MARKET IS UNDOUBTEDLY ALIVE

On the trends exposed by St. Petersburg Property Show

A property show is not a sale fair, justly remarked Kim Waddoup, president of aigroup
that organized the St. Petersburg International Show in October 2009. Only several months later when it becomes clear how many deals were closed and how great the sales volume was that it is possible to review the results of such a forum.

Yet no pause is needed to assess the current market situation and so experts always try to find time for visiting the stands and talking with the participants, since communication with active market players is the best market measuring tool.

What conclusions can be made after the October international property show held in Saint Petersburg? Generally speaking, they are quite optimistic. First of all, it should be noted that the overseas property market has stood the test of the crisis and remained a rather attractive segment both for regular buyers and for investors. The second thing worthy of note is new destinations getting ever more popular. And thirdly, the interest in commercial real estate and in the purchase of small and medium-sized overseas companies is rekindled.

Two property shows held in Moscow and St. Petersburg one after another gathered more than 11,000 visitors, which is already a good outcome. Aigroup
introduced an electronic system of counting the visitors at its shows, to make sure the figures are absolutely accurate.

The participants noted the prevalence of the target and competent audience. “There’s no feeling that life has come to a standstill and people do not want to buy, – underlined Olga Wolf Yucel, Sales Director, International Property Consultants. – On the contrary, they know what they want and have already figured out when they might be able to go and examine a property.

This target client is a good sign for the market at large.” In addition, Olga pointed to the fact that investment projects are a relevant issue again and this is another evidence of the market recovery. The experts we talked to agree that November and December will the months of buying so the general picture of the year may undergo considerable positive changes.


A brief review of the main destinations represented at the Petersburg show reveals new trends rather than sensations. Bulgaria remains number one destination for Russian buyers, which came as no surprise.

This fact is confirmed by the participation of 32 Bulgarian companies that pooled into the Bulgarian Real Estate Salon. Vasil Ivanov, Sales Director, Dinevi Group, believes that a remarkable extension of the line-up offered by developers is a distinctive characteristic of the given stage of the Bulgarian property market evolution. For instance his company presented self-contained complexes with full service and security which successfully competed with apartments and cottages, quite traditional for the Bulgarian market.

The “leadership” of Spain and Turkey was not unexpected either. Cyprus, thought to be least affected by the crisis, was also among the leading destinations in terms of consumer predilections. This view is shared by Karina Luneva, spearheading the sales department at Kanika development. In her opinion, the results of this year will even be better than last year. “The situation has stabilized, Russian people feel ever more confident and so sales will keep growing.”

A noteworthy trend in the overseas market is a robust march of former Yugoslavian republics, Montenegro in the first place, that arrest everybody’s attention. Vladislav Virin, representing Montenegro house, believes that “demand has grown because real estate prices are rising in Montenegro, which makes local apartments and homes attractive for investors.”

Another important factor is that Russian buyers feel at home in Montenegro as they enjoy a hearty welcome and a kindred language. In the opinion of Raisa Semichastnova, CEO of Semia, Serbia is another promising destination. Buyers appreciate that property can be bought here without registering a legal entity (unlike Croatia, for example) and prices are quite affordable.

“The only disadvantage is that this is a land-locked nation, notes Semichastnova. – but on the other hand, there’s a lot of hot springs, and wellness opportunities may outweigh all cons.”

The coming of Gazprom to Serbia produced a favorable impression upon Russian buyers and investors who stirred to higher activity at this destination.

Companies offering Finnish real estate are increasingly aggressive in the Russian market. That six companies operating in the Finnish property market participated in the St.

Petersburg show is an unprecedented and by no means an accidental result. Their offers were buttressed by high demand which could readily be seen by the number of visitors at the stands.

Olga Krylova, helming the Finnish Properties arm of YIT Lentek, explained that the interest was conditioned on a number of factors: Finland is Russia’s closest and traditionally friendly neighbor and this country has stable and well-developed infrastructure. For now Petersburg residents prevail among the potential buyers, stated Andrei Neznaev in charge of the representative office of DomSuomi.

But on the whole the interest in Finnish real estate is not a prerogative of people living in the northern capital.

Companies from the Baltic countries also try to enter the Russian market. Edis Barny representing Saliena Sia, and Andres Rjatsepp offering the Gospa Residents project, were unanimous: the crisis is coming to an end in the Baltic countries and now is the best time to buy before prices skyrocket. Perhaps this estimation is a bit more optimistic than reality, but the trend certainly exists.

Czech Republic is worthy of mention among the East-European markets. Czech real estate evoked great interest at the Petersburg show. “We have many requests from Russian citizens, – we were told by Victor Bobkov, Deputy General Director, Sodul Development, – so our company decided to open its representative office in St. Petersburg.”

It should be noted that real estate prices are quite moderate in Czech Republic; even in Prague one can buy a decent studio for 40,000 EUR, while an exclusive 250-sqm apartment in the historical center may cost 500,000 EUR and so Mr. Bobkov was right when he said that “Czech Republic offers quite affordable housing to Russian buyers.”
Incidentally, the bias towards cheaper property was noted by a number of experts.

According to Maxim Simunin, Vice-President of Dios (Switzerland), “in times of crisis visitors to the International Property Show are more often interested in low-cost properties; accordingly the participants shifted their focus to less expensive offers.

This is neither good nor bad; it’s just how it is.” The last thing to mention, perhaps, is the confidence of many experts that the year 2010 will be the time of robust market recovery and maybe even the time of growth.

They argue that the results of several international property shows give them grounds to draw such conclusions.

www.spb.propertyshow.ru