Five countries that deceived Russian investors
Some Russians believe that buying real estate abroad is better investment than purchasing it in Russia. In the hope of a perfect deal, the Russians are looking for houses outsides of their homeland. Blinded by the dreams of a house in Bulgaria, Spain and Egypt, Russians often forget that swindlers live in foreign countries as well.
As discovered by consultants of portalaIndriksons.ru, the most deceptive countries in terms of real estate sales to Russian citizens are Bulgaria, Egypt, Spain, Dubai and Italy. The consultants ranked the countries whose real estate agents frequently deceived the Russians in recent years.
First place unquestionably went to sunny Bulgaria, revered by Russian tourists who frequented the neighboring country in the years of the Soviet Union. In the socialist past of Russia, few people had the opportunity to visit foreign countries, but many wanted to vacation on a beach, and so the main resort in Bulgaria was formed. Soviet citizens even had a saying that Bulgaria was not considered "abroad." This is the country where the Russians mostly go, inspired by dreams of buying a home. This is the country of the biggest disappointment, as shown by the research of the consultancy.
"Nearly 60,000 Russians have virtually lost their money by buying unfinished real estate in Bulgaria before the financial crisis of 2008," Komsomolskaya Pravda quoted Igor Indriksons, an investment manager.
Yet, the unfinished buildings are not the worst consequence of the transaction with the Bulgarians. Swindlers who work in the real estate market of the country often practice double sales. A house built in Bulgaria can be registered as property only after 80% of construction is completed, whereas in many other countries (for example in the UK) one has a right to register the ownership of the building at the level of the pit.
In addition, every year dozens of real estate agencies open in Bulgaria and later shut down and disappear. Therefore, before entrusting the dreams and finances to overseas intermediary, one should carefully examine the reputation and history of the agency. To help housing applicants, a rating of real estate agencies in Bulgaria was created and can be found on portal LesTest.
However, even if an agency was chosen successfully, the buyer should be prepared for high realtor commissions, which the real estate market in Bulgaria is famous for. Also, the buyers should expect marketing costs that can reach 45% of the total value of a house or apartment.
Second place in the ranking of the worst countries for purchasing real estate goes to Egypt. After the Middle East experienced the bloody "Arab Spring", talks about buying real estate in the land of the Pharaohs sounds strange. But before that the Russians who favored this cheap and hot resort along with the Germans, as a sign of devotion often used to buy property in Egypt. The Russians tried to ignore the imperfection of the local property market that always had problems with the status of certain lands.
Egypt became a hotbed of fraud after the revolution of 2011. Before the revolution 40,000 Russians were land owners in Egypt. During the revolution dozens of homes were looted and burned in the country. Looters rampaged through the streets, and property owners in the hottest areas of Egypt counted losses because they did not have time to take care of insurance. Today, despite the fact that the riots in Egypt have subsided, it is impossible to sell real estate in the country at the price it was purchased. Real estate in Egypt can be only sold with the discount of up to 80 percent.
In the current situation worries about low revenues for the resale of the Egyptian housing are unlikely. After taking into account the aggression of progressive radical Islamists directed against members of other religions, foreign owners could lose the property altogether.
Real estate owners in Spain do not have many reasons for joy either as after the economic crisis real estate prices decreased by 60%. The cost of housing has shrunk significantly even in such attractive for Russian investors places like Marbella, Torrevieja and Ibiza. The issues in the Spanish market were obvious even before the crisis, and stemmed from excessive attention of developers to these areas. In some regions houses were 17-30% overpriced.
Today in Spain there are hundreds of thousands of empty homes. In total, there are 700,000 unused real estate objects doomed to staying unattended. Their price is falling rapidly due to high unemployment and mortgage crisis, which makes the investors lose hope to earn on their investment.
Dubai took fourth place in the ranking due to rapid, but only virtual price increase that was high only in the price lists. Dubai property market began to develop in 2002. 70% of investors who poured into the country from abroad were citizens of Russia. Thanks to the capitals of the Russians who took advantage of the opened Dubai investment market, over six years, property prices in the country grew by 300%, which made the crash hurt even more.
The same situation occurred with Russian investors in the Italian administrative region of Calabria. The investors were lured there by fraud. The property market in the region that presented no interest began to grow. In the price lists investors saw that the prices were rising, and this was associated with a growing interest in the new region. However, in reality the region continued to be depressed. Only prices for real estate that could not be sold on the secondary market miraculously rose, until one day the already weak market has collapsed, leaving the Russians with nothing.