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Russian roulette?
Towns such as Tyumon and Noyabrsk where salaries are way above the national average due to the concentration of energy industry workers pose solid opportunities for healthy returns.
Property investment companies selling stock especially from the UK and Dubai have also sought exposure to the Russian markets purchasing power, setting up new offices in Moscow. Despite the tax rate of 30% for non-domiciled companies, the Russian way of buying properties makes for easy off-plan sales.
Buyers are willing to put down a minimum of 50% deposit, often paying outright in cash, therefore, reducing the risk of failed completions for such off plan investment companies.
Before rushing in, there are a number of pitfalls to avoid. Firstly, in any foray into buying you should hire your own interpreter.
Valujeva says that "although Russian-based agencies, such as Knight Frank and Savills has a number of English-speaking people working for them, it pays to hire your own interpreter. People who can't negotiate properly can end up paying up to 30% more. Russian agents will rely on people's ignorance".
Secondly, be sure that the property you are buying is registered and that its ownership is not disputed. This can be a common problem, especially where flats are communally owned with different families occupying separate rooms.
The World Bank's 2008 report stated that "the investment climate in Russia still suffers from weak property rights enforcement and inadequate competition".
Watch out for new ‘build fraud' and use developers with a proven track record. There are all too many cases of rogue developers taking off with the deposits of keen individuals looking to get onto the property ladder and leaving them with nothing, not even a hole in the ground.
You should also be prepared to pay more fees than usual in a sales transaction; buyers pay both the bank's expenses but also a brokerage fee if an estate agent is involved - which can vary from 2-4%. On resales, you can also expect to be taxed up to 30% on the profits.
Not everyone is as enthusiastic about the potential for gain or the effects of the market; the Global Property Guide recently dubbed the Moscow market as unsustainable and just "too expensive".
The World Bank argues that Russia needs to diversify its economy and encourage the growth of small to medium enterprises, yet conversely, this is also an inroad to an investment opportunity.
There is no doubting that development has been ruthless with the destruction of many historically significant buildings to make way for new build blandness and reports of the flattening of exquisite 17th century mansions.
The advice from the larger investment houses is clear: Federico Aliboni, a banker at Merrill Lynch who brought two Russian property companies to the market last year said: "We think the Russian real estate market is an interesting one and growth is set to be far stronger than the rest of Europe".
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