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Expats Buying Less Property

Published: June 18, 2014 (Issue # 1816)



  • There is now an increasing trend of expats selling their property, especially in the city center
    Photo: Florstein / Wikimedia Commons

Fewer foreigners are choosing to invest in St. Petersburg residential real estate, now only making up 2 to 5 percent of all real estate transactions, reports real-estate agency Knight Frank St. Petersburg.

The 1990s though to the mid-2000s saw more foreigners investing in local property, mostly to rent out. The most popular area for investment was the city center, in particular the Golden Triangle an area bounded by the Neva River, Ulitsa Gorokhovaya and the Fontanka River. However, in the last three years, an increasing of foreigners have been selling their property.

We are now seeing more foreigners who bought their apartments in the city in the 90s starting to sell, said Alla Shinkevich, deputy director of the Nevsky Prostor real estate agency. This is most likely related to the current political situation and the decrease in profitability from rent, she said.

Another reason attributed to foreigners selling and their reluctance to invest is the difficulty they face in dealing with companies hired to manage their property when they rent it out. As more of these types of managing companies enter the market, so too do the number of dishonest operators, squeezing the honest companies off the market.

It is becoming more and more difficult to find a good management company for an apartment, even for 10 percent of the apartments monthly rental rate. Ten of our foreign clients have had to sell their flats because their managing company left the market, said Pavel Pikalev, head of Penny Lane Realty St. Petersburg.

Another issue foreign real estate investors are facing is a growth in taxes for non-residents.

Foreign customers tend to buy property through a bank rather than pay cash. Even though there are some ways of getting around the legislation, the 30-percent tax that all foreigners have to pay restricts their freedom significantly, said Pikalev. As a result, it is easier to just sell the property than to deal with all the headaches.

There are two main types of foreign customers who purchase property in St. Petersburg: Residents of the former Soviet republics, including Russian citizens that now live abroad, and people married to Russian citizens.

We received several applications from foreigners this month. All of them work in different Russian cities. When I asked them why they chose St. Petersburg, I got a surprising look as a response, and they answered that Moscow was more expensive. It shows that they are not even looking at other cities for accommodation only Moscow and St. Petersburg, said Shinkevich.

While the Golden Triangle was once popular to invest in, foreigners are now more interested in newly constructed apartment buildings, and the Vasilievsky and Petrograd districts, along with Krestovsky Ostrov, are in demand, added Shinkevich.

Many foreigners are now mostly interested in newly-constructed houses built by western developers, usually by Finnish companies, Pikalev said.





 


ALL ABOUT TOWN

Wednesday, Oct. 22


English teachers can expect to receive a few useful pointers today from Evgeny Kalashnikov, the British Council regional teacher, during the EFL Seminar this afternoon hosted by the British Book Center. The topic of todays seminar is Grammar Practice.


Young Petersburgers will get the chance to jumpstart their careers at Professional Growth, a job fair and forum featuring more than 40 major Russian and international companies vying for potential candidates for future positions. The forum not only is a chance to network but also to learn more about the modern business world and to understand what it takes to get the job you want.



Thursday, Oct. 23


AmChams Public Relations Committee meeting is scheduled to meet this morning at 9 a.m. in their office in the New St. Isaac Office Center.


Sportsmen get their chance to stock up on all kinds of gear at the Hunting and Fishing 2014 exhibition starting today at Lenexpo. Everything from rods and reels to boats, motorcycles and equipment for underwater hunting will be on sale so that any avid outdoorsman can always be prepared.



Friday, Oct. 24


SPIBAs ongoing Breakfast with the Director series continues today, featuring Tomas Hajek, Managing Director of the Northwest Division at Danone Russia. Hajek will be discussing collaborations between businesses from different cultures. The meeting is at 9 a.m. at the Domina Prestige St. Petersburg hotel and all who wish to attend must confirm their participation by Oct. 23.


Get your gong on at Sounds of the Universe, a concert at the city planetarium this evening incorporating six different gongs to create relaxing songs that will transport you upwards into the stratosphere. Tickets are 700 rubles ($17).



Saturday, Oct. 25


AVA Expo, the eighth edition of the event revolving around all things pop culture, returns to Lenexpo this weekend. Geeks, nerds, dweebs and dorks will have their chance to talk science fiction and explore a variety of international pop culture. Tickets for the event can be purchased on their website at avaexpo.ru.



Sunday, Oct. 26


Zenit St. Petersburg returns home for the first time in nearly a month as they host Mordovia Saransk in a Russian Premier League game. Currently at the top of the league thanks to their undefeated start to the season, the northern club hopes to extend the gap between them and second-place CSKA Moscow and win the title for the first time in three years. Tickets are available at the stadium box office or on the clubs website.



Monday, Oct. 27


Today marks the end of the art exhibit Neophobia at the Erarta Museum. Artists Alexey Semichov and Andrei Kuzmin took a neo-modernist approach to represent the array of fears that are ever-present throughout our lives. Tickets are 200 rubles ($4.90).



Tuesday, Oct. 28


The Domina Prestige St. Petersburg hotel plays host to SPIBAs Marketing and Communications Committees round table discussion on Government Relations Practices in Russia this morning. The discussion starts at 9:30 a.m. and participation must be confirmed by Oct. 24.



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