Super presentation

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Residential Real Estate in Russia Overview
Residential Real Estate in Russia overview of
the affordable housing market in progress
Russian Investors Requirements to other
Markets preferable directions, types of
properties, attraction of CEREAN countries
Tatiana Rodionova, Bulletin of Real Estate St
Petersburg
CEREAN Annual Conference 2008, Istanbul
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Residential Real Estate in Russia Overview
March, 1992 free market of Real Estate as a
private property appeared in Russia, when the
Privatization Law has been accepted. According
to that law every Russian tenant got the right to
privatize his rented from the State residential
real estate free of charge. The right to
privatize real estate may be used by a Russian
citizen of legal age (after 18) only once in a
lifetime and only till 2010
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Residential Real Estate in Russia Overview
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Residential Real Estate in Russia Overview
1992 hyperinflation and economic crisis made
hard currency extremely expensive and purchasing
capacity extremely low and so since people got
their real estate free of charge the property
appeared to be extremely unvalued. The hard
currency property market formed in Russia
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Residential Real Estate in Russia Overview
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Residential Real Estate in Russia Overview
The price of 1 square meter of residential real
estate in the beginning of 1992 found to be only
150-200 in main cities of Russia This sum of
money was enough to satisfy all the basic needs
of a standard family during 3-4 month
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Residential Real Estate in Russia Overview

• Progress and current situation in the Russian
  real estate market.
• So what are the main characteristic features of
  the development of the affordable real estate
  market in Russia?
• Progress of
• housing construction
• Russian economy in general
• Government housing policy
• Mortgage mechanism
• Legislation, devoted to property market
• - Role of the professional organizations

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Residential Real Estate in Russia Overview
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Residential Real Estate in Russia Overview
HG
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Residential Real Estate in Russia Overview
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Residential Real Estate in Russia Overview

• In 2005 the Government of the Russian Federation
  proposed the priority national project
• Affordable and comfortable housing for the
  citizens of Russia.
• The results of this project should become visible
  by 2011.
• The President of Russian Federation has defined 4
  main priorities for the period of 2006-2008.
• 1. Further expansion of mortgage crediting
• The growth of housing affordability factor
  through the government support of the young
  families in buying apartments building houses
• Growth in housing construction industry and
  modernization of communal infrastructure
• 4. The obligations of the state in providing
  housing for eligible citizens

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Residential Real Estate in Russia Overview
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Residential Real Estate in Russia Overview
The number of the deals with mortgages as
compared to the total volume
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Residential Real Estate in Russia Overview
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Residential Real Estate in Russia Overview
Citizens, eligible for the state support 1.Young
families. 2.Public service employees (dependant
on the state budget) 3.Families,requiring the
improvement of the living condition (with
dwelling space less than 9 square meters per
person) 4.Families living in slum emergency
houses 5.Families living in communal apartments
And thanks to this program a lot of additional
budget money come to the market!!!!
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Residential Real Estate in Russia Overview
And now some words about
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Residential Real Estate in Russia Overview
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Residential Real Estate in Russia Overview
So, today the middle price of 1 square meter of
residential real estate is 2000-4000 EURO in main
cities of Russia This sum of money is enough to
satisfy ONLY the basic needs of the standard
family during 3-4 month What changed during 15
years? A lot, but not this proportion!!!
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Residential Real Estate in Russia Overview
Main questions of the potential investor If the
prices are growing quickly Is there the bubble?
And can it burst?
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Residential Real Estate in Russia Overview
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Residential Real Estate in Russia Overview
Arguments against it. Stable economic growth
political situation. The growth of average
incomes of the citizens Existing deficit of
housing space Satisfactory rate of growth in
housing construction. Migration of the population
to urban areas. Seasonal labor migration from
abroad. Reasonable prices for realty in
comparison to main cities of Europe. Comparably
small volume of the mortgages in purchasing
properties (not more than 15-20 during 2008 in
main cities. Less- in the regions). Allocation of
state funds into the market.
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Residential Real Estate in Russia Overview
What happens today- when the financial crisis
started all over the world? What we are waiting
for tomorrow? So, we are waiting for some soft
landing and stagnation analytics proclaim the
possible slow decrease of the prices for
residential property market - but not more than
10-15 during 2009. The prices were still growing
till September for today there is fluctuation
- 0,5 -0,7 each week on the secondary market,
-0,3-0,5 on the housing construction market
(www.bn.ru)
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Residential Real Estate in Russia Overview
Are there some difficulties in the purchasing
procedure in Russia? No, it is absolutely
clear You need not register a company You need
not buy shares of the joint-stock company or look
for assistance of any trust funds any
foreigner can buy any number and kind of property
the rules are the same as for Russian
citizen you just sign an agreement (better in
Notary office) with the seller register the
Title in the official structure
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Residential Real Estate in Russia Overview

