Prices for Russian property

Prices for Russian property are at historical highs after the last few years of increases. However that doesn’t justify all ‘high’ prices, and the asking price of any Russia property should be evaluated in terms of its market context and in comparison to other similar properties in the area (referred to as ‘comparables’).

Many properties in Russia for sale to foreigners are actually overpriced in terms of their market context and comparables. This is especially true of the resale market where individual sellers largely decide the asking price, but can also be true of new developments. Real Estate agents often allow sellers to ‘name their price’ rather than give them a professional evaluation of the true market price.

There are various reasons why a property in Russia might be overpriced. Vendors sometimes set an unrealistically high asking price in the hope that a) someone might actually pay it and b) that it will give them a stronger negotiating position at the start and ensure that final transaction price is higher than it would have been had they started with a lower asking price. Another reason is because some sellers have unrealistic expectations as to what their property is actually worth. A further reason is because agents in Russia and / or developers in Russia sometimes increase the price if they think that foreign buyers are and will remain ‘ignorant’ of market values. This is more likely in those cases when the agent ‘controls’ the entire visit of the buyer thus preventing them from finding out what comparable properties are worth.

To say that a property is overpriced is not the same as saying that it won’t sell at that price. The great tragedy is that people do actually buy overpriced properties on a regular basis. This is bad for the overall market as word often gets around, driving up the expectations of sellers and reinforcing the suspicion that foreign buyers will pay any price. Ofcourse there are good agents out there, those who provide a great service & accurate price estimates. Just research to be sure.