Review of the foreign real estate markets of Russia, Kazakhstan, Ukraine and Azerbaijan.

25.07.17

Over the past few years, foreign real estate markets in Russia, Kazakhstan, Ukraine and Azerbaijan have undergone many changes. Naturally, they were influenced by the recent global economic crisis. However, recently, the situation is gradually stabilizing and it is possible to build more realistic forecasts. In this article, we will try to briefly describe the current state of foreign real estate markets of Russia, Kazakhstan, Ukraine and Azerbaijan.

Closure of banks, low-quality investment climate within the country does not contribute to strengthening the economic situation. Compared to the second half of 2016, according to Yandex statistics, the average absolute number of requests for foreign real estate increased by 22% . Leading places on requests for the acquisition of foreign real estate are occupied by Asia and Europe. Among them, the leaders are such countries as Turkey, Georgia, Greece, Spain, Bulgaria, Italy, etc. Data was published in 2015 that half a million Ukrainians received a residence permit in the EU countries. At the same time, there are at least three million in Russia. But this is only official data. In addition to the acquisition of foreign real estate, the issue of investing funds remains acute. According, to the forecasts of the executive director of the Center for Economic Strategy, "the Ukrainian economy will grow by no more than 3% next year. This is very small compared to 17%, for which the Ukrainian economy contracted for 2014-2015. " Also, according, to the editor-in-chief of the portal Financial Club: "PrivatBank's nationalization worsened the exchange expectations of the population and business." This situation surely effects the investment component. Due to the lack of any guarantees on the domestic market, a wealthy private sector is looking for opportunities to invest abroad. The National Bank of Ukraine (NBU) will simplify the Ukrainians investing foreign currency abroad, providing individual currency licenses in electronic form.This will allow Ukrainians to transfer foreign currency for investment purposes.

Now let's observe the situation in Kazakhstan.According to the statistics of the search engines Yandex and Google, the number of requests for "foreign real estate" in Kazakhstan increased by 23% in comparison to the first half of 2016 (see Table 1).  This change can be explained by several facts. The most favorable factor is the rise in oil prices. However, despite notable improvements, some financiers consider the forecasts to be briefly positive. But still, according, to them, until the second half of 2018, oil prices will fall and rise slightly. Such a positive trend in oil prices contributes to the strengthening of the tenge. We can assume that this trend will continue in the next year, which, in turn, will undoubtedly affect the even greater increase in demand for the purchase of real estate abroad. Among the regions that are interesting for purchasing real estate, Kazakhstan is tracing the global trend that is relevant for the most of the CIS countries (see Ukraine). Also we shouldn’t forget about the investments abroad. The number of requests for investment abroad compared to the second half of 2016 increased by 24%.

According to the statistics of search engine Yandex and portal HomesOverseas.ru in Russia, number of requests related to aquisition of overseas real estate, has significantly raised by the end of 2016 in comparison with the beginning of the year. For example, the number of request "real estate abroad" in search engine Yandex, in the beginning of 2016 was less than 3000 per month, and by the end of the year, this number has raised up to 5500 requests per month. We can see that oil prices are going up again for pretty long time period, this improves national currency in Russia (a situation similar to the strengthening of the tenge in Kazakhstan).

And, finally, let's observe the situation in Azerbaijan. Buying overseas properties is pretty new topic for the population of the Azerbaijan, since mainly, people where investing their means in local real estate and where saving them through deposit accounts in local banks. At the end of 2015 and beginning of 2016 years, the national currency has collapsed, and the banking sector of the country is experiencing recession now. State is securing deposits in foreign currency only below the 3% annual interest . Due to financial statistics, only during 2016, the volume of deposits taken from the banks equals to 10 Billion USD. Wealthy part of countries population is actively looking for alternative ways of investment and securing their means, consequently, buying real estate abroad country has become very popular trend. Main popular products for investing in foreign real estate are: projects in popular tourist directions with high incomes, projects with guaranteed rental income, projects in western countries with stable economy.

As can be seen from all of the above, the demand for foreign real estate in Russia, Kazakhstan, Azerbaijan and Ukraine does not decrease, but on the contrary, we see a tendency to increase. 

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