings. A lot of foreign markets show stable growth where corruption is minimal and legislation is transparent and understandable,” said Olga Yasko, director for analysis and market research at Knight Frank Russia & CIS.

“Although property is the most reliable way to protect investment savings, there are still some disadvantages. Increased tax growth and rental market regulation is being seen almost everywhere in Europe, making it unfavorable for investing,” she added.

Only 50 percent of Russians surveyed in the Knight Frank report say seeking better standards of living is the key motive to buying property overseas. The recent spread of wealth in Russia means that the popular tradition of owning a dacha (summer cottage) has reached the middle classes and over half of Russian property purchases abroad are for the purpose of a second home.

Meravista reported that typical property prices ranged between 134,752.73€ () to 269,505.46€ (), with 95 percent of Russians retaining their permanent residential property, meaning that for the vast majority citizenship is not a priority.

However, the current crisis between Russia and Ukraine has lead to an increase of wealthy Russians wanting to relocate to avoid the consequences of economic isolation by the West, with Spain being a popular choice of destination, according to Meravista.r.