Property market in Russia: purchasing a residence in Russia

You wish to engage in the Russian real estate sector, then our handy handbook on acquiring flats, residences, and other estates in Russia can assist you throughout the procedure.

The real estate sector in Russia has a relatively brief history. During the Soviet era, all properties were state-owned; individuals only had the right to utilize them with flats distributed based on one’s place of employment. As a consequence, choices for relocation were quite restricted. Nonetheless, following the collapse of the Soviet Union, the Russian real estate market developed and inhabitants of Moscow were able to privatize and subsequently trade and purchase properties for the first time. At present, Russian real estate is thriving. It provides numerous thrilling opportunities and substantial returns for lifestyle and investment.

This guide to acquiring properties in Russia covers the following subjects:

• • Is it a favorable moment to acquire real estate in Russia?
  • Real estate rates in Russia;
  • Where to make a purchase in Moscow?
  • Central real estate in Moscow;
  • Moscow outskirts;
  • Real estate intermediaries in Russia;
  • How to acquire real estate in Russia;
  • Inspecting a property’s past;
  • Expenses of acquiring real estate in Russia;
  • Bank charges;
  • Trust agreements;
  • Validation;
  • The conclusion procedure on real estate in Russia.

Is it a favorable moment to acquire real estate in Russia?The financial and political environment in Russia over the recent years with commercial embargoes following their engagement in Crimea and Ukraine, the drop of the Russian currency, substantial inflation rates, and elevated interest rates have all placed the nation into a downturn.

Inevitably, this influenced housing prices throughout the nation, including real estate prices in Moscow.

At the exterior level, without inflation adjustments, Russia’s real estate sector appears to still be rising, but in a report by Global Property Guide from 2015, the statistics issued by the Federal State Statistics – Rosstat, actually presented a reduction when considering inflation.

While this might sound unfavorable for vendors who had formerly experienced great demand, high real estate rates and numerous buyers, the Russian housing market has decelerated. Nevertheless, for purchasers, especially foreign investors, this might be the ideal moment to acquire real estate in Moscow. Rates are relatively low, but with predictions for oil rates to escalate in 2017 and the economy starting to recuperate, these could provide favorable returns on investment.

Real estate rates in Russia

Moscow is a densely inhabited capital with over 12 million inhabitants. The city is circular surrounded by four rings extending from the Kremlin in the heart to the Moscow Ring Road or MKAD that defines the city’s boundary, with some added territories.

Within the rings, the city is divided into ten administrative divisions known as okrugs, which are then subdivided into 123 districts.

Real estate rates for acquiring in Moscow are usually mentioned with a cost per square meter in Roubles, and at times with a total real estate cost. Recent data from Numbeo place average rates for acquiring an apartment in Moscow at approximately 308,500 Roubles per square meter in the city center and 147,000 Rubbles outside of the central area.

If you’re acquiring real estate in Moscow, like in most cities, location, size, and category of real estate will determine the cost and what you can afford. Apartments in the city center of Moscow come with a premium cost. Nevertheless, there are a variety of regions outside the city center that also command a high cost in affluent areas and appealing regions surrounding the Garden Ring. These localities boast lush neighborhoods, expansive green areas, larger properties, all complemented by efficient transportation links.

Furthermore, certain upscale modern developments designed for the luxurious market and international investors may come at a higher cost. For instance, in the Central Administrative Okrug, areas like Presnensky District, also recognized as Presnya, and Sokol feature luxury apartments with price tags reaching millions of Roubles.

Where is the best place to invest in Moscow?

Moscow frequently grapples with traffic congestion, making driving in the city a tedious and time-consuming experience. Thus, when contemplating the ideal location to invest in Moscow, it is crucial to consider public transportation links and commute times to workplaces, schools, or social hubs.

The Moscow Metro stands as one of the longest underground systems globally, with nearly 340 km of lines running beneath the city and servicing 203 stations as of 2016. This facilitates finding a locale with excellent connectivity.

For numerous expatriates, purchasing an apartment in Moscow situated centrally within or in close proximity to the Central Administrative Okrug proves preferable, offering minimal commute times, a plethora of amenities, and ease in finding tenants in these highly sought-after regions.

Central Moscow real estate

Encircling the Kremlin, various districts within the Central Administrative Okrug stand out. Just like in the rental market, districts neighboring Tverskaya Street remain a sound investment, providing access to the vibrant city scene at their doorstep; however, prices per square meter may rank amongst the highest in Moscow. Similarly, areas such as Arbat, Kropotkinskaya, Smolenskaya, and Patriarchy Ponds a bit further west, as well as Chistye Prudy to the east, offer a central location with promising returns.

Perimeter districts in Moscow

Purchasing property in Moscow, outside the central regions, presents a broader spectrum in terms of budget and property types. Noteworthy areas attracting affluent clients reside in the western, southwestern, and northwestern parts of the city, like the Sokol district, Shchukina, Voykovskaya, and Filakovsky, showcasing ample green spaces and diverse property options.

