Marina Vasil’eva: peculiarities of realtors’ work with buyers from Saint-Petersburg (transcript of the report)

Each region has its own type of buyers. Their specificity should be considered by both realtors and developers. The peculiarities of working with a buyer from St. Petersburg have been discussed by the manager of foreign property department, “Adveks.Nedvizhimost” corporation, Marina Vasilieva.

How was the foreign property market formed in St. Petersburg?

Back in the nineties two categories of Russian citizens were interested in acquiring foreign property. The first were those who wished to immigrate under certain programs (for example to the U.S., Germany and Israel). They didn’t require the assistance of Russian realtors since they used the services of foreign agencies. The second category was those who have saved some money (and as for the 1990's, there can be no illusions regarding who these citizens were and what their source of income was).

Barely two destinations used to be popular - offshore Cyprus and Spain. Accordingly, the St. Petersburg market was formed “from the outside”. We had a few transactions with Spanish properties in the early 1990’s, but they rather brought us problems than profit. We even had to make disbursements for one deal. In general we can say that at that time, Russian foreign property market was literally chaotic.

At the moment the market is rapidly developing. Property in St. Petersburg is much more expensive than abroad, which creates problems on the market of suburban housing. Why buy a villa in the Leningrad region, if you can purchase a house abroad and visit it each time you want to have a vacation? The foreign market is also changing: many countries have enacted laws regulating the purchase of property by foreigners, and such transactions have become common.


Request Statistics

Lets take a look at the property markets most popular among buyers from St. Petersburg.

Bulgaria
The surge of interest in Bulgaria has emerged in 2006-2007, and now people are buying somewhat “reflexively”. It should be noted that sometimes the information about Bulgaria is not quite plausible: some dishonest companies knowingly mislead clients. Sometimes people come to our office seeking to buy beachfront Bulgarian apartments barely for €20 thousand, but such type of property in the country is worth at least €70 thousand. If the price is lower, it means that there must be a catch.

But one way or another, Bulgaria still holds the leading position. Russians are actively buying economy-class housing there, and a lot of retirees come to our office willing to purchase a home for €40 thousand and up.

However, despite the abundance of acquisitions in this segment, our data shows that the average purchase price for Bulgarian property works out €75-150 thousand. Typically, this is a transaction in an elite residential complex, and such buyers are quite well-off, commonly they have other properties abroad. They rely on the fact that the level of Bulgarian properties is considerably high, prices are low and the expenses for leisure are very modest. Theoretically, you can buy a property in Calabria, Italy, for the same money as in Bulgaria. But the cost of living and resting in Italy will be much higher. At the same time, you can send a family with children to Bulgaria, to a closed, secure complex with protected area, where there would be no need to worry about maintaining the property, as there are many management companies operating in the country.

Another important advantage of Bulgaria: it takes only a two-hour flight to get there from Russia. There is a certain category of citizens in St. Petersburg who come to Bulgaria on weekends. They send their children on vacation there, and once in a couple of weeks visit them. Round-trip airfare is approximately 13 thousand rubles, the expenses are low - these are the reasons why Bulgaria remains the leader.

Spain
This summer, the buyers’ interest began to shift towards Spain. Our corporation has seen a booming demand for Spanish housing. Currently, there are many foreclosures on the Spanish market. Such properties are averagely sold for 70-120 thousand, which is comparable to Bulgaria. The quality of construction in Spain is higher than in Bulgaria, and if in the latter the majority purchases one-room apartments, than the most popular type of property in Spain is a two-bedroom flat. Luxury housing is also in demand. I cannot say that Spanish prices have decreased sharply, of course if it is not a foreclosure.

Finland
A popular place for Petersburgers’ recreation. The country attracts Russians with safety and excellent environment. The majority of our buyers who purchase Finnish property are fishermen. Primarily they want to acquire a 150-meter-large home with three or four bedrooms, with a private coastline, and 40 hectare of land. Most of the deals vary from €450-500 thousand. At the same time, we receive requests majorly for properties worth €150 thousand. The main purpose for acquisition of Finnish property is summer vacation.

