In recent years, the interest of Russians in real estate abroad has grown markedly. Although last year there was a decrease in demand compared to the peak figures of 2022, in the long term, the activity of customers from Russia remains on the rise. So, in January-April 2024, Tranio received 35.8% more applications than in the same period of 2021, but 9.8% less than in the record 2022. The changes over the past year are insignificant: the dynamics of applications by January-April 2023 amounted to only 0.1%.
The geopolitical and economic context makes investing in real estate abroad one of the most popular strategies for preserving capital and avoiding country risks (the ruble exchange rate, the impact of sanctions, etc.). However, after 2022, clients with a Russian passport face difficulties in transactions: compliance procedures have become more complicated, access to a number of visa and passport programs is limited for investors. To assess how these factors influenced the choice of clients and which countries are most open to Russian capital in 2024, Tranio conducted a survey of brokers, developers and relocation experts. Among the respondents are experts in the real estate market of the UAE, Thailand, Turkey, Germany, Greece, Spain, Cyprus, Portugal, France and 20 other countries.
According to the experts interviewed, in many countriesclients from Russia and the CIS account for a significant proportion of clients: up to 60% of all foreign buyers of real estate in 2023 — against 49% a year earlier. At the same time, the share of Europeans among foreign customers has been declining for the second year: to 39% in 2023, compared with 49% in 2022 or 62% in 2021. Last year, the activity of buyers from Israel also increased: their share increased to 20% compared to 16% in 2022, and customers from the Middle East became more visible — with a share of 12% compared to 8% in 2022.
In recent years, foreign real estate has become a significant component of the portfolio of Russian investors, but this does not mean a lack of interest in assets in Of Russia. On the contrary, experts note the revival and growth of the Russian stock market.
At the same time, large investors retain their investments in real estate abroad, where Russian capital has mastered new markets in Asia and the Middle East: this helps diversify the portfolio and reduce dependence on the ruble exchange rate.
Russians refused deals because of prices and money transfer problems
Tranio survey participants identified two main reasons why transactions with real estate buyers from Russia and the CIS countries in 2023:
- It was not possible to transfer money to the country of purchase (41% of respondents);
- Buyers expected an unrealistically low price (38% of respondents).
These reasons dominated in 2022, but now they have become more significant. Thus, the share of respondents noting the complication of money transfers increased by 3 percentage points. In 2022-2023, real estate prices increased in many popular markets among Russians (UAE, Turkey, Cyprus, etc.), but against the background of the depreciation of the ruble, buyers often are not ready to raise the check. According to Tranio, in January-April 2024, the median budget of Russians decreased by 6.7% and amounted to 280 thousand euros against 300 thousand for the same period in 2023.
The indicators vary markedly by region and do not always correlate with the division into “friendly” and “unfriendly” countries: in a number of EU countries, it is still possible to make a direct transfer from Russia, but in general Europe has become more closed to Russian customers. Thus, 78% of respondents indicated difficulties with transferring funds to buy real estate in Spain, 67% in Montenegro, 54% in Cyprus, and 50% in France.
The problem of low price expectations is mainly noted by respondents from those countries where Russian-speaking buyers are active and aimed at increasing capital, looking for real estate with a higher yield with a lower check. Such countries include Georgia, where 80% of the surveyed experts noted low price expectations among Russians, the UAE (64%), Turkey (61%) and Portugal (60%).
Among other common reasons that hindered transactions by Russians, experts named denial of banking services due to the client’s connection with Russia (26.2% of respondents), compliance problems unrelated to the client’s origin (22.6%) and a sharp decline in the ruble exchange rate (20.2%). At the same time, according to the respondents, none of the Russian clients purchasing rental housing had difficulty finding tenants, and only 16.1% of respondents faced the choice of clients in favor of assets in Russia.
The depreciation of the ruble primarily influenced the decision to make a deal in the UAE (55%), Thailand (38%), Georgia (40%), and correlates with the expectation of high yields and the motive to increase capital. Buyers from the same countries, instead of foreign real estate, decided to purchase assets in Of Russia.
The increase in literacy in the issue of buying real estate among residents of Russia and the CIS countries also confirms the decrease in the proportion of those whose transactions were disrupted due to the sluggishness of customers. If in 2022 27% of the survey participants noted this reason, then in 2023 — only 17%. The main countries where the “delayed customer” factor was most noticeable were Turkey and the UAE. If in Turkey the reason for such behavior was often the client’s uncertainty about the situation in the country of the transaction, then in UAE — fluctuations in the ruble exchange rate and the choice in favor of other investment formats.
