РУСENG

Investment in Crimean real estate

At present, lively interest for Crimean real estate arises. Our national as well as foreign investors are more attracted with the possibility of buying ready business which is completely built real estate object with provided management concept and extensive client database; nevertheless there are very few of such objects on the market. That is why investment goes into commercial immovable property to support guests (cafés, shops etc) which allows of having annual lease income about 10-14%.

Crimean real estate, especially new buildings, has high liquidity and good opportunities for business. Long-term lease proposals for Crimean immovable property also become more often.

Crimean real estate is very attractive for investment on the initial stage of building process. The price for 1 sq. meter in Crimean elite apartments on the initial stage of building starts with $ 2000-2500 on the condition of 30% payment in advance.

However, real estate prices growth rate, which is demonstrative on the example of housing lease market this year (elite apartments in July-August 2007 were $200-600 a day) , makes it possible to predict further attractiveness of the Crimean real estate market for investors due to its profitability.

In this situation the elite apartments at the CSC can pay for themselves in 5-7 years, and in case of long-term lease even ordinary apartment will pay for itself in mere 8-10 years. According to the world-wide experience, if the management company works well, luxury suite covers the expenditures in about 6 years by letting it on lease in owner’s absence.

According to the Crimean real estate agencies, last year profitability of the investment into new buildings reached 30-60% depending on the object chosen by the investor. By the results of first 6 months of 2007 initial real estate in Crimea went up for 12-15%. And as for the Crimean central part and Yalta’s areas bordering it - even for 35%. In such market segment as commercial immovable property, mini-hotels in particular, prices went up till 70-80% last year.

The expansion of the Crimean real estate market and fast investment growth promises the improvement of health-resort and tourist appearance of all the Crimea, the CSC in particular, in near future.