Italy
This summer, the demand has shifted toward expensive markets. Buyers from St. Petersburg are not interested in Calabria, housing there is mainly purchased by Muscovites. Citizens of Saint-Petersburg acquire properties in the Italian Liguria and Tuscany, on Lago Maggiore. Speaking of prices, they fluctuate from €500 thousand to €1.5 million

Montenegro
The interest in Montenegrin housing has decreased. Many customers think that Bulgaria and Montenegro are very similar. But this is incorrect: property in Montenegro is more expensive, while there is absolutely no order, even in comparison to Bulgaria. Petersburgers buy in Montenegro and for some reason expect that prices will fall even further closer to October. I doubt that this is likely to happen.

Czech Republic and Slovakia
As usual, we receive a lot of requests for property in these countries. Russian consumers are primarily interested in Czech commercial space. Many people demand property for their children to live in while studying abroad. I would like to note that in case of Czech Republic, buyers are often interested in acquiring residence permit.

Germany
Russians are mainly interested in commercial properties. It is worth noting that Russians have started to demand considerably expensive commercial properties, whereas a few years ago the requests were simply ridiculous. For example, people expected to buy a villa for less than €60 thousand.

United Kingdom
The number of requests for the UK is on the rise. London is in the highest demand. Recently, the country has introduced new laws on property advertising: if there is no energy passport, the realtor has no right to put the unit on the market. I think that the surge of requests submitted to us is reasoned by the falling number of proposals offered by British sellers on the local market.

Turkey
Petersburgers simply love vacating in Turkey, which is one of the traditional destinations for tourists from the Saint-Petersburg. However, there are not that many transactions. I think that this is reasoned by the differences in mentality and religion.

Cyprus
Cyprus is not included in our list. This is explained by the abundance of advertising, which did us an ill turn. If clients interested in buying on Cyprus address us, then most likely they come upon a recommendation. Mainly, of course, they communicate with developers directly in the Internet. And this is not the smartest thing to do, because it is virtually impossible to orient in so many projects. Moreover, Cyprian developers have learned to cleverly present their properties. For example, a unit located on a hill five kilometers from the shore, which, despite the distance offers a sea view could be easily called a “house overlooking the sea”. When Russians come to Cyprus on a property viewing tour and they do not like the offered unit, then the developer often shows perseverance and “forces” the customer to purchase either this or that property. And it leaves us with virtually no work on Cyprus. Despite it being a favorite resting place for the Petersburgers, it is almost like the second Finland.

Other countries
For descriptive reasons I would like to compare our data with the Prian.ru statistics. Some countries listed in the TOP-10 of the Prian.ru ranking, are not included in our list. The point is that our statistics are not based on the level of interest, but rather on the number of people that have actually addressed us, those who called us, came to the office, etc.

For example, Latvia is not included in our ranking. The fact is that we simply do not work on this market. Regarding the U.S., it is a separate issue. Realtors there are not ready to work with Russian colleagues on parity terms yet. I visited the U.S., underwent the training and I can say that they are still reluctant to cooperate with us. We have some requests for the U.S. property, but we only provide consulting services.


Purchase Goals

People mostly buy property for recreation, but are still interested in the opportunity to obtain residence permit and citizenship. When asked: “Why?” they reply: “Just in case, maybe I would need it later”. This means that a possibility to receive citizenship through acquisition of foreign property is very important for the buyer from St. Petersburg.

When it comes to profit, then the St. Petersburg market was always evolving far more dynamic than the foreign market, which makes it interesting to invest in. Of course, now you may spend money on property in Miami, or, for example, on German commercial space, but these are long-term investments, for a period of five to ten years.

There is a category of people who invest money for them “just not to be lost”. There are also many buyers of so-called “status property”. People often want to buy in France exactly because of the prestige.