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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, Sept. 3


Although the Peter and Paul Fortress sand sculptures are more central and therefore more visible to the throngs of tourists, the 300th Anniversary Park of St. Petersburgs own collection closes today. The World Collection of Sand Sculptures that have been on display at the park reaches its final day, so fans of the classic beach activity should get there while they can.



Thursday, Sept. 4


Vladimir I. Danchenkov, Head of Baltic Customs, will be in attendance during AmChams Customs and Transportation Committee Meeting convening this afternoon at the organizations office near St. Isaacs Square at 3 p.m.



Friday, Sept. 5


Scrabble lovers and chess masters get their chance to assert their intellectual dominance at the return of the British Book Centers Board Game Evenings tonight. Held weekly on Friday nights, the event gives both board game lovers and those hoping to improve their English the chance to meet, greet and compete. Check out the centers VK page for more details.



Saturday, Sept. 6


Athletes will relish the chance to get the latest gear and try out something new at I Choose Sport, an annual event at Lenexpo forum that plans to welcome more than 30,000 people this week to the international exhibition center. Not only will visitors get to try their hand at various athletic endeavors but they will also be able to peruse equipment that can fulfill their dreams of becoming a champion.


Local KHL team SKA St. Petersburg open their season this evening at home against Lokomotiv Yarovslavl at the Ice Palace arena next to the Prospekt Bolshevikov metro station. See their website for a full schedule and available tickets.



Sunday, Sept. 7


Check out retro and antique cars at Fort Konstantin on Kronstadt Island in the Gulf of Finland at FORTuna, a yearly car festival that highlights the eccentricities of the Soviet automobile industry. A car race, contests and a stunt show will give visitors a chance to rev their engines.



Monday, Sept. 8


This evening marks the opening of the two-week ballet festival High Season at the Mikhailovsky Theater. Check the theaters website for more details about performances and featured dancers.



Tuesday, Sept. 9


Discuss the latest news and issues at the AmCham Hazardous Waste Management Roundtable this morning in the Tango Conference Hall of the Sokos Hotel Palace Bridge on Birzhevoy Pereulok. Starting at 9 a.m., planned topics include the Krasny Bor landfill and waste transportation between Russia and Finland.


Learn more about the citys modern architectural trends at the SPIBA Real Estate and Construction Committees meeting on the topic Contemporary Petersburg Style: What is It? Participants will get the chance to discuss whats in-demand with RBI Holdings Irina Petrova and Lubava Pryanikova, and the current state of the local real estate market. Please confirm your attendance by Sept. 5 through SPIBAs website if you wish to attend.



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