Customers from Russia and CIS countries often conclude transactions in “cheap” countries

The lower the average cost of property in the country, the greater the conversion of the buyers, i.e. the percentage of customers who reach the conclusion of the transaction. “Analysis of Tranio” made this conclusion on the basis of a survey conducted in 2015 among more than 500 real estate agencies and developers in 37 countries. The survey concerned the Russian-speaking overseas property buyers.

We evaluated the conversion in percentage of the number of clients, because this value greatly depends on the method of calculation. Conversion rates can vary considerably depending on what stage of the sales funnel are considered to be the reference. Instead, we estimated a conditional level: how many times the conversion rate in a country is higher or lower than the world average. For example, the level of 1.0 in Turkey means that the conversion is average; level of 0.14 in the UK conversion rate is about 7 times less than the average. This ratio is maintained regardless of the method of calculation.

The chart shows the 15 countries most popular among Russian buyers of real estate.

The level of property value reflects the state of prices in each country relative to the world average values. For example, the level of 0.53 for Bulgaria means that the property in this country is approximately twice cheaper than the world average; level of 3.15 for France — that the estate there are 3.15 times more expensive than average. Calculated according to Numbeo for November 2015. More the level of value of real estate in different countries is discussed in a recently published article “Russian buyers choose the most expensive housing in the most expensive countries”.

Between the level of property value and conversion applications in the transaction have an inverse relationship: most of the “cheap” countries (Bulgaria, Greece, Thailand) respondents “Tranio” noted the high conversion (up to 1.1). In “expensive” countries (Germany, USA, Italy, Austria) the conversion is below the average (about 0.8).

One of the main factors of failure of customers is a mismatch between budget, they expect, and the real value of the property of suitable quality. According to the observations of “Tranio” in high price ranges the failure of the transaction for this reason, it happens 40% more often than “cheap”. “For example, we are approached by customers who want to buy in Austria, the hotel cost up to 1-1,5 million euros to lease the management company and to have a passive income,— says Elena Milashenkova, Manager of “Tranio” real estate in Austria.— It is unreal. For the same amount to buy a small family-run Gasthaus, where the owners themselves work with the whole family. Management companies do not handle such objects. To acquire the hotel, the proceeds from which will allow you to use the services of a management company must have a minimum of 3-4 million euros.”

In the most “expensive” of the considered countries — France and Britain — the situation varies considerably. In France the highest median property values among the sample, however, the conversion of $ 0.82 from the average value, i.e. is on the same level with other countries in the high price category. In the UK, the index value of the property equal to 2.92 (i.e., the property is almost 3 times higher than the world average), and the conversion is about 7 times less than the world average. According to George Kachmazov, managing partner of “Tranio” in the UK, especially in London, where most customers purchase a “Tranio”, fierce competition among sellers and a very experienced, discerning buyers. In addition, prices have recently increased, and the purchasing power of Russians has dropped. Therefore, the Agency is more difficult to bring the client before the transaction, that he did not go to a competitor or abandoned the purchase.

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“Tranio” recommends its customers to adequately plan the budget of purchases, focusing on the real level of property value in the country of interest or locations. We regularly publish analytical materials about the state and dynamics of market in different regions.

According to a survey of foreign real estate agents “Tranio” preparing a detailed analytical report on Russian buyers investing in overseas property. We plan to publish it in January 2016.

Rostislav Chebykin, Daria Berezina, “Tranio”