An overview of where real estate is purchased by Russians in 2022 and prospects for 2023

The geopolitical situation in 2022 has resulted in a significant rise in the desire of Russians to acquire real estate abroad. Prian reports that the number of inquiries regarding the purchase of foreign residential properties has risen by 2.3 times over the year, with almost 80% of requests leading to actual transactions.

Learn about the top properties purchased by Russians in 2022 and what industry experts are predicting for 2023 in our article.

What Were the Reasons Behind It? Geopolitical and Otherwise

For over three years, the real estate market and investment opportunities have been affected by geopolitics, world conflicts, and natural disasters. However, in 2022, there was a significant surge in demand for foreign real estate, with queries for purchases more than doubling. The increase in demand was moderate in January and February due to the pandemic, but it sharply rose in March and mid-autumn due to geopolitical reasons.

Prian reported that nearly 75% of Russian customers bought foreign residences in 2022 with the intention of relocating, compared to 55% in 2021. People are now buying housing abroad for permanent residence rather than vacation homes. Additionally, there has been an increase in investment operations involving the purchase of residential buildings for the purpose of renting or resale. According to Philip Berezin, Editor-in-Chief of Prian.ru, the trend of purchasing “a house by the sea in order to vacate there once in a while” has significantly decreased.

NF Group reports that the primary objective of wealthy Russians who purchase property abroad is to obtain permanent residency or citizenship. In 2022, immigrant programs offered by Turkey and Cyprus were the most sought-after. Despite many citizenship or permanent residency programs being suspended for Russians, the remaining countries received all the requests. These programs include those offered by Grenada, Turkey, Montenegro, Italy, Portugal, Cyprus, Serbia, Bulgaria, and the UAE, according to Henley & Partners.

Around 15% of affluent Russian buyers select foreign real estate as an investment. The most favored countries in this category are the UAE (specifically Dubai and Abu Dhabi emirates) and Turkey (specifically Istanbul). The remaining 7% consider residential property purchase for both living and investment purposes. Experts observed that the UAE is the most popular destination in this category.

Top Destinations of 2022

Russians are primarily interested in countries that have open borders and offer a long-term stay provided certain conditions are met. While Turkey and the UAE are the most popular destinations, there is also an increasing trend for some European countries.

According to analysts at Prian.ru, Turkey, the UAE, Georgia, Montenegro, Thailand, and Bulgaria are among the most sought-after countries. Additionally, Irina Mosheva, a Russian partner at the international trading company Savills, suggests adding Indonesia to this list. Furthermore, clients are increasingly considering investments in Oman and Qatar, according to her account.

Turkey stands out with more than 40% of requests submitted for properties in this country, indicating its dominant position. Turkish real estate has been the top choice among Prian users since 2020.

There has been a significant increase in demand for visa-free countries, including for Russians. The UAE has shown the highest growth throughout the year, followed by Thailand, Indonesia (mostly in autumn), and Israel. The demand for Georgia and Montenegro has more than doubled, with the UAE leading the pack with a 4.5 times increase in demand.

While European countries have mostly lost ground, their drop in the ranking does not necessarily mean a decrease in the number of requests. It is only evident in certain countries such as Germany, Czech Republic, and Latvia. Additionally, the number of requests related to the USA has decreased.

Conversely, there has been an increase in the number of requests for Southern European countries such as Spain, Italy, Portugal, and Greece. Cyprus, in particular, has emerged as a leader due to the ongoing permanent residency program. In 2022, residential properties in Cyprus were searched for twice as often as in 2021, according to Marina Shalaeva, Executive Partner of Parus Real Estate. She confirms that 14% of all requests were for Cyprus, while 8% were for Portugal, 6% for Greece, and 4% for Malta, Spain, and Great Britain, respectively.

Prian.ru estimates a 15-20% increase in interest in real estate in Spain, Italy, Portugal, Greece, and Cyprus over the year.

According to Mr. Berezin, European countries are less accessible for Russians due to difficulties with transferring funds and negative perceptions of Russian passports. However, those who already possess a second passport or permanent residency in one of these countries do not experience these issues.

