How can Russians buy an apartment abroad under the current sanctions?

Currently, the situation regarding the purchase of foreignreal estate for Russian citizens has changed significantly. Although there are no official bans on acquiring property in other countries, the process of completing transactions has become considerably more complicated. This is largely due to the international sanctions imposed against Russia, as well as the retaliatory measures taken by the Russian authorities.

Issues with transferring funds

One of the biggest obstacles for Russians when buying real estate istransfer of fundsUnfortunately, due to Western sanctions, many large Russian banks, around twenty, can no longer make transfers abroad. Over time, other financial institutions, such as Gazprombank, may also be added to this list. Although some banks, like Tinkoff, still offer the option for currency transfers, they are imposing high fees, making such transactions less advantageous for customers.

Increase in transaction time

Moreover, transferring funds takes longer, especially if banks that are not under sanctions are used. Correspondent banks abroad may delay transactions and request confirmation of the purpose of the transfers. As a result, the process can stretch from several days to several weeks, and in some cases, payments may be rejected and returned to the sender.

Refusal of operations with unfriendly countries

Another problem is that Russian banks may refuse to carry out financial transactions if they are addressed to individuals or organizations from unfriendly countries. According to data published by the Russian government on July 24, 2022, this list includes 49 countries that have imposed sanctions against Russia.

Obstacles to opening bank accounts

Problems with transferring money are also accompanied by difficulties in opening bank accounts. In some foreign countries, such asItalyandSpainLocal banks have started refusing Russians the ability to open new accounts and are also limiting the possibility of replenishing existing ones. This creates additional difficulties, as it is impossible to purchase real estate without an account in a local bank, and having one is a mandatory condition for completing the transaction.

Restrictions on deposits in EU banks

It is also important to consider the decision of the European Union Council from February 25, 2022, which states that Russian citizens are not allowed to hold more than 100,000 euros in deposits in EU banks. These restrictions complicate the situation for those who have significant funds that could be used for purchasing real estate or other needs.

Final recommendations

Thus, although there are formally no laws or restrictions directly related to the purchase of real estate by Russians abroad, the actual process has become much more complicated and difficult. It is extremely important for potential buyers:

• Carefully study the terms of the money transfer.
• Keep updated on changes in banking regulations in the countries where they plan to conduct transactions.
• Before making a purchasing decision, consult with lawyers or real estate specialists.

It is also worth noting that the situation may continue to change, so it is important to be prepared for new challenges.Choosing a reliable bankUnderstanding all aspects is the key to a successful deal in the foreignreal estate market.

Difficulties in transferring funds

In some situations, it is possible that, in agreement with financial institutions, funds exceeding the limits are temporarily transferred solely for the purpose of executing transactions, rather than for accumulating in accounts. However, it should be noted that inappropriate use of such schemes may lead to the blocking of bank accounts, which in turn can result in a number of additional difficulties.

Challenges of international real estate

In the international real estate arena, complex financial procedures are being discussed, and these discussions are led by specialists from various countries. However, the degree of complexity and potential issues related to transfers invariably depend on the legislation and banking practices of each specific state, leading to significant discrepancies. Countries with moderate complexities include Spain, Italy, and Bulgaria. These southern countries, which were previously popular among Russian investors, have become significantly less accessible for transactions in recent years, and the number of buyers from Russia has decreased substantially.

The situation in the markets of Spain and Italy

According to international real estate expert Yulia Titova, there are still Russian citizens in Spain and Italy who hold residency rights or second passports, for example, from CIS countries. Typically, these clients already have accounts in local banks. It is important to note that banks in Spain and Italy have stopped opening new accounts for Russians, making the presence of an already opened account a necessary condition for successfully completing transactions. The issue of replenishing the account with the required amount is addressed individually with each bank.

Expert's comment

“At first glance, there are no formal prohibitions, but in practice, it becomes extremely difficult to open a new account for Russian citizens in Italy,” explains Elena Dvurechenskaya, director of the Italian agency Italcasa.

