The situation on the foreign real estate market in 2024

Against the backdrop of the gradual recovery and stabilization of Russians’ demand for foreign real estate, the map of transactions began to change again: investments in assets in Turkey and the UAE, which previously replaced European destinations, are gradually being replaced by countries in Southeast Asia and the Middle East. In the first case, real estate buyers can count on stable rental income due to the constant growth of tourist flows; in the second, they often hope to repeat the success of investing in properties in Dubai.

After a decline at the end of last year, demand for foreign real estate is gradually beginning to stabilize. According to Prian.ru, in the first quarter the activity of potential buyers increased by an average of 20% compared to the fourth, although it remained below the levels of the beginning of last year. The motivation for transactions is often the desire to invest. Prian.ru editor-in-chief Philip Berezin says that the share of buyers looking for real estate to generate income has grown from 20% to 25% over the year. “Real estate remains a relatively affordable asset in terms of the possibility of receiving funds abroad in dollars or euros,” he notes.

Tranio notes that 42% of all applications in the first quarter were generated by clients who were selecting real estate for their own vacation and rental. A year earlier, their share was noticeably smaller – 27%. The pronounced growth, according to analysts, indicates the growing popularity of investing in rental housing. Managing Partner of Intermark Global Irina Mosheva believes that 70% of transactions on the market are concluded for investment purposes.

Change of locations

Until 2022, the main direction of Russians’ investment in foreign real estate was Europe, recalls Nevestate founder Ekaterina Nikitina. But two years ago, it became more difficult to buy assets there: money transfers from Russia under classic sales contracts became impossible, many EU countries introduced restrictions for Russians, they are reluctant to open accounts, the expert lists. Against this background, she said, some clients sold assets in the EU, investing in properties in “friendly countries.”

Türkiye and the UAE were considered the main objects of interest for Russian buyers in 2022–2023. But now both directions have noticeably lost popularity.

Tranio Development Product Director Elena Milishenkova says that in the first quarter the number of applications in these areas decreased by 27.5% and 25.8%, respectively. The decline in demand for Turkey can also be clearly seen from the official statistics of local authorities: according to their data, in January-February, Russians purchased 950 real estate properties in the country compared to 970 a year earlier. The reduction in interest was influenced, in particular, by investment factors.

According to Endeksa, the average price of real estate in Antalya province over the past two years in dollar terms has increased by 68.3%, to $1.1 thousand per 1 sq. m. m, in Istanbul – by 64%, to $1.2 thousand. This affected the profitability of investments: it began to take more time to recoup them. At the same time, according to Mr. Berezin, making money on short-term rentals in Turkey has become technically more difficult: according to the law that recently came into force, it is necessary to obtain a license, for which the owners will need to obtain the consent of their neighbors.

In the UAE, according to Dayana Berezovskaya, head of international real estate at Golden Brown Group, investment transactions by Russians were largely stimulated by the political situation. Now this factor has weakened and purchases are made mainly for their own needs. “It is necessary to take into account the increase in exchange rates over the past year and, as a result, the rise in real estate prices,” she adds. The founder of Monet Real Estate, Mikhail Bushmin, draws attention to the fact that the bulk of buyers who sought to restructure their capital have already done so.

Heading to Asia

At the same time, Southeast Asian destinations have become increasingly in demand among investors in overseas real estate. About 80% of real estate buyers in Thailand, Indonesia and Vietnam, according to Philip Berezin, enter into transactions specifically to generate income. “With reasonable risks, you can earn 8-10% per annum on rent, and in some cases even 15%,” he says. For comparison, the average profitability from the purchase and further rental of a one-room apartment in Moscow in January, according to Cyan.Analytics, was 4.5%, in St. Petersburg – 4.4%, in Sochi – 4%, in Sevastopol – 4.3%.

Ms. Milishenkova says that demand for Thailand has almost doubled over the year.

She also traces positive dynamics in Bali, Vietnam, and Cambodia. The expert associates the upward trend with the restoration of the tourist flow to these countries: buyers expect to both earn money by renting out real estate to tourists and purchase housing for their own seasonal vacation.

Irina Mosheva states that the demand for Thailand as a whole strongly depends on the activity of the tourist flow: in the high season, more transactions are concluded in Phuket, and vice versa.

Mikhail Bushmin believes that the secret to the popularity of Asian destinations among buyers is the low barrier to entry and the large number of projects and agencies with Russian roots. Ms. Nikitina notes that you can find a property in Phuket or Bali with a budget of $100–150 thousand. Investors, in her opinion, purchase assets not only for rental, but also for subsequent resale. Although Mr. Berezin believes that there are few recent transactions on the market. “It seems to me that there has been some kind of excitement, and the rapid rise in prices in Turkey, Georgia, and the UAE has ended and there is no confidence that there will be no correction in the market, so people are more often considering the possibility of rental income,” he argues.

Anna Larina, director of the foreign real estate department of NF Group, cites short construction times and high profitability as factors of the attractiveness of Asian markets. “But when it comes to clients who are simultaneously considering the possibilities of obtaining immigration status and investing, the choice is often reoriented towards countries such as Cyprus, Spain and Greece, this is especially true for those with a second citizenship,” she says.

Middle Eastern alternative

But Southeast Asia is not the only growing region. Philip Berezin names the Middle East, in particular Oman, Bahrain and Qatar, as the second region of interest to investors. According to Tranio, interest in real estate in Qatar has increased 3.3 times over the past year. Analysts consider Saudi Arabia to be another popular destination, noting a two-fold increase in sales. AREA representative Viktor Sadygov also considers the country promising, noting that it appeared on the market, in fact, recently. The law allowing the sale of real estate to foreigners in Saudi Arabia only came out at the end of last year, he says. This allows potential investors to count on a future increase in demand, and therefore housing prices.

Elena Milishenkova connects the increasing investment interest of Russians in Middle Eastern countries with the positive experience in the UAE. In previous years, clients in the country could count on high returns due to a sharp rise in housing costs and a constant increase in demand for rentals. Now the growth of this market has slowed down, and investors, according to the expert, expect to repeat the success of Dubai in countries that have only recently opened up to foreign property buyers. Irina Mosheva associates the growing interest in Oman with an increase in tourist flows into the country, in particular from Russia.

Alexandra Mertsalova