How has Russians' interest in foreign real estate changed in 2023?

Introduction

In 2023, the study of the foreignreal estate market, based on data for the last 11 months, demonstrates a constant interest on the part of Russian citizens and representatives of CIS countries to purchase foreign properties. However, this year there has been an expansion in both the dynamics of buyer demand and the geography of transactions compared to last year.

New investment areas

Russians have started to actively explore new real estate investment destinations, moving away from traditional countries such as Turkey and the United Arab Emirates. The simplification of visa procedures and new programs for obtaining residence permits in European countries have encouraged citizens to explore the opportunities offered by this region. The accessibility of the real estate market in European countries has led to a marked increase in the number of transactions.

Changes in preferences

In addition, Russians' interest in Asian countries, both for vacation and for business migration and investment, has increased significantly. This change in preferences has set Russians up to purchase properties in less conventional locations such as Georgia, while there has been a decline in activity in major cities. The main reason for this change is the desire of Russians for more flexibility and better options than the conditions offered in large metropolitan areas.

Decline in purchases in 2023

In 2023, there is a noticeable decrease in real estate purchases in Russia, which is due to changes in the political and economic situations. According to statistics, the number of requests to buyreal estate in Turkey decreased by70%as compared to the previous year, in Georgia by38%and in the UAE, by13%. That said, if we take the 2021 data into account, the positive trend in the housing market in these countries continues.

Popular investment areas

The most popular destinations are still the United Arab Emirates, where Russians continue to actively invest in real estate, which is confirmed by the high demand and number of inquiries. The interest of Russians varies, and the diversity of their preferences can be seen in this. The leaders in the number of inquiries in 2023 are the following countries:

• UAE- 11.4% of inquiries (-13% compared to 2022, +421% compared to 2021); median price €210,000.
• Greece- 9.9% of inquiries (-13%, +39%); median price €250,000.
• Thailand- 9.4% of inquiries (+37%, +370%); median price: €137,953.
• Turkey- 9.2% of inquiries (-70%, +41%); median price €150,000.
• Spain- 8.9% of inquiries (-39%, -32%); median price €274,681.
• Georgia- 7.8% of inquiries (-38%, +189%); median price €35,000.
• France- 6.5% of inquiries (+3%, +17%); median price €392,000.
• Cyprus- 5% of inquiries (-30%, +37%); median price: €293,071.
• Montenegro- 4.6% of inquiries (-35%, -9%); median price €150,000.
• Italy- 4.6% of inquiries (-16%, -18%); median price €500,000.
• Indonesia- 4.2% of inquiries (-5%, +582%); median price €188,971.

Overall outcomes and budgets

Overall, there has been a decrease in the number of applications for the first 11 months of 2023 for31%compared to 2022, but compared to 2021, there is an increase of25%The median budget to buy a property was €250,000.

Categories of customers

At this stage, there is a division of Russian buyers into several segments depending on their goals. The first group still seeks to obtain a residence permit, which simplifies the process of crossing borders and access to banking services in European countries. The second category is interested in countries where investments are protected from political risks, which creates a stable environment for doing business and opening bank accounts, helping to avoid the complexities associated with possible migration. Thus, the real estate market continues to evolve and investors are looking for new opportunities in both familiar and new countries.

Status of countries in the real estate market

The status of a country as “friendly” or “unfriendly” is not a decisive factor. A vivid example is the situation on the real estate market in Turkey. Although this country has not joined the Western sanctions, in 2023 Russians significantly reduced their real estate purchases there due to new difficulties in obtaining residence permits.

At the same time, Cyprus, being part of the “unfriendly” European Union, offers a highly divisive business infrastructure that allows Russian citizens to obtain residence permits through real estate investments.

Alternative areas for investment

According to Mikhail Bulanov, one of the co-founders and managing partner, Russians have started to look more actively for alternative investment destinations, including destinations other than Turkey and Dubai. The drop in interest from Russian buyers in Turkey can be explained by many factors:

• the horrific aftermath of the earthquake in February;
• new legislative changes that went into effect this fall.

In particular, in October 2023, the threshold for obtaining a residence permit for the purchase of real estate was significantly increased - from 50 to 200 thousand dollars. New requirements for short-term rentals were also introduced. In the context of rising housing prices and tightening legislation, the volume of transactions by Russians decreased by about 2-2.5 times compared to the record figures of the previous year.

Dynamics of Russians' purchases in Turkey

Nevertheless, Russians continue to rank first among foreigners buying real estate in Turkey. They purchased 713 residential properties in October 2023, up 31% compared to 2021 and 144% more relative to 2019.

