Stampede Into Crimean Real Estate Hits Hurdles
Russia’s business ombudsman Boris Titov called land ownership in Crimea ‘a big problem.’
Published: April 9, 2014 (Issue # 1805)
Wealthy Russians, eager for a holiday residence by the idyllic Crimean seaside, were burning up the phone lines of local real estate agencies even before Russia officially declared its annexation of the Ukrainian peninsula.
However, a host of uncomfortable practicalities — not least among them the likelihood that purchase agreements would not be internationally recognized — are for now holding the market in check.
The surge in applications on online real estate portal Nadezhda-Krym began about a week prior to the referendum on Mar. 16 in which more than 96 percent of voters in the territory supported joining the Russian Federation, the website’s director Nikolai Pisarkov said Monday. Military forces widely believed to be Russian have been in control of the peninsula since late February.
The nature of the applications has also changed, he added. While Russians were interested in purchasing apartments and houses in the past, they are now also considering buying plots of land for further development.
Over the last two months the portal has also noted an increase in applications from certain regions of eastern Ukraine, such as Donetsk and Lugansk.
“Prices on real estate are higher in Russia, so just as in any market, people want to buy at a moment of crisis and sell when the prices go up,” Pisarkov said.
Some Russian firms are already seizing onto the new market. Good Wood, a company specializing in the construction of log cottages, plans to invest $20 million in the region over the next two years, founder Alexander Dubovenko said.
The company is opening a sales office in the region and will begin constructing houses for customers with land in the region. They are also searching for three large plots of land on which to build their own settlements of cottages, which will go on sale in May 2015.
The peninsula’s new government is anticipating a vast wave of development as Russian business enters the region.
“We are really counting on Crimea turning into a big construction site. We are inspired by the example of Sochi,” the region’s new Deputy Prime Minister Rustam Temirgaliyev told RIA Novosti.
Many grave systemic issues persist, however, which are likely to hold the market in check for years to come.
For now, it is impossible to buy or sell properties in Crimea. “We cannot perform basic transactions, such as the sale of real estate, because we have no registration database. Kiev has blocked our access to it,” Temirgaliyev said.
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