Russians investing overseas

According to a recent Morgan Stanley Economic Report, growth in Russia is poised to accelerate by 5 per cent by the end of this current year, and up to 5.5 per cent again in 2012.

Retail sales are on the increase along with wages, while unemployment is dropping and the Russian inflation is also falling to 6 per cent.

Meanwhile the business environment is healthy, with many companies achieving excellent capital growth. However corruption is still abundant, so off shore investments are a popular alternative method to allow for secure profits and capital gains.

According to experts, over US$12 billion will be invested by Russians overseas in the next twelve months, much of which will be earmarked towards real estate, and this was echoed by the record attendance at last weekend's Moscow International Investment Show.

The rising middle classes are seen as the new investor with huge potential for overseas investment due to increasing wages, low monthly overheads (US$100 per month for general overheads such as gas, electricity, water and telephone is not uncommon) and a low tax rate of just 13 per cent. Less than 8 per cent have mortgages to repay.

Proof that this sector is moving towards buying property abroad is echoed by Yandex, Russia's largest search engine. Yandex showed massive increases in specialized searches for property aboard. Over 512,572 searches were made in just four months up to May 2011, against 382,979 during a similar period in 2010. Cyprus had the largest increase with 56.5 per cent more searches, with the USA achieving a 48.8 per cent increase.

Statistics from 1-property.ru Russia's leading real estate online portal, showed searches for international real estate also had a dramatic increase. Bulgaria topped the list with 17 per cent of all searches. Easy destination, language and similar mentality were the main reasons given. Spain came in second, however over 21 per cent of all searches were for other non European destinations.

International Residence magazine held a recent survey and asked Russian investors what their main reasons were for buying abroad. Over 55 per cent stated that it was for a safe investment, 30 per cent for personal enjoyment and 20 per cent wanted to create income with buy to let property.

Source: Property Report