One of the factors contributing to the drop in interest may be the upcoming increase in the minimum for participation in Turkey's “golden passport” program. In early December 2023, Turkish media reported that from January 2024 applicants for citizenship will have to invest more than 600 thousand dollars in the Turkish economy instead of the previous 400 thousand.

The popularity of the “golden passport”

Investing in real estate remains one of the most popular ways of obtaining a Turkish “golden passport”, which makes it very attractive for investors from Russia, Iran and a number of other countries. Against the background of the new conditions, many Russians may change their priorities in favor of similar programs in other countries.

For example, in Egypt it is now possible to obtain a “golden passport” for investments in real estate from $300,000. According to the latest data, after the launch of a similar program, the number of applications from Russians to buyreal estate in Egypt increased by 67%.

Competition and challenges for the Turkish market

At the same time, competition for the attention of international investors is intensifying in the Gulf markets, which offer favorable conditions for housing investments. This creates additional challenges for the Turkish market, which has traditionally been in high demand among citizens of other countries.

Experts believe that the development of the situation may force local agents and developers to change their strategies in order to maintain the interest of foreign buyers and improve conditions for investment. Thus, the real estate market in Turkey continues to demonstrate dynamic development, and the changes seen may have a significant impact on its future development.

Dubai and new investment horizons

For a long time Dubai has held a leading position in attracting international real estate investments. However, it can now be seen that other emirates and Gulf countries are actively adopting the successful practices of their neighbor.

Russian investors have started to turn their eyes not only to the Dubai real estate market, but are also beginning to show interest in regions such as Abu Dhabi and Ras Al Khaimah, as well as nearby countries. According to recent data, over the past year, Russians have applied for75%more real estate inquiries in Qatar, while in Oman and Saudi Arabia the figure increased by an impressive200%in both countries.

Growth of new capital centers

The Persian Gulf is beginning to develop new centers capable of attracting international capital. The local authorities of these states are aiming to develop tourism infrastructure, taking the successful experience of Dubai as an example.

For example, the August 2023 results show an increase in the real estate market in Ras Al Khaimah by106%compared to the same period last year. In Oman's capital, Muscat, the rental housing segment is actively developing:

• The average rental price in the Al-Muja neighborhood increased by15%for the last 18 months.
• In the Kurum district, the price increased by10%.

Investments in the face of economic change

With the weakening ruble, some Russians prefer to invest in developing regions with more affordable real estate prices, which start from the150-200 thousand dollars.. It becomes an alternative to more expensive properties in Dubai, where the minimum cost exceeds .400-500 thousand dollars..

Many large Russian investors who previously focused on investments in Dubai are now looking to diversify their portfolios by exploring new efficient destinations in the region with the hope of increasing the overall returns on their deposits.

Change in interest in overseas real estate

According to various research agencies, in 2023 there is a decline in the interest of Russians in buying foreignreal estate in order to obtain citizenship or residence permit. Statistics show that for 11 months the number of such applications has decreased by24%compared to the same period in 2022.

By comparison, 2022 was a year of unprecedented interest in such programs. However, in the long term, interest in investments that allow you to obtain a passport or residence permit continues to grow. For example, relative to 2021, the number of inquiries has more than doubled, increasing by a112%.

Popular investment areas

Among the most attractive countries for investment at the moment confidently stands out Spain, which is among the first five. This is the only country in the European Union, where investors have the opportunity to get a “golden visa” when purchasing real estate worth more than500 thousand euros.

This program offers a number of advantages over a regular residence permit event:

• There are no permanent residency requirements for visa extensions.
• Investors are not required to become tax residents of Spain if they spend less than183 daysin the year.

Russian investors also retain the possibility of obtaining a residence permit in Spain for financially secure persons when buying or renting housing.

Thanks to the adapted visa conditions, the interest of Russian citizens in Spain has been maintained despite the restrictions imposed. According to the Spanish Board of Registrars, during the first nine months of 2023, Russians took the 10th position among foreign investors in the Spanish real estate market, acquiring 2,182 objects.

Statistics on applicant countries

If we look at the statistics on the countries from where applications for housing for residence visas or passports are received, there are several leading countries for the eleven months of this year:

• Greece- 42.7%, an increase of 26.9% over the previous year;
• Turkey- 13.5%, with a drop of 69.5%;
• Spain- 12.5%, which is an increase of 10.6%;
• France- 8.4%, up 27.3%;
• UAE- 6.4%, also recorded a decline of 45.9%.

The overall trend in countries was down 23.8% year-on-year.

Investing in real estate in Greece

In recent years, real estate in Greece has become increasingly attractive to foreign investors.

