I had a meeting with a Russian. I admit it. In fact, I had several meetings with Russians. And the meetings have even occurred in Moscow!
I thought that might get your attention. But please understand that there was nothing sneaky here, and you do not need to tell CNN.
The reasons for my meetings were purely to visit with my affluent real estate clients who live and work one of the world’s emerging global markets.
As Russian wealth has grown and changed, so have the affluent and their desires to invest in luxury real estate. Below, you’ll find my observations and four ways that investors have changed their outlook on luxury real estate.
Changes in Russia
I have been working with Russian clients for a long time, and I make annual visits to Moscow. The city is incredible, and I have been amazed at its growth. I first went in 2003, and back then, there were still signs of the old USSR everywhere.
But now, Moscow is comparable to other global business centers including London and New York. In fact, Moscow’s real estate market is booming with luxury property prices prices now comparable to those major cities.
Every year I go to Moscow, I am amazed at the speed of change. In less than two decades, it has gone from a 1920s type American city to becoming a 21st century business power.
This time, I noticed two major changes. The first is the Chinese have found Moscow. Their presence is everywhere from business to real estate.
Secondly, the quality of service you get in Moscow is now far better than what you will likely find in the U.S., London or Paris. The Four Seasons and the Ritz, for example, are extraordinary.
Russian investors have new desires
My Russian clients are affluent business leaders who remain interested in residential real estate investing. But they have also changed quite dramatically in the past several years. Here are four major changes I’ve seen.
1. Russians don’t want to invest in U.S. property
First of all, the existing and recently announced U.S. sanctions against Russia are having an impact on confidence in America and desire to own property in the U.S.
Russians also have difficulty getting a visa. It can take three to four weeks for approvals, which does not help, considering these people have money and like to travel when they wish.
I expect that luxury agents in the U.S. may start to see their existing Russian clients show an interest in selling their U.S. properties. And I also believe the U.S. market will continue to see a downturn in Russian buyers.
2. Other countries are falling off the favorite list too
Affluent Russians are also not so interested in buying in London right now, because of uncertainty over Brexit, or Paris because we have the same visa restrictions as the U.S.
Italy, which only requires a couple of days for visas, continues to rise in importance as does Dubai, Singapore and some of the European resorts I’ve previously talked about.
3. Russians want walkable cities
Moscow’s traffic is awful, and Russians have learned the importance of walking everywhere.
This is a big change because Russians once loved having large vehicles, which made parking something they naturally looked for when buying an investment property.
A city like Milan is now very appealing to them.
4. It’s not just about trophy homes anymore
Owning multiple homes in foreign countries is a relatively new phenomenon that was fueled by the affluent Russians’ desire to protect their money when the new Russian system was developing.
When they started purchasing outside of Russia, they were very interested in trophy homes. I am seeing a change here too.
They now appear to be much more comfortable in purchasing a property, single homes or condos, between $2 million and $5 million (USD). And they are looking to buy in multiple locations.
Remember, the Russian affluent are very used to traveling. It’s a huge country, and to achieve wealth, they have worked in numerous Russian cities and must fly.
Most of my clients, while looking at property as an investment first, visit their homes at least once a year for vacation and/or business. Do not expect them to rent their property out.
The Russians have played a very big part in luxury real estate becoming global. This should continue as they continue to gain wealth.
In my next article, I will give you some tips on how best to identify, reach and work with Russian buyers and sellers.
I am having fun sharing what the real estate industry is like outside of the U.S. Feel free to email me at Laurent.Demeure@coldwellbanker.fr if you have any questions.
Laurent Demeure is the founder and CEO of Coldwell Banker France & Monaco.