Editor’s note: This item is republished with permission from Global Edge Marketing Ltd. View original post.
When a naked man drinking Heineken joined me in the sauna at 7:30 in the morning and the only English word he seemed to know was "crazy," that was when I knew Russia was different.
There were no rich oligarchs paying cash on a whim for resorts they had never seen, but the 128 Russian agents who attended "Russian Summit," an event hosted and organized by Global Edge, were there to do business.
The aim of the event was to provide delegates with a complete guide to the Russian buyer market. The conference focused on the practicalities of how to enter the market, and a separate workshop provided meetings and introductions to internationally focused real estate professionals.
The conference provoked intense debate and produced as many questions as it did answers. What do you have to do and how much to you need to spend to successfully enter the Russian buyer market?
Unfortunately, the answer invariably was: "It depends …" It depends on the market you are targeting. The conference highlighted several market segments, their location preferences and motivations.
As demonstrated by Richard Hazel, director of Windrush Alliance, a combination of hard work and building the right connections can be enough for companies with the right properties in the best locations.
For others