According to Prian’s analysis, the majority of Russians (70%) were seeking properties priced up to €100,000, with 20% considering properties up to €300,000. Only a small portion (2.5%) of potential buyers were interested in properties over €1,000,000. Elena Marinicheva explained that the minimum budget required to buy foreign real estate in 2022 was $100,000. She further added that such an investment could lead to a permanent residency in the country for the buyer in Georgia and Turkey, both of which have income-generating projects for this price range. Meanwhile, in the UAE, the threshold for investment varies depending on the emirate, starting from $180,000 in Ras Al Khaimah and from $205,000 in Dubai.

Predicting the Future: Which Countries Will Attract Russian Interest in 2023?

In 2023, Russians continue to show a keen interest in purchasing real estate abroad. Once again, they have topped the list of foreign buyers of residential properties in Turkey.

Based on Prian’s data, as of early 2023, the top five countries most popular among Russians for buying real estate are Turkey, the UAE, Georgia, Montenegro, and Thailand. The demand for housing in Bulgaria is comparable to the last three countries, mainly because these countries offer permanent residency programs.

For instance, Turkey offers a long-term residence permit with a pathway to citizenship based on real estate purchases. In contrast, the UAE does not have a permanent residency scheme but grants a long-term visa requiring investments in the country, including real estate acquisitions. The visa’s validity is dependent on its cost.

In Georgia, permanent residency can be obtained by investing $100,000 or more in real estate, subject to purchasing one or more properties in the primary or secondary market, with the option of buying them on credit.

To obtain permanent residency in Montenegro, the price of the property does not matter, but it is necessary to have no encumbrances, such as a mortgage or loan. The permanent residency permit is issued for a year and can be extended, but it does not authorize work or settled domicile in Montenegro.

To obtain permanent residency with a settled domicile in Cyprus, one must purchase a property from a property developer, such as a new construction. The required price of the property must be above 300,000 euros. Property owners who bought resale property before May 7, 2013, may also be eligible for a settled domicile.

Despite the current geopolitical environment, Russian buyers are expected to maintain their interest in purchasing residential property in European countries. Which cities and countries will be the most popular? PwC analysts have created a ranking of the most promising large European cities in terms of investment prospects for 2023. The experts analyzed various factors that impact property prices and provided corresponding forecasts. The top-ranking cities are as follows:

• According to PwC analysts, London remains the most desirable European city for real estate investment in 2023, retaining its first place from the previous year.
• Taking the 2nd position in the ranking, Paris has overtaken Berlin, which held the same position in 2022. Analysts have pointed out that the inflation rate in France is relatively lower than in Germany. Additionally, the office market in Paris has seen some improvement this year.
• Ranked third on the list, Berlin experienced a decline compared to the previous year, as inflation and dependence on Russian energy supplies have impacted the German economy, according to experts.
• Madrid secured the 4th ranking spot, showing significant improvement compared to the previous year, despite the challenging circumstances caused by COVID-19 and an increase in inward migration, according to the report. Additionally, Spain’s development in solar and wind power engineering is an advantage that will help the country avoid potential power outages predicted in Europe for 2023.
• Munich retained its 5th place position from the previous year, unable to surpass other cities. Despite being a major city in Bavaria, Munich is still unable to outpace Berlin, which continues to attract significant domestic and foreign investment.

Meanwhile, experts in international investments caution that some European countries may pose a risk to Russian investors at present, hence caution should be exercised when considering property purchases in these areas.

In Lieu of Summary

The foreign real estate market has undergone significant changes that are affecting Russians this year, and the situation is still evolving. Due to global changes in the investment map, restrictions on fund transfers, and sanctions, it has become increasingly challenging for Russian citizens to purchase property abroad.

As a result, many are turning to countries such as the UAE and Turkey, which are considered more favorable for foreign investment. Nevertheless, there is still a strong desire among high-income Russians to purchase real estate in Europe, despite the geopolitical environment and limitations in some countries. Therefore, it is crucial to consider these factors when marketing European real estate to Russian buyers.