Country Guides Country Guide: Russia

Date Published:

02/06/2008

Russia, Europe’s largest country and so vast it covers 10 time zones, has been on a rollercoaster economic ride in the last two to three years. But it is a viable place to buy?

By Gordon Miller

Driven largely by commodities markets and oil and gas reserves, the Russian economy boomed during the mid-noughties. House prices, too, went northwards at a soaring rate. International agent Knight Frank recorded that existing apartment prices increased by 30 per cent in the year up to the first quarter of 2008. Then, the Russian stock market crashed, in September 2008, and the property bubble was well and truly burst.

Statistics from Blackwood Real Estate indicated an 8-10 per cent price drop to end-Q4 2008 from the previous quarter. Some real estate agents note that many sellers are accepting offers 15 per cent to 30 per cent lower than their initial asking prices. But the Russian economy is nothing if not resilient. Knight Frank reports property prices grew year on year to the first quarter of 2009 by 3 per cent. Russia was one of only 15 countries from 46 in the Knight Frank Global Index to record a positive growth.

As to the future, for the remainder of 2009 and into 2010, it’s anyone’s guess. Maria Litinetskaya, acting director of Blackwood, said: 'Property prices are expected to slide further in 2009, by 20 per cent-25 per cent for newly built- economy class housing and by 30 per cent for business-class housing.'

The house price forecast reality in Russia and its economic powerhouse, Moscow, probably lies somewhere between both Litinetskaya’s predictions and Knight Frank’s findings to date.