Introduction

Having a second passport or residence permit in European countries greatly simplifies the process of crossing borders for Russians, provides access to banking services and creates new opportunities for international business.

Stable preferences of Russians

In recent years, the preferences of Russians when choosing countries to purchase real estate for the purpose of obtaining a residence permit have remained extremely stable. The most popular destinations are states with special programs aimed at attracting foreign investors.

• Golden Visa programs in Spain and Greece;
• The possibility of obtaining a permanent residence permit in Cyprus when buying real estate.

Program closures and new opportunities

In 2023, the “golden passport” programs in Montenegro and “golden visa” in Portugal, which were previously popular with Russians, were closed. Despite this, there is still interest in investment residence permits in Europe, and the real estate market is quickly adapting, offering new opportunities.

For example, in the second half of 2023, there is a growing interest of Russians in Hungarian real estate and the Global Residence program offered by Malta.

Growing interest in Southeast Asia

According to Mikhail Bulanov, one of the co-founders and managing partners, there has been a significant increase in interest from Russians, especially against the backdrop of travel to Southeast Asia, both for vacation and relocation. Among the popular destinations are such resorts as the islands of Phuket and Bali.

According to the results of November 2023, Thailand was again among the three most attractive countries for Russian clients, while Indonesia took a place in the top ten. The latest data shows that the interest of Russians in real estate in Thailand has increased by an astonishing amount37%for the last year.

These figures are confirmed by official statistics showing activity in the housing market by Chinese nationals, as well as Russians and Americans, who ranked second and third, respectively.

Activity in the residential real estate market in Europe

At the same time, the first half of 2023 saw an increase in activity in the residential real estate market among Europeans. For example, the number of purchases made by citizens of France has increased by78%while British activity increased by56%and the Germans on53%.

While in the Persian Gulf markets Russians most often prefer to make investment deals, in Europe they tend to acquire real estate to obtain residency permits.

The diversity of goals of Russians in Southeast Asia

In Southeast Asian countries, their goals are mixed: Russians are not only looking for opportunities to invest in resort areas, but they are also eager to find housing for vacations, seasonal living, or even for full relocation.

The factors contributing to this include:

• Low cost of living;
• The flexible visa policies of countries like Thailand and Indonesia.

Moreover, in the leading resort areas of Asia, not only is there a tourist infrastructure, but also a well-developed infrastructure for comfortable living. In all these countries, international schools, medical facilities, coworking spaces, and many other amenities are successfully operating, making them attractive for long-term residence.

Changes in the perception of the Thai real estate market

Changes in the perception of the Thai real estate market by Russians have become evident due to a long-term analysis of the reasons for purchases. Five years ago, most buyers did not consider the possibility of acquiring property in Thailand for resale or obtaining citizenship. The main reason remained the search for housing for vacation or rental purposes, which accounted for59%all requests.

Trends of 2023

For the year 2023, it can be noted that the combination of rental and leisure still holds a leading position, accounting for56%but there is also an increase in the number of clients considering the possibility of moving in the future —12%Additionally, the proportion of people wishing to obtain residency or citizenship has increased.5%), and a small group of investors has also emerged, interested in acquiring properties for subsequent resale (3.5%).

Decrease in the share of Muscovites

The decline in the share of Muscovites as buyers of foreignreal estate continues to be observed. Over the course of11In the months of 2023, it was noted that if five years ago more than half of the requests came from Moscow, now this figure is45%The demand for foreignreal estate among residents of the capital decreased more slowly than the national average: the annual decline was-9%against-31%in Russia.

Preferences of Muscovites

The median amount that Muscovites plan for their purchases is13%higher than in other regions and amounts to282.6thousand euros. As for preferences, they are almost the same for residents of the capital as for those in other regions:

• UAE
• Thailand
• Turkey
• Greece
• Spain

Increase in activity in some regions

Against the backdrop of a general lull, there is an increase in activity in some regions of Russia.2023In the year. Thus, the number of requests for real estate purchases from residents of the Chelyabinsk region has increased by70%In Bashkortostan — on33%Among the regions not in the top ten for the number of applications, the highest growth was recorded in:

• Kemerovo region (+86%)
• Bryansk region (+75%)
• Amur Region (+45%)
• In the Khanty-Mansi Autonomous Okrug (+30%)

The most popular countries for purchasing real estate among actively investing regions have become Thailand, Greece, and the UAE.