• "Even with an existing account, carrying out any banking operations turns out to be quite difficult."
• Recently, a customer from Russia contacted me who has an account opened in October 2021.
• The bank director informed her that the account should only be used in extreme cases due to the lengthy bureaucratic procedures required for each transaction.
• She managed to transfer a small amount through a notary deposit, but it was no more than 300,000 euros.

Difficulties in the Bulgarian real estate market

In the Bulgarian real estate market, Russians are also facing serious difficulties. They cannot make transfers from Russian accounts, as most banks refuse to conduct transactions with "unfriendly" countries.

According to Evgenia Prokazova, the sales director of Bulgaria Avenue:

• Attempts to conduct transactions through banks that are not excluded from the SWIFT system require additional approvals, correspondence, and justifications, which significantly complicates the process of acquiring real estate.
• In such conditions, it is extremely important to approach international financial systems carefully in order to minimize risks and ensure the successful completion of international trade transactions.

The situation with money transfers

Recently, many clients have been facing the need to transfer funds to credit institutions in countries that have friendly relations with Russia before they can send money to real estate sellers in Bulgaria. In some situations, there is a need to use intermediary services.

This implies that cash in rubles is transferred to a trusted person in Moscow, while at the same time your partner in Bulgaria receives the equivalent in euros at the current exchange rate at the time of receiving the money.

The interest of Russians in real estate in Bulgaria

“Russian buyers are still showing interest in real estate in Bulgaria; however, difficulties with money transfers and the lack of direct flights between our countries are significantly reducing their activity in the market,” notes Evgenia Prokazova.

“Last year was quite successful in terms of sales, and this year is showing even more promising results. However, the number of Russians purchasing real estate has significantly decreased, and now investors from other countries, including Ukraine, Israel, and Germany, are becoming increasingly active in the market.”

Red status for the Baltic States

It should be emphasized that among the countries with a "red" status are currently Estonia, Latvia, and Lithuania. Since September 2022, Russians who do not have a residence permit cannot enter these countries, even if they own property there. The issue of purchasing housing in the Baltic states is no longer being considered.

Opportunities for purchasing real estate

Despite the challenging circumstances, there are still some options available. Countries with a "green" status include destinations such as:

• Turkey
• United Arab Emirates
• Georgia
• Thailand
• Serbia
• Egypt
• Dominican Republic
• Indonesia

It is precisely these areas that Russians planning to purchase foreignreal estate are currently focusing on.

The special status of Cyprus, Montenegro, and Portugal

Cyprus, Montenegro, and Portugal occupy a special niche. Despite being on the list of "unfriendly" countries and joining the sanctions, there are still opportunities to open accounts in some local banks. Although the conditions here are much more restrictive compared to Turkey, they are still simpler than, for example, in Spain.

Kirill Ravchenko, the CEO of Dom Real Estate, says that opening bank accounts in Cyprus for Russian citizens is still possible, although the process has become longer. While it used to take about a week, now one should expect it to take 2 to 3 weeks. Just like in most European countries, no more than100 thousand euros.

Methods of payment for real estate

The most reliable and common method of payment for purchasing property isSWIFT transfersfrom banks that are not subject to sanctions. This financial management method allows buyers, especially Russian citizens, to confidently make payments to sellers, avoiding many risks and complexities associated with financial transactions.

According to data provided by Anastasia Kezik, the head of the marketing department at Alanya Property Sales, most Russians prefer to make payments for real estate in Turkey through their foreign currency accounts at Raiffeisenbank. These funds are transferred to the accounts of developers or property owners. The key document for such transactions is the sales contract, which must specify the exact account number for the money transfer. This scheme is only possible if the seller is willing to state the full amount of the transaction in the contract.

Problems in the UAE market

In the United Arab Emirates (UAE), there are certain difficulties when it comes to transactions in the secondary market. This country attracts many foreign buyers, and sometimes it turns out that the seller of an apartment is a citizen of a country with which Russia has strained relations. In such cases, transferring payment from Russian banks can become problematic. As for the primary market, the situation is noticeably simpler, as the owners of construction companies are most often local citizens, although there are exceptions.