The main purpose of the purchase is to obtain a residence permit and protect capital
The key motive for buying real estate abroad in recent years has been obtaining a residence permit or citizenship for investment But its importance is gradually decreasing: in 2023, 47% of respondents noted this option against 52 and 56% of respondents and in 2022 and 2021, respectively. The countries where this buying motive prevails include Portugal (90% of respondents), Turkey (83%), Spain (82%) and Greece (70%). Over the past three years, Russians’ interest in investment residency in Cyprus, Spain, Portugal and France has grown most noticeably, and it has decreased most significantly in Georgia.
The relocation motive remains significant: the share of those who noted relocation as a goal of buying real estate in 2023 increased by 9 percentage points and reached 31%. For relocation purposes, real estate is most in demand in countries such as Portugal (60%), Cyprus (54%) and Italy (44%). However, according to Tranio’s observations, in the first 4 months of 2024, the share of customers from Russia, considering housing for relocation, has again decreased to 20%.
A popular alternative is the purpose of seasonal living in the country of purchase of real estate: only 30% of respondents singled it out, and most often experts from Thailand (73%), Italy (56%), Turkey (33%) and Cyprus (31%). According to Tranio, among these countries, Russians choose the most affordable housing in Thailand, where the median budget for January-April 2024 was 140 thousand euros, and the most expensive — in Italy, where the median budget was 700 thousand euros.
The share of experts noting the conservative motive for buying real estate to save capital remained almost unchanged from the previous year — 20% versus 21% a year earlier. This motif prevails in countries such as Germany (67%) and the UAE (37%). In January-April 2024, the median budget in these countries amounted to 500 thousand and 241 thousand euros, respectively. At the same time, industry representatives note that the share of customers buying real estate has increased to protect against country risks (36% vs. 29%), to diversify assets (34% vs. 25%) and increase it (21% vs. 8%).
The motivation of Russian clients as a whole remains: they purchase foreign real estate in order to diversify assets, protect against ruble risks, preserve and increase capital. In terms of trends by country, in 2023 and the first quarter of 2024, there was a significant increase in interest in the Phuket real estate market, where Russians now occupy a significant share.
At the same time, the popularity of real estate in the UAE has declined, and few new customers are coming to this market from Russia, but those who have previously purchased real estate in the Emirates and studied this market continue to expand their portfolio.
Thus, investors take a more rational and structural approach to purchasing real estate, in the current context it becomes not just a condition for obtaining a residence permit, but also an alternative to investing in financial institutions and funds. According to the respondents, the main target areas for protection against country risks and asset diversification are the UAE (55% for both motives) and European countries (France, Spain, Germany). However, investments in real estate in the UAE (55%) and Thailand (46%), rather than European countries, are associated with the motive for increasing capital.
In which real estate markets are Russians most active
According to 58% of the experts surveyed, in the country they represent, buyers from Russia and the CIS are in the TOP 5 among foreign buyers.
Russian-speaking buyers are most noticeable in the markets of Cyprus and Thailand (96% of experts from these countries note that they are in the top 5), as well as in the UAE market (62%). In the Emirates, Russian—speaking customers are among the main foreign buyers, but in 2023 they lost the lead: now, along with Russians, 53% of local experts note the high activity of Europeans and 13% of immigrants from the Middle East.
Despite the decline in interest in Turkey, Russian-speaking buyers are still among the leaders in this country (77%). Official sources also provide similar figures for Turkey: according to TUIK, Russians are leading among foreigners in the number of real estate purchases until March 2024. At the same time, buyers from Russia and the CIS have become less visible in Italy, as indicated by 78% of respondents.
In Germany, 82% of respondents consider Europeans to be the most active investors, while about half of residents of Russia and the CIS (46%) note. Perhaps one of the few European countries where customers from Russia and the CIS may displace Europeans, but Greece remains: 35% of survey participants note interest from Russian-speaking buyers compared to 40% of those who note Europeans.
In Spain15% of experts surveyed by Tranio indicated the activity of Russian clients, compared with 85% of those who record the dominance of European clients. These figures also largely coincide with the official statistics of transactions: according to the Board of Registrars of Spain, in 2023, Russian citizens were in 10th place in terms of the number of real estate purchases, and the top three included citizens of Germany, Great Britain and France.
Real estate transactions in Europe have become more difficult for Russians in recent years, and this market is now mainly interested in those clients who plan to move or often travel to European countries for personal or business purposes. Among such clients, a residence permit for real estate investments is in demand, as it solves the visa issue and makes it possible to open bank accounts.
Although the offer of “golden visas” in some countries The EU was limited for Russians, at the same time, new programs are being launched — for example, the acceptance of applications for “golden visas” of Hungary, available to citizens of the Russian Federation, recently started. Thus, obtaining a residence permit in the EU through the purchase of real estate remains a working scheme and finds its interested parties.
