There is a vacation home-buying frenzy going on in Russia these days.
Only the frenzy isn't centered in buying residential properties in
Russia. It is in buying the homes in Eurozone countries where real
estate often has gone through the floor.Bulgaria right now is the favorite hunting ground. According to the country's Ministry of Justice, about 340,000 Russians have already bought houses there. Global real estate research groups estimate Russians rank fifth by the volume of investment in real estate in Western Europe.
But France, Spain, Portugal and Cyprus are also offering fire-sale prices for the Russians, many of whom believe they are buying the vacation homes for both leisure and as a long-term investment.
However, that is a misconception that may shock many Russian buyers when they try to sell their properties in the immediate future, according to Russia & India Report, a periodical produced by Rossiyskaya Gazeta, a leading Russian daily newspaper.
Curiously, the frequently publicized Black Sea coast of Russia is in little demand due to its inadequately high prices and imbalanced investment policy, international brokers note.
The paper quotes Gennady Gudov, director of a foreign real estate agency, as saying many buyers "could be chasing pipe dreams."
Gudov says, " Real estate for investment and real estate for vacationing are rarely the same type of real estate. The most important thing that every potential buyer should have in mind is that if the investment in the real estate is ever going to pay off, it will take a great deal of patience."
Five years ago only the wealthy could buy houses by the sea outside of the former Soviet space. Today many middle-class Russians are seeing the appeal, "even if it means going into debt," the newspaper reports.
The paper notes that many of the vacation home-buying Russians may not yet be aware of the risks in buying properties abroad.
"The global financial crisis has transformed what once was a gold mine into a housing bubble," according to the paper's special report.
The real estate markets of Bulgaria, Montenegro, Croatia, Cyprus, Thailand, Spain, Turkey and the UAE, where Russians are especially actively buying 'houses by the sea,' have frozen.
"There are many unsold and unfinished buildings, and buying real estate in those countries is not a problem, but it will be impossible to sell it fast if the owner is in need of money," the report states.
The secondary housing markets are affected by the low demand, partially due to ever newer and cheaper offers from developers
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