Russians have been one of the top luxury residential property buyers in many countries, but the dwindling value of ruble has slashed their purchasing power.
The ruble’s value has declined by over 50% compared to the US dollar since June last year, wiping out a major chunk of Russian buyers from the international real estate markets.
Real estate professionals in many countries including the UK, Spain, Dubai and France say that the number of Russian buyers has come down substantially in a matter of just few months. The West-imposed restrictions following Russia's takeover of Crimea is a major reason, keeping many wealthy Russians from buying properties overseas.
Russians have been a major force in the central London’s luxury property market. In 2013 they bought 5.2% of all central London homes sold, but their market share dropped to 3.5% in 2014, according to Knight Frank. Experts believe it will likely go down further if rubble’s value doesn’t improve in the near future.
“The wealthiest Russian buyers have all but disappeared from some areas in the south of France. Their absence has left quite a void,” Mark Harvey, France’s residential expert for Knight Frank. In St.-Tropez, Russian demand for luxury villa rentals came down 20% year-on-year in 2014, he said.
However, ultrahigh-net worth Russians are still buying.
“There are two clear Russian buyer markets in London, the uber-wealthy and the mainstream buyer... The wealthiest Russians still have the ability and desire to buy, and have their infrastructure in place in London to keep purchasing,” Harvey was quoted as saying.
Developers in Spain, where the Russians are the third largest international buyers, also report a drop in sales to Russian buyers.