Russian buyers choose the most expensive housing in the most expensive countries

Experts “Tranio” compared the cost of real estate, which are Russian-speaking customers in foreign countries, with the average price level in these countries. It turned out that the more expensive the overall property in the country, the more clients from former Soviet countries tend to buy luxury housing there, which is still more expensive than average.

These conclusions are based on statistical analysis of over 200 transactions with clients of the “Tranio” 20 most popular countries in 2014-2015.

The value of the property and the index “Tranio”

In the following table the level of value of real estate 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 6.40 for Switzerland means that real estate there is 6.4 times more expensive than average. This figure is calculated according to Numbeo for November 2015.

The index “Tranio” shows how the budget of customers differ from the average prices in a country: if the index is close to 0 % (e.g. for residential property in Bulgaria, Montenegro or the Czech Republic), it means that they buy in this country “average” housing — same as what is preferred by the locals. The larger the index, the more purchases: for example, the index +40% for commercial real estate in Spain means that the Russian buyers choose there are commercial properties on average 40 % higher than normal level.

Price category	Country	Level cost real estate	Residential property		Commercial property
			Average budget purchase thousand euros	Index “Tranio”, %	Average budget purchase thousand euros	Index “Tranio”, %
Low	Bulgaria	0,53	60	+10	250	0
	Hungary	0,65	75	+10	308	0
	Turkey	0,66	70	+10	400	+10
Average	Greece	0,89	120	+20	400	-10
	Montenegro	0,94	110	+10	325	-20
	Portugal	0,96	200	+70	535	+10
	Latvia	0,96	200	+70	584	+10
	Cyprus	Of 1.09	133	+20	500	-10
	Croatia	1,10	200	+60	600	+10
	Czech Republic	1,19	124	0	571	-10
	Thailand	1,28	89	-20	626	0
	Spain	Of 1.47	165	+20	1 000	+40
High	Germany	2,18	249	+30	1 000	-10
	USA	2,22	358	+120	894	-10
	Italy	2,30	300	+50	1 000	-20
	UAE	2,33	340	+80	671	-70
	Austria	2,40	350	+80	1 100	-10
Very high	UK	Of 2.92	800	+350	1 500	+10
	France	3,15	500	+130	1 400	-20
	Switzerland	6,40	1 255	+440	3 000	-20

Residential real estate: luxury segment in “expensive” countries

Comparing the budget of purchases of Russian-speaking clients with the cost of residential property in different countries, were able to identify a pattern: the “more” country, the more they buy the more expensive luxury properties.

In “cheap” countries (Bulgaria, Hungary, Turkey) the index “Tranio” is only 10 percent, the average check of purchases of Russian-speaking clients is not very different from the typical value of the property. But the more expensive housing in the country, the more the index “Tranio”. For example, in the UK it is +350 % — that is, Russian-speaking buyers purchase property here, which is almost twice the average level of the market. The index is also particularly high in France (+130 %) and Switzerland (+440 %).

The fact that the UK Russian-speaking buyers purchase residential property mainly in London and Surrey, in France — in Paris and on the French Riviera, in Switzerland — on lake Geneva and the Alps. The differences between these locations — prestige, attractive lifestyle, many expensive and high-quality proposals.

In the total rating allocated, four more countries where the budget is higher than the average price: Croatia (+60 %), Portugal and Latvia (both +70 %) and the USA (+120 %). In Portugal and Latvia a typical housing area of 100 m2 costs about 130 thousand euros, whereas the minimum threshold for obtaining a residence permit is 500 thousand euros in Portugal and 250 thousand in Latvia.

Commercial real estate: the average cost or cheaper

In contrast to housing, in most countries, Russian-speaking buyers usually acquire commercial real estate in the middle price category for this country. More than half of the countries in the index “Tranio” a little less 0 % — this means that Russian investors buy objects slightly below the average market price. Buyers of commercial real estate not pay attention to prestige and profitability, and the high cost of the object — not the main indicator of profitability.

Two countries stand out in overall ranking. This is Spain, where the index “Tranio” is +40 %, and the UAE (-70 %). That is, in Spain Russian buyers prefer commercial real estate is significantly more expensive than average, while in the UAE is much cheaper. This is due to the fact that the UAE is not available loans for foreigners in Spain, buyers can afford a more expensive acquisition with Bank financing. According to the survey “Tranio” among the Spanish real estate agencies, the number of respondents who indicated that more than half of buyers from Russia and other countries of the former Soviet Union apply for a loan increased from 18% in 2013 to 31 % in 2015. Investors in Spain increasingly using the mortgage to increase the profitability of real estate.

Conclusion

The study of “Tranio” revealed:

• in more expensive countries, Russian buyers are becoming increasingly more expensive luxury properties;
• when buying commercial property Russian investors to invest in objects of an average price category and close slightly below the average market price.

“Tranio” will continue to publish articles on the basis of a study on the investment of Russian buyers in residential and commercial property abroad in November and December 2015 and will present the full study in January 2016.

Yulia Kozhevnikova, Daria Berezina, Rostislav Chebykin

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