Decrease in demand in other regions

A significant reduction in the number of requests was noted in:

• In the Krasnoyarsk Krai-38%)
• Sverdlovsk region-47%)
• Tatarstan-63%)
• Rostov region-59%)

This led to the Rostov region no longer being among the most active. In the other regions, the level of demand remained at the same level as the previous year or decreased within limits.-30%, which corresponds to the overall decline across the country.

Interest in foreignreal estate in 2023

A list of ten regions in Russia where there is the highest interest in foreignreal estate.2023In the current year, it remains relevant and is of interest to analysts studying market trends.

Trends in the foreignreal estate market in 2023

In 2023, there is an interesting trend in requests for purchasing foreignreal estate both in Russia and in other countries of the Commonwealth of Independent States. Notably, the median budget for such transactions remains stable and amounts to250 thousand eurosThis indicates that clients across the country most often rely on such amounts.

Compared to last year, this value has not changed; however, there is a clear difference in budgets, which depends on the specific region.

Regional differences in budgets

Capital residents, for example, demonstrate the highest median budget for purchases, which amounts to282.6 thousand euroshowever, this is on9%less compared to 2022. St. Petersburg ranks second with a median budget of250 thousand eurosAlthough there is a decline observed here in29%.

In third and fourth place are Krasnodar Krai and Krasnoyarsk Krai, where the median budgets amount to219.8 thousandand144.8 thousand eurosAccordingly. Each of these places also shows various trends, both in terms of increasing and decreasing budgets.

Increase in budgets in certain areas

Surprisingly, buyers from Bashkortostan have increased their budgets for33%, reaching the median at232.9 thousand eurosThe Chelyabinsk region is also showing activity with an increase in70%and a budget of200 thousand euros.

At the same time, there is a significant decrease in the Sverdlovsk region and Tatarstan: their median budgets amount to250 thousandand255 thousand eurosWhat does a decrease of mean?46%and63%accordingly.

Low budgets in some regions

The lowest budgets are recorded among clients from the Kurgan region, where the median budget is only82 thousand eurosBuyers from Mordovia, Buryatia, and the Sakhalin region remain at the same level.100 thousand euros.

This data indicates that the demand for foreignreal estate among Russians, especially in the regions, varies significantly and depends on the local economic situation.

Demand from the CIS countries

Although the demand for foreignreal estate from Russian clients shows weak growth, inquiries from buyers in the CIS countries, on the contrary, are actively increasing. Over the 11 months of 2023, the number of requests from these countries has increased by49%.

There is particularly strong growth noted in Uzbekistan and Kyrgyzstan —195%and159%Accordingly, this highlights that the interest in real estate outside the country is taking on an international character.

Decrease in demand in Russia and Moldova

Despite the active requests from the CIS, Russia and Moldova stand out against this trend, as there is a decrease in demand for foreignreal estate here.31%and26%accordingly.

Premium market segment

It's interesting that5%The total number of qualified applications for real estate purchases is formed from budgets that exceed5 million eurosThis indicates a continuing interest in expensive and unique offerings.

While the mass segment occupies about60%the premium segment accounts for approximately35%.

Conclusion

Overall, the statistics on activity in the real estate sector show that there is a significant difference in preferences and budgets among the regions of Russia and the CIS countries, which largely determines the current state and prospects for the development of the international real estate market.

Conclusion

As a result, 2023 has become a significant year for Russian buyers of foreignreal estate. Analyzing the changes in demand and preferences, I realize how dynamically the market is evolving. Interest in overseas properties remains high, but its geography and focus have undergone significant changes. Classic destinations like Turkey and the UAE continue to attract investors, but there is a clear shift towards a more diversified selection.

The ongoing events, such as changes in legislation in Turkey and the introduction of new visa programs in European countries, directly influence buyers' decisions. At the same time, new opportunities for investment and relocation are emerging in those countries that provide more stable conditions for doing business and protecting capital. The attractiveness of Greece, Spain, and the recently increased interest in Egypt confirm that Russians are actively seeking alternatives, adapting to modern realities.

Changes in investors' approaches

I can't help but note that the shift towards a more serious analysis and strategic approach among young investors is a positive development. They are no longer just looking for profitable offers, but also taking into account:

• The geopolitical situation
• Opportunities for obtaining a residence permit
• Business habits
• Tax benefits

The most important thing is that Russian investors are aware of their needs and actively respond to changes, which allows them to preserve capital and develop their business in uncertain conditions.

Prospects for the future

Thus, the year 2023 highlights the need for adaptation and the search for new avenues for investment opportunities. By exploring new horizons, the citizens of Russia demonstrate that they are capable not only of enduring changes but also of finding benefits in the emerging challenges. Considering all these factors, one can expect that the coming year will bring even more changes and opportunities in the foreignreal estate market.