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Russian Property Latest Eastern Europe Investment Opportunity

News Posted On: 06 December 2012

Of all the division and volatility in the world's property market, a clear pattern has emerged that investors can get in front of to make gains. In Eastern Europe we have seen several markets suffer greater losses in their property markets than their overall economy, this combination of massive house price falls combined with resilient and/or resurgent economies presents a solid opportunity in most cases.

Latvia is the shining example of this. Through 2008 and into 2009 it languished at the bottom of the Global Property Guide index as one of the worst hit property markets in the world along with Dubai, as prices in both Latvia and Dubai were down by over 50% on an annual basis. But the Latvian economy was much more resilient to the crisis and as the economy began to recover strongly the housing market became an excellent opportunity for investors. One that they did not miss out on, and the increased demand saw Latvia in a complete turnaround. Looking at the Global Property Guide index for the year-end 2010 we see Latvia in number 1 position with prices up over 19% on the year, and this is where is stayed for many months. Latvia is 10th on the latest table for Q2, with prices up 2%+ compared to Q2 2011.

Russia could be the next market to benefit from this trend. Russia suffered a very short recession in 2009, and since then the economy has been growing at over 4% per year ever since, including growth of 4.9% year on year in Q1, and 4% in Q2. Against this backdrop of economic resilience we see property prices falling sharply since 2008. In 2008 the average price of all apartments across Russia was 52504 rubles (£1,059) per sqm according to the Federal State Statistics Service (Rosstat), in 2011 this price had fallen to 43686 rubles (£881) per sqm. Luxury apartment have fallen even more sharply from 69,612 rubles (£1,404.11) per sqm in 2008 to 49,042 rubles (£989.201) per sqm last year.

In actual fact this trend may have already started, in other words you may have missed the bottom if not the boat. According to the latest data from Rosstat, the price index for all resale apartments in Russia rose by 7.88% (3.86% inflation-adjusted) during the year ending Q1 2012, the fastest annual growth since Q1 2009.

In Moscow, the price index for resale apartments increased by 4.02% (0.15% inflation-adjusted) in Q1 2012 from the same period last year. On the other hand, in St. Petersburg, the country’s second largest city, the price index for resale apartments dropped by 0.74% (-4.43% inflation-adjusted) over the same period.

Now is the time to buy cheap property in Russia

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