• Are there some specific aspects of the deals on
  Russian market?
• Yes, a lot of
• Payment in cash is traditional and preferable, if
  you deal with physical persons (currency is
  negotiating in each deal)
• The price in the agreement can be symbolic and it
  can bring you some troubles in future
• No legal mechanism to study title in details
• 85 of deals include relocating of the tenants
  to another flat (so, few deals are to be combined
  chains)
• A lot of wild agents uncontrolled agencies,
  who can provide unqualified service

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Residential Real Estate in Russia Overview
So, if you are looking to buy some property in
Russia your Russian colleague says I have an
agent she is a nice girl! it means only,
that he knows some nice girl with SOME KIND of
experience at property market and nothing
else!!! Realtors activity IS NOT regulated by
the state since 2002 so you are to deal with a
company, but not with a person
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Residential Real Estate in Russia Overview
Is it possible to overcome the mentioned
problems? Sure- if you deal with companies
according to the recommendations of Russian guild
of Realtors (RGR) - the unique Nationwide
Association of Real Estate professionals in
Russia, founded in 1993
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Residential Real Estate in Russia Overview
The members of RGR are the companies members of
the local Associations, working on the market
according to some specific rules conditions
Code of Ethics Standards of professional
activities System of professional
education System of public control over the
activities of its members Insurance of the
professional responsibility, etc. You can find
them at www.rgr.ru
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Residential Real Estate in Russia Overview
But, in any case, Russian people are creditable
enough to buy properties abroad priority of
foreign markets permit them, by the way (and
also in case of crisis prices), to exchange
their property in Russia to a lot of variants on
different markets all over the world. Are they
ready to do that?
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Residential Real Estate in Russia Overview
Russian Investors Requirements to other
Markets preferable directions, types of
properties, attraction of CEREAN countries
CEREAN Annual Conference 2008, Istanbul
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Residential Real Estate in Russia Overview
The number of Russians, who invest into
International property market, grows quickly
during last 2-3 years. The purposes for the
purchasing property abroad are presented at the
next picture there are 4 comparably equal
groups 1)profitable investment, 2)season
vacation (second home), 3) immigration (for some
period mostly), 4) mixed ones (now 1 or 2,
later (in old ages) 3) - Survey of 2008, March
at www.prian.ru (English version www.prian.eu)
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Residential Real Estate in Russia Overview
Main purposes of potential Russian customers to
purchase properties abroad (groups of needs)
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Residential Real Estate in Russia Overview
The results of another survey show the price
categories of the properties, which potential
Russian customers are interested to purchase
abroad 77,3 are looking for economy-class of
affordable market properties with price less
than 150.000 Euro Properties with price 300.000
1.000.000 Euro are the dead zone for Russian
customers And there is a still existing strong
interest for properties with price more that
1.000.000 Euro and the practice proves that
So, for today we have a great army of Russians
with comparably small money, but they can buy a
lot and this demand needs good supply
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Residential Real Estate in Russia Overview
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Residential Real Estate in Russia Overview
The list of the most popular countries between
Russian customers was formed according to the
number of the visits on the pages with
information about property markets purchasing
procedures in different countries, presented at
www.prian.ru the main International Web-site
for Russians, looking for properties abroad with
daily audience more than 5000 original visitors
(summary data for September,2008) We show the
Top10 countries congratulations to Bulgaria
the absolute leader of the International property
market in Russia! Another diagrams show the
demand to concrete searched objects Top10
countries for different types of objects
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Residential Real Estate in Russia Overview
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Residential Real Estate in Russia Overview
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Residential Real Estate in Russia Overview
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Residential Real Estate in Russia Overview
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Residential Real Estate in Russia Overview
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Residential Real Estate in Russia Overview
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Residential Real Estate in Russia Overview
Demand for the CEREAN countries info and
properties - As compared to Bulgaria (100)
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Residential Real Estate in Russia Overview
Supply of the International market CEREAN
countries at www.prian.eu
Number of the offered properties
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Residential Real Estate in Russia Overview

• Conclusions
• Foreign buyers (investors) are welcome at Russian
  property market for profitable business
• Russian buyers (investors) are interested and
  creditable enough to purchase abroad
• Great deficite of the supply from Romania,
  Georgia, Poland and Lithuania where are you,
  dear friends?!!!!
• Lets do good business together, dear CEREAN
  colleagues!

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Residential Real Estate in Russia Overview
Thank you for the attention, if any questions
you are welcome! Sincerely yours Tatiana
Rodionova, General director of the International
property agency Planet Property
Ltd. Coordinating director and the Head of
International Projects department of the Group of
Companies Bulletin of Real Estate,
FIABCI-Russia the member of the Board, Russian
Guild of Realtors the member of Coordinating
National Councils, etc. realty_at_mailbn.com 7 921
992 92 88 Scype planet_property
CEREAN Annual Conference 2008, Istanbul