Documentation for purchase

Elena Timchenko, managing partner of Royal Home Real Estate, notes that developers, understanding the current situation, are providing all the necessary documents requested by Russian banks. This package includes:

• Licenses for construction activities;
• Project documents;
• Reservation forms;
• Invoices.

It is important for buyers to translate these documents into Russian themselves, as the lack of translation can significantly slow down the purchasing process.

Activating interest in new construction projects

Observations show that after the introduction of restrictions, Russians have become significantly more interested in purchasing real estate at the construction stage, reaching out to developers directly. Svetlana Kasatkina, managing partner of Exotic Property in Thailand, adds that in order for a Russian bank to approve the transfer of funds, certain documentation is required. The most important documents are:

• Purchase and Sale Agreement in English with Russian translation;
• An official letter confirming that the founders of the construction company are not citizens of countries classified as "unfriendly".
• Details for making the transfer.

Experience in translations in Georgia

Nikoloz Tsurtsumia, the director of Kolos Residence in Georgia, shares his experience. He reports that clients from Russia transfer the required amount to the construction company's account through Raiffeisenbank.

Difficulties in using installment methods

Given the specifics of the current situation, using a method related to listing monthly installment payments can become quite a complicated and costly process. The bank that accepts funds in Georgia charges its own fee, which is approximately 45 US dollars.

Results of transfers from Russian banks

Kirill Ravchenko emphasizes that when purchasing real estate in Cyprus, there is an option to make payments through transfers from Russian banks that are not subject to sanctions, such as Raiffeisenbank, Vneshtorgbank, and Sberbank. Usually, this process takes up to three business days, but sometimes there are delays caused by the strictest KYC (Know Your Customer) rules that Cypriot banks apply to Russians.

The expert notes:“In our experience, there have been situations where the payment arrived in two days, but there were also cases where the wait took up to three months.”This method of payment is most commonly used when purchasing property from developers. Typically, developers and banks have established business relationships, which significantly simplifies the process of processing payments from clients that the bank already knows. However, if the transaction is made with an individual, the likelihood of successfully approving the payment decreases.

Cryptocurrencies as a means of payment

The use of cryptocurrencies for real estate transactions is becoming increasingly active on the global stage. This approach is gaining popularity in countries such as:

• Thailand, where about 30% of transactions in the primary market are conducted using cryptocurrency;
• UAE
• Turkey;
• Georgia.

We previously discussed this method of calculations in our article about digital currencies. However, there are certain limitations. Citizens of Russia are prohibited from holding assets on cryptocurrency exchanges exceeding 10,000 euros. Moreover, new sanctions may deprive Russians of the ability to trade digital assets.

Cash transactions in real estate purchases

Regarding cash payments, is it possible to buy an apartment by paying for it entirely in cash, or at least to make a down payment for an installment plan? This option is available in countries like Georgia and Turkey. From Russia, it is allowed to take out up to $10,000 (or the equivalent in other currencies) per person. Thus, a family of four can take out up to $40,000, which is quite enough to purchase a small apartment in Batumi.

At the same time, in the UAE and Cyprus, using cash for payments is considered risky. Elena Timchenko notes:"The Central Bank of the UAE does not approve the transport and use of large amounts of cash."This could lead to additional scrutiny regarding the source of funds, which in turn could delay or even halt the transaction.

Recommendations for investors

Considering all these circumstances, purchasing real estate is becoming an increasingly complex and multi-layered task that requires a careful approach and knowledge of the laws in the countries where transactions are made. Investors should pay particular attention to current conditions and potential changes in regulations, as this can significantly impact the success of their ventures in the real estate sector. Additionally, it is advisable to consult with professionals in real estate and law to avoid unnecessary risks and to optimize the purchasing process as much as possible.

