New data contradicts Russian buyer stereotype
In 2010, the stereotype of Russian buyers turning up and buying developments with paper bags full of cash is misplaced, according to a new report.
Data from international real estate agency, Gordon Rock and mortgage broker, Lowell Finance shows that more than 50 percent of overseas property transactions made by Russians this year were conducted using loans received from Western banks.
Kirill Dolginskiy, managing director of Lowell Finance believes the economic crisis has made Russian buyers consider the benefits of mortgage finance:
"As a result of the current economic situation, mortgage loans suddenly became a very convenient way for Russians to finance real estate transaction abroad”.
“It is like killing two birds with one stone,” Dolginskiy says. “They can obtain low-interest credit to invest in new objects while keeping funds already invested in other projects intact”.
Better rates for overseas property
Stanislav Singel, president of Gordon Rock believes Russian investors are beginning to look overseas due to more attractive financing deals:
“What we are seeing are big buying opportunities for those looking for bargain deals that are not yet available in post-crisis Russia. Right now, you can hardly obtain mortgage loans in Russia at less than 12 percent interest. In the West, you can get the same for just four percent, which is three times cheaper. In addition, processing mortgage loans is faster and the background check for eligibility is snappy”.
According to Ivalio Jordanov, founder of Russian property portal Domavin.ru, the stereotype of a Russian buyer paying in cash has always been just that, a stereotype: “There is certainly a culture that reliance on debt is a bad thing but this is when it is used to finance lifestyle rather than investment. Over the past fifteen years, credit and mortgages have been slowed embraced, particularly by investors”.
The differences between lifestyle buyers and investors in the Russian buyer market will be addressed by Knight Frank Russian and Intermark Savills at Russian Summit in Moscow on 11th November.
Source: Global edge