Hi Everyone,

The eventful 2014 is behind us and I've been looking for creating the report on Russian buyers of international properties behavior during the past difficult year. Many various realtors and analytics said various things about Russian buyers in 2014: the demand from Russian buyers is down; or they do not see any difference; or Russian buyers' preferences have changed; etc. It'd be quite a job to summarize all that…

At last I've found a report on Russian buyers in 2014 that has been published by the most popular Russian information internet agency Lenta. As I believe they can do this job better than me – with all their rich resources and plenty of analytics, here are just the major points from this report for you in English:

"As we all remember, 2013 was a record year in terms of the amount of money invested by Russians in international properties – abroad from Russia. 2014 was more modest, but continued the trend. In spite of the higher prices of properties in euro and dollars (as ruble is significantly down), Russians keep buying.

In 2013 some big real estate agencies from Spain, Italy, France and Montenegro reported that Russian buyers made up about half of their business.

"In 2014 the situation has changed. Some problems – the Ukrainian conflict and sanctions against Russia because of it, stagnation of the Russian economy, low oil prices, low exchange rate for Russian currency – made Russians less active in international real estate markets. At the same time the demand is still here and for some positions not much different from 2013."

The 1st Quarter of 2014: conflict in Ukraine and investment capital leaving Russia

"As the Central Bank of Russia reports, during the 1st quarter 50 billion dollars of investment capital left Russia – it’s about the same amount as during the whole year 2013. Investments in international properties are also on the rise – about 15% more than in the 1st quarter of 2013. The uncertainty of the situation with Ukraine and the beginning of the fall of ruble are the reasons of course.

By the way, Ukrainians begin to buy more international properties right at this time – to escape from the turmoil in their home country."

The 2nd Quarter of 2014: less demand for international real estate from Russian buyers

"Ruble becomes a bit stronger, nobody knows what to expect, and some Russian buyers are sitting on the fence so speaking. The demand for international properties from Russian buyers goes down and at the same time the average price of purchased properties goes up – approximately 2.5 times."

The 3rd Quarter of 2014: negative trend continues

"Probably the worst quarter of 2014 in terms of Russian buyers' demand for international properties – the Russian currency keeps falling and the demand with it.

In summer 2014 sanctions against Russia start and many Russian buyers cancel closings. But some others decide to move forward even faster looking at the negative prognosis for the Russian economy."

The 4th Quarter of 2014: sharp growth in demand for international properties from Russian buyers

"The Russian currency keeps falling, and international properties become more expensive for those Russians with rubles (nothing changes for those whose money is already in dollars and euros).

But in spite of the falling ruble at the end of the year 2014 Russians start buying more international properties and for higher prices too – approximately twice in comparison with the previous quarter. The reason is to try and save what's left of their money.

In spite of the sanctions Russians still get visas for the countries (that require visas to entry) on the same or even better terms (for longer periods as in Italy, Germany and France) than it was before. The US still provides 3-year visas for Russians."

What's next?

Personally, I'm not a big fan of any predictions for the future, but the final notice of the report says what seems quite logical:

"As the Central Bank of Russia reports, in 2014 the private capital that has left Russia evaluates as 128 billion dollars which is twice as much as in 2013 - that was about 63 billion. The reason is obvious – fear, fear of the economy in Russia is getting worse. This fear prompts to invest Russian money in the stable countries, such as Austria, Great Britain, Germany, Switzerland, and France. Also, Russians will turn their investment interests more to the East where there are no sanctions against Russia."

So, in 2014 the more investment money left Russia as ever in one year… Where will it be invested?

To your best business success,

Sincerely,