Property investment in Moscow

Buy to let is a craze that has swept the United Kingdom over the last few years, as the economy has boomed.  Buy a house or flat (apartment), let it out at enough to cover the interest only mortgage, then after a few years flog it on to take advantage of obscene increases in house prices.  Quickly running out of suitable properties back home, though, investors are increasingly looking to buy to let abroad and, the further East you go, the cheaper property is and the higher capital gains are expected to be.

A newspaper’s property section isn’t complete, these days, without at least one  two page ‘in-depth’ (translation: eye-poppingly shallow) survey of the property market of a post-Communist capital city.  Up until now, Moscow has been largely exempt from this peculiarly British hysteria, but today The Times broke new ground by publishing the direly named "Watch your steppe: Moscow’s gingerbread houses are a risky but tasty investment"

AS HIGH-RISK and high-reward buy-to-let schemes go, there has been nothing like this. The houses in question are detached, well-built and cheap at £100,000 to £175,000 for three bedrooms. Tenants seem easy to find, and respected British estate agents predict 20 per cent-plus capital appreciation for this year. The catch? They are in Moscow.

[…]This sounds and looks beautiful, but there are clear risks for buyers. No UK mortgage firm will lend on Moscow property, while only the insane would buy into Russian mortgage schemes aimed at foreign buyers with interest rates of 11-19 per cent plus a “loan tax”. So the individual investor must pull down up to £175,000 from the equity of his or her principal home to buy outright, while a large-scale investor should treat this purchase as by far his or her riskiest venture.

[…]“They should come and tell us what they want,” says Vladimir Ostashkevich, deputy director of [a Moscow property] firm. “We’re sure there’s a deal to be done. After all, this is Moscow.”

Right, I don’t know about you, but I’m off to raid the piggy-bank.

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