Features of conducting transactions in different countries

In different countries, the methods of making money transfers have their own differences, but the main principle remains the same. For example, in Russia, you can transfer money in rubles to a person authorized by the developer or a recommended intermediary.

Exchange points and the possibility of obtaining cash

In large cities like Moscow and St. Petersburg, there are exchange offices owned by Turkish citizens. Clients have the opportunity to bring money to the capital and receive cash in Antalya in just one day. Each transaction made in Russia receives a unique identification code, which must be presented in Turkey to receive the agreed amount. The commission for the transfer can vary from 1% to 7%, with a lower percentage for larger amounts.

The process of translation in Northern Cyprus

In Northern Cyprus, the process of transferring money is slightly different. In this case, the buyer hands over the funds to an agent in Moscow, who instantly receives the equivalent amount in currency through their lawyer, acting as a guarantor. Thus, the feasibility of using this scheme depends on the availability of alternative methods and the level of trust in the recommended individuals.

International payment systems

As for international payment systems, part of the necessary amount for the down payment on real estate can be transferred abroad using platforms like "Golden Crown," Contact, or "Unistream." Each system imposes its own limits on transfer amounts:

• “Golden Crown”: a monthly limit of about 10,000 dollars for one user.
• The maximum amount for one day5,000 dollars to Turkey and 2,000 dollars to Georgia.

You can receive funds either in cash at one of the banks or microfinance organizations, the list of which is available on the system's website, or transfer them to a foreign bank card if you have one. Usually, the fee ranges from 1% to 2%. In Turkey, since "Golden Crown" transfers go through the central bank, an additional fee of 4% may be charged when withdrawing cash. If the money is credited to a bank account, the fee is reduced to 1%, but in this case, the payout is made in lira. It is important to remember that if you plan to withdraw funds before the month is up, you will have to pay a 2% fee for currency conversion.

Opening accounts in foreign banks

Many buyers prefer to open accounts in foreign banks that are more welcoming to Russians, such as in Armenia, Georgia, or Serbia. These accounts are used for making transfers to the accounts of real estate sellers, for example, in Montenegro. However, it is worth noting that even in these jurisdictions, the requirements for Russians have become stricter.

• The KYC (Know Your Customer) procedure can take some time.
• There may be cases of account opening refusals.

These circumstances complicate life for buyers who need to conduct international transactions. Ultimately, the choice of transfer method depends on individual circumstances and the level of trust in the services being used.

Conclusion

In concluding our discussion about the complexities of the process of purchasing real estate abroad for Russian citizens, it is important to note that, despite all the obstacles, there is a certain hope and possibility of successfully overcoming these difficulties. Against the backdrop of international sanctions and countermeasures, buying an apartment outside the country requires potential buyers to be thoroughly prepared and to understand the realities they may face.

Modern realities in the real estate market

First of all, it is worth mentioning that the real estate market situation in countries like Spain, Italy, and Bulgaria continues to be unstable. Russian buyers, who previously actively invested in foreignreal estate, now need an updated strategy to navigate the "green" and "orange" conditions arising from new banking regulations. It is important to understand that having a local bank account has become a necessity for conducting transactions, which poses a significant challenge for many Russians.

Opportunities for purchasing real estate

Despite the current challenges, the opportunity to purchase real estate abroad still exists. It is essential to carefully develop the details of each transaction and consider all aspects—from government and banking requirements to the real estate market. Every buyer should be prepared for the fact that financial operations may take longer and require additional efforts for coordination.

Key recommendations:

• Prepare in advance- study the requirements for real estate buyers and banking operations in the chosen country.
• Consult with experts- interaction with professional real estate agents and financial consultants.
• Be patient.- Keep in mind that the process may take longer than you expected.

Final thoughts

Finally, I would like to emphasize that being informed is the key to successfully closing a deal. Interacting with professional real estate agents, as well as consulting with experts in international finance, can make the process more manageable and less stressful. Although the real estate market abroad is becoming increasingly complex for Russian citizens, those who are willing to adapt to new conditions and possess patience can still achieve their goal of owning their dream apartment abroad.