Despite the fact that transactions in Europe have become more difficult, it remains attractive to customers, including those who shop in the high price segment. Thus, by the end of 2023, 82% note the activity of Russian—speaking buyers in France, 75% – in Portugal. According to Tranio data for January-February 2024, the median budget of Russians choosing real estate in France amounted to 450 thousand euros (against 600 thousand euros a year earlier), in Portugal — 300 thousand euros (against 310 thousand a year earlier). Customer activity from In Russia and the CIS countries, it decreased in Montenegro (to 57% against 71% a year earlier), in Italy (to 10% against 23%) and in Spain (15% vs. 36%).
Over the past two years, Russian clients have expanded the geography of real estate investments. So, in 2022, traditionally popular European countries (Spain, Italy, Montenegro) were pushed by the UAE and Turkey, and in 2023 Thailand and Cyprus joined the leaders in demand. At the same time, according to the estimates of a third of the survey participants, the total activity of Russian–speaking buyers abroad decreased by 1.5-3 times compared to 2022. In 2023 — early 2024, new markets in the Middle East are becoming more and more in demand: for example, according to Tranio, real estate
Average receipts and expected returns have increased
In most countries, the average check for Russians in 2023 increased compared to last year. On average, purchases in Montenegro became more expensive by 50%, reaching 225 thousand euros, average receipts in Montenegro increased by 20% Georgia and on Cyprus — up to 113 and 450 thousand euros, respectively. The average check in Turkey increased by a record 89%, from 238 thousand euros in 2022 to 450 thousand euros in 2023. Such a sharp increase is associated with an increase in the limits for issuing a residence permit for investments (from 50 to 200 thousand dollars) and passports for investors (from 250 to 400 thousand dollars).
Russians chose more affordable facilities in Greece and Thailand: in both countries, the average check decreased by 10% to 225 thousand euros, due to the variety of offers for different categories of buyers and the initially low entry threshold. While European countries remain accessible only to investors with large capital: the average check in Portugal amounted to 450 thousand euros, Spain — 625 thousand euros, and France — 800 thousand euros. The survey participants recorded the highest average receipts in Italy (1.4 million euros) and Germany (2 million euros).
The average check of Russians in all countries whose representatives participated in the survey amounted to 450 thousand euros in 2023, compared to 290 thousand a year earlier. However, in the context of the three-year period, the average budget has not yet reached the maximum recorded in 2020 (620 thousand euros).
Buyers from Russia and the CIS, which purchased rental real estate abroad in 2023, estimate its profitability quite conservatively. On average, according to Tranio survey participants, the expected rental yield has nevertheless increased to 6.2% per annum, compared with 5.25% in 2022.
Expected returns have increased in those countries where investors expect to increase and preserve capital and diversify assets:
- by 2.1 percentage points to 7.1% in Spain;
- by 0.6 percentage points, up to 8.6% in Thailand
- by 0.5 percentage points, up to 8.5% in the UAE.
On the contrary, in those countries where buyers of real estate intend to obtain a residence permit and buy housing for relocation, the expected profitability has decreased.
Online deals are gaining popularity, but unevenly across countries
48% of the survey participants believe that more than 10% of all transactions in their country were concluded online. The relevance of this format for Russians and residents of the CIS is largely due to the limitations of flight programs after sanctions in the aviation industry. Despite the fact that operators are striving to find new corridors and partners for air transportation, flights from Russia’s trips to Europe have become longer after 2022, which also affects consumer choice when buying real estate.
Individual countries stand out from the general background due to the high proportion of remote transactions. Remote transactions are most in demand in the UAE, where 64% of respondents estimate the share of online transactions at more than a third of all transactions, and in In Portugal, the share of such respondents is 56%. Remote real estate purchases are often practiced in France (30% of respondents believe that more than a third of transactions are made online), in Thailand and Germany (25% of respondents each) and in Georgia (20%).
Experts predict market growth in 2024
Tranio survey participants are optimistic about the future: 73% of respondents believe that the real estate market will grow in 2024, and only 2% fear a sharp collapse. At the same time, the share of those who believe that the market will reach a plateau (16%, +4 pp) and that the market will begin to decline smoothly (10%, +2 pp) is growing, which is generally expected after high demand in 2022-2023.
As in previous years, Tranio analysts calculated an “Optimism Index” based on the survey results, which takes values from 0 (if all respondents give the most pessimistic forecast) to 1 (if all respondents are the most optimistic). On average, this index for all countries, as in the previous year, amounted to 0.8, which indicates generally positive expectations of market figures.
The survey participants show the greatest optimism in Greece (the index was 0.93), as well as Thailand (0.85), France (0.80) and Cyprus (0.78). On the contrary, the most pessimistic forecasts for 2024 are given by respondents in Turkey (the index was 0.64) and Germany (0.63).
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