Another favored locale for those desiring proximity to the city center, yet embracing fresh air and tranquil residential settings, are positioned around the Sadovoye Koltso or Garden Ring Road and the Boulevard Ring Road, both former city boundaries. Tagansky district on the eastern side of the Garden Ring is an emerging area, transitioning from a traditionally working-class zone to witnessing modern residential complexes due to recent business investments.

For families relocating to Russia, the Kuntsevo/Krylatskoye district west of the center adjacent to the MKAD offers convenient access to the International School of Moscow and is esteemed as the most eco-friendly neighborhood in the city. Conversely, Leninsky prospect to the south proves popular among expats due to its proximity to several exceptional international and national schools.

To strike a deal, properties on the lower end of the price spectrum in Moscow can be sought in the eastern and southern industrialized districts. Despite this, these regions still boast efficient transport connections to the city, potentially allowing for more space while preserving the essence of being in the city.

ExpatNews can satisfy all your needs with any budget to purchase and/or sell your real estate in Moscow and any place of Russia. Please contact LLC Rodnyi by phone +7 495 374 7972 during business hours 10-18 Mon-Fri

Russian property agents

When it comes to purchasing real estate in Russia, abundant information on available properties can be found in public outlets or online platforms and various publications.

Nevertheless, choosing the right property, setting up a viewing appointment, and evaluating the allure of different options require expertise. Hence, especially for foreign investors, it is recommended to engage a reputable Russian real estate agent. They will furnish you with the most comprehensive and up-to-date information on all properties in the market, even those not publicly listed, and offer invaluable local insights. Moreover, they can assist in conducting due diligence on a property and structuring a secure transaction.

Always enlist the services of a property agent or a legal practitioner with experience in Russian real estate to safeguard your interests during the transaction.

Steps to acquire Russian real estate

Once you have identified the areas that meet your criteria and located a property, it is time to delve into the logistics of purchasing property in Moscow.

Verifying a property’s background

Given the constantly evolving real estate regulations, thorough research into the property’s past is crucial. In some cases, your ownership rights may face challenges from previous owners or individuals formally registered with the property. These risks can often be mitigated if identified prior to the real estate transaction.

Expenses related to acquiring Russian property

In Moscow, it is customary for the buyer to bear all closing costs, including notary charges, state registration fees, and bank expenditures. Furthermore, if you engage a real estate agent to locate a property and/or negotiate your transaction, a brokerage fee will apply. This fee covers property search, background checks on the property and seller, review of ownership documents, inspection of usage rights, closing arrangements, and overseeing the final property transfer to the new owner. The brokerage fee is typically a percentage of the sale price, ranging from 6 percent for lower-priced properties to 3 percent for higher-end properties.

The seller’s brokerage fee includes property assessment, marketing, setting up property viewings, negotiating with potential buyers, compiling all required transaction documents, finalizing the deal, and supervising the property transfer process.

Bank charges

A significant number of real estate transactions are conducted in cash, with sale-purchase transactions occurring at a Russian bank where the bank’s safety deposit facilities act as an escrow account to ensure that the payment is made upon the final ownership transfer. Full funds are deposited and only released to the seller when the complete set of registered documents under the buyer’s name is presented.

Escrow agreements

Most Russian real estate transactions span from five weeks to several months, involving the accumulation of various documents from governmental authorities.and the purchaser might need to secure funding or the vendor might need to discover an alternate dwelling. That is why a preliminary or depository contract is established between the purchaser and the vendor outlining the conditions and requirements of the future transaction.

Upon ratifying the preliminary contract, whether it be an advance payment (Avans) or property deposit (Zadatok), buyers provide a sum as a guarantee to withdraw the property from the market while the necessary paperwork is gathered and the sale is concluded. The exact deposit sum is not a fixed percentage, but typically an agreed-upon amount by both sides. Always make sure to engage a proficient and trustworthy agent or an experienced Russian real estate attorney to formulate a depositary or preliminary contract and conduct a thorough investigation of the property.

Notarization

Formal certification of a sale-purchase is not obligatory by law, but it is recommended as it is tantamount to purchasing title protection. The fees charged by notaries vary based on the property’s selling price, running from 0.7% for higher-priced properties to 1.5% for lower-priced ones.

The completion process for Russian real estate

Once the groundwork and documentation are finalized, the completion process commences, with funds being deposited into the bank and both parties endorsing the sale-purchase contract. This contract is then lodged for state registration (propiska).

On the day of property handover, the involved parties must ratify an Acceptance Act, ordinarily at the bank, notary’s office, or real estate establishment. This verifies that the property has been transferred to the buyer in the stipulated condition.

Enrolling the sale-purchase contract with the Federal Registration Service for Moscow formalizes the transfer of property rights. Typically, this process takes 30 calendar days to finalize, though it can be expedited if a mortgage is used to fund the property.