The fate of a non-resident: foreigners have become more likely to buy housing in the Russian Federation

Citizens of the CIS, China, Estonia and Abkhazia have become more likely to purchase real estate in Russia, market participants told Izvestia. Such transactions now account for 20% of the total number of apartment sales. Demand from non-residents is mainly concentrated in Moscow, followed by St. Petersburg and the Moscow Region, while other regions of the country together accounted for only 10%. Foreigners spend 20-50 million rubles on Russian housing. About why citizens of other countries began to buy up real estate in Russia — in the material of Izvestia.

What foreigners buy

Foreigners have become more likely to purchase real estate in Russia. For six months now, there has been an active increase in purchase and sale transactions with non—residents, which began in September 2024, market participants told Izvestia. Currently, such sales account for about 20% of all concluded contracts.

Citizens of Uzbekistan, Belarus, Kazakhstan, Tajikistan, Turkmenistan, and Abkhazia were among the active purchasers of housing. Chinese and Estonians buy less often, Evgeny Shavnev, general director of the Flip real estate investment company, told Izvestia.

"At the same time, the share of Ukrainian citizens in the overall segmentation has increased dramatically over the past six months," he said. — If at the beginning of 2024 they accounted for only 2% of transactions, now they account for more than 5% of total sales and 19% among non-residents.

According to Kalinka Ecosystem, there are residents of Tbilisi and Tallinn among the buyers. Olga Nerusheva, Deputy General Director for Commercial and Marketing at BN Group, added that Chinese investors, Turkish businessmen and CIS citizens stand out among the main buyers in 2024.

Demand from non-residents is mainly concentrated in Moscow, followed by St. Petersburg and the Moscow Region, while the remaining regions account for only 10%.

Most often, according to Evgeny Shavnev, foreigners buy apartments in a business or comfort-plus class housing complex for cash.

— In 70% of cases, the purchase is not of an investment nature, but is considered for living in the future for one to five years, - he noted. — The most expensive apartments are bought by citizens of China, Kazakhstan and Ukraine. The purchase budget of these investors is slightly higher than that of buyers from Russia.

65% of purchases fall on a budget of up to 20 million rubles, 21% — from 20 to 50 million rubles, above 50 million — 14%.

Kazakh citizens most often buy apartments for personal living, rather than for investment purposes, said Oksana Romanovskaya, a top Whitewill broker.

— This is due to the fact that investments in Russian real estate are less profitable for foreign citizens due to the high tax rate, — the expert explained. — If the sale of the property takes place earlier than in five years, the tax will amount to 30% of the total value of the property, which significantly reduces the potential profit.

The share of transactions with non-residents in the residential real estate market in Russia is about 3% in the economy class segment, and in the comfort and business class segments this figure reaches 10-11%, Maxim Luchnikov, commercial director of BMS Development Group, confirmed.

"Such figures are due, among other things, to the fact that mortgage conditions for non—residents are much more difficult," he said. — In the commercial real estate market, non-residents account for about 20% of total sales.

Will the trend continue

In 2025, Russia will continue to be attractive to foreign investors in the real estate sector, experts believe. The greatest interest will be focused on Moscow and Sochi, where investments in highly liquid premium projects can bring returns of up to 20%, said Sergey Goncharov, CEO of Razvitie Group. Altai and Crimea are also considered promising investments among investors.

"The stability of the Russian real estate market and its attractiveness to foreign investors are increasing against the backdrop of global economic turbulence," the expert said. — One of the factors fueling interest is Russia's active economic cooperation with the BRICS countries, in particular, with India.

India is actively investing in Russian business and the development of commercial and industrial facilities - the total amount of investments already exceeds 10 billion rubles. Indian companies also consider Russian real estate as a tool for effective use of accumulated rupees and balancing the trade balance between the countries.

Metropolitan cities remain leaders in demand due to their developed infrastructure, high living standards and business opportunities, while the southern regions and the Far East attract buyers due to their climate, tourism potential and growing economic importance, said Roman Antonovsky, Director of Advertising and Marketing at OM Development.

"The quality of life in Russia is much higher than in many other post—Soviet republics," he said. — This standard of living can only be compared with the major capital cities of the former CIS: Tashkent, Bishkek, Astana, Alma Ata. Therefore, it is natural that not only residents of other regions of Russia, but also citizens of neighboring countries and republics seek to live in large Russian comfortable cities.

According to the expert, two trends can be distinguished: migrants from neighboring countries with average, not very high earnings are trying to buy economy-class housing in residential areas and suburbs of large Russian cities.

"The second is when businessmen from neighboring republics can purchase premium housing for investment purposes," he said.

Foreign citizens' interest in Russian real estate may also be related to starting a business in Russia, said Fyodor Ushakov, sales director of the Mangazeya development company.

"It can also be a story when a wealthy family that has been living in Moscow for a long time, has its own business or a large income, buys their child an apartment in a ready—made house next to the chosen university," the expert added.

What is the reason for the activity of non-residents?

High activity of non—residents in the housing market is not bad for the market, added Vladimir Shchekin, co-founder and co-owner of the Rodina Group.

— It is important to note that foreign citizens will not buy a bad product — the quality content of the project is important to them: functional lobbies, landscaping, social and sports infrastructure, — the expert specified.

At the same time, there is additional pent-up demand in the market, which is constrained by difficulties with international bank settlements, account openings, and sanctions restrictions, said Dmitry Yefimov, Deputy Commercial Director of PIONEER.

—And as soon as such restrictions are lifted, we will see a completely different picture in the volume and structure of demand," he believes. — Today, the predominant countries are those whose citizens are technically a little easier to buy real estate and pay for it.

The growth of transactions with non-residents, especially through the CIS countries, may be related to several other factors, said Fyodor Sidorov, a private investor and founder of the School of Practical Investment.

"There is a possibility that some of the transactions are conducted indirectly in the interests of residents of unfriendly countries," he suggested. — This may be a mechanism for exiting Russian assets, when the objects are first transferred to CIS citizens and then resold. It is also possible for foreign investors to enter through intermediaries from these countries to minimize sanctions risks.

And the increase in transactions may be related to relocation, business interests or integration processes, as well as the desire to fix assets in Russian real estate, the expert said. He attributed the growing interest from citizens of Uzbekistan, Kazakhstan, Belarus and other CIS countries to the strengthening of economic ties, migration processes and business expansion in Russia. In the case of Kazakhstan and Belarus, there may be companies that act as transit companies to work with the West and China.