Russia is a large market with great opportunities. It also offers a skilled and cheap labour force and a wide range of natural resources. According to statistics, foreign investment in Russia has been skyrocketing since 2007, and has since stabilized. The main foreign investors are Americans and Germans.
Real estate legislation and tax policy encourage long-term investment in the real estate sector by foreigners. During the purchase of real estate, the foreign citizen enjoys several rights, like a Russian citizen. The proceeds from the sale of a property can also be exempted from taxes, but under certain conditions. If you want to invest in Russia and stay there, read our article on obtaining a Russian visa.
Moscow stands out from other cities in Russia
Investing in real estate in Russia’s capital was quite strange, if not essential, until a few years ago. Considered too expensive and far too unstable, this market, which was considered too young, is nowadays a very good deal, according to experts in the field.
The Moscow real estate market
is famous for being one of the most expensive in the world. It offers new opportunities for adventure-loving foreign investors. They can buy real estate in Moscow and even expect a return on their investment, provided they know all the right things.
Foreign agencies have specialized in buying old flats and communal flats, of which the capital is full. Sometimes poorly maintained, these are returned as good as new. Sometimes they even become beautiful lofts and flats that meet European standards and norms.
With an entry ticket of 250,000 euros, you can buy a renovated flat, a small area of about 50 m², in the centre of Moscow. Once rented out, the property can offer you a return on investment of 6-7% net per annum. The larger the space, the higher the return on investment.
The Moscow market
is very interesting when it comes to recovering flats in poor condition for renovation. The owner can then rent out the property at rates adjusted to the real estate market. The market for functional flats is more popular than historical buildings.
The share of foreigners in the Moscow market is not significant, however, and only accounts for about 3-5% of all buyers. The most important investors
are Americans, Italians, English and French. But the main foreigners who invest in this place are people who have a connection with Moscow or Russia. For example, they have family in Russia, or they have been working there for years.
Another attractive feature for the investor is that there is no property tax, no local tax in Russia. Residents pay the classic income tax of 13%, including rents received, or 6% for those registered as entrepreneurs. In contrast, non-residents have to pay 30% on income. In the case of a resale, the seller if a tax resident pays 13%, while non-residents pay 30%.
Russia’s ‘wild’ property market
While Russian housing
was state-owned during the communist era, the entire stock began to be privatized in the 1990s. At that time, it was sufficient to prove that the inhabitant had occupied the premises in order to have a title deed. Two major consequences: the Russian real estate market is less than 20 years old (compared to 200 years old in France) and the rate of ownership is 80%.
For those who have not been lucky enough to have a home, renting is the only alternative, except that it is still too expensive. For example, you have to pay around 1250 euros to rent a studio in Moscow. That’s why shared accommodation is very popular.
There are between 60,000 and 80,000 real estate agents in Russia today, half of whom have a serious and regular business. Except that the market is still far from being regulated. This means that anyone can declare themselves a professional in the real estate sector. Are you used to seeing real estate shop windows in France? You should know that these are almost non-existent in Russia. There is also no directory listing agents. Therefore, the business develops mainly on the basis of word of mouth or on the internet. Unfortunately, this gives rise to disorderly practices. For example, there are several false advertisements on the internet with only one objective: to lure buyers.
In the list of 5,000 websites that carry real estate ads in the country, none of them stand out yet. All cities have several generalist sites that deal with local real estate. However, more and more Russians
are turning to sites like Lebon coin.
Finding accommodation in this country is a very difficult task. There are not many vacancies, but there is a lot of demand. And it is not enough to love a flat to get it. You also have to provide a strong application so that the landlord can choose you from among the others. And even if you do find a flat to rent, the rates are still quite high. The solution to this problem? Shared accommodation.
The main advantage of sharing
a flat is of course the amount of rent you pay. For the same rent, you can afford a 15 m² house or a room in a flat, with a living room, kitchen and in some cases a private bathroom.
Although in some cases landlords are choosy about who they share with, most shared flats are managed directly with the people who are already in the flat. This means that you will not need to provide a lot of paperwork. A meeting with the flatmates is more than enough to see if cohabitation can be envisaged or not. But be careful, we are not talking about a sublet here. All tenants must therefore be registered on the lease.
In addition to the rent, the budget is also shared by all the occupants of the flat or house. This includes bills, service charges and exceptional expenses (such as plumbing). All these costs are usually shared between the flatmates. Less common, but still possible, are joint shopping trips.
You have to admit that sharing a flat also allows you to have real moments of exchange. You can be sure that you will never be left alone during meals. Another thing you shouldn’t neglect is washing up (and even other household chores). Indeed, living with other people allows you to have an open mind, to discover new cultures, new ways of living, to create strong and unique bonds with other people, to share fearlessly the experiences you have already had and even to do favours for each other.
There are also many students who are looking for a flat share. But beware, it is not always like in the movies. But anyway, living with an international student is the best way to learn new languages as well as to enrich your knowledge of the country
If you are interested in Moscow, find out more about the places to visit in Moscow!