Understanding the nature of real estate investment flows: CIS countries

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real estate investment flowsOver the past 15-years old there is a trend of significant investments in real estate of Great Britain capital from CIS investors. Since the 90s investors from Russia and CIS took the 5th place among the total mass of real estate buyers in London. So why real estate prices in London attract such interest among CIS residents? What are the payback prospects and what projections are expected in real estate market in the coming years?

The situation in the real estate market in London: the cost to date and the prospects for profits

The fundamental motive that prompts CIS residents to pour their capital in housing is, first of all, the profitability of such investments. The fact that the London market of immovable property is not stagnating even during tough times, remaining stable even to the general decline in the value of housing across the country in the post-crisis years of 2010-2012. The property in the capital of the United Kingdom not only does not fall in its price, but increases. Thus, the maximum peak of prices for real estate was observed in 2007-2008, characterised by the highest dynamics of sales of real estate in London, housing prices, interest from buyers and increased rents. However, now in 2016 the figures exceeded the cost of housing in 2007-2008 by as much as 9% already. If we analyse the situation across the country, the cost of residential properties in the capital has gone 2 times higher. The total cost not always includes conveyance solicitors services, which may account for another 1 – 2%.

Property in London, according to statistics compiled by Knight Frank will go further by 7% in 2016, if we take the average statistical and housing areas. More prestigious objects and luxury apartments in respectable areas of London will experience an annual increase of 12% or even higher. From this it follows that our CIS residents investing in particular residential facilities will be able to gain large sums from resales. The owners, not seeking to sell their houses and apartments, make profits from renting space for rent, but that is a rare case. So, in the Eastern and industrial areas, as well as the suburbs of London, the increase in price of property can range from 2 to 5% for 2015, in central London, these figures may be as high as 15% per year.

In view of the prevailing trends CIS citizens are increasingly resorting to acquire property in the capital. Statistics compiled for 2014 by the same analysts from Knight Frank, is eloquent: real estate objects in London priced at under £2 million are largely acquired by CIS residents bought up, and they occupy a leading place among all those who have made a deal, surpassing the Asian and Arab investors. Russian investors took the 5th place among all the nationalities, who have concluded the contract on the purchase of property in London, outnumbering Chinese and the Arab buyers. 85% of the total number of transactions conducted in 2013 on the sale of apartments in the exclusive central London – City of London, were made by investors from Russia and CIS countries. Approximately 35% of the population of the Eastern districts of London, where budget accommodation is located, priced at £150,000, were primarily purchased by the member of CIS diaspora.

Facts speak eloquently for themselves. In turn, the British government is actively promoting the opportunities in the acquisition of housing in the capital, creating different subsidiary programs, for example, ‘Buy a house’, as well as giving the opportunity to take a mortgage loan on a property in London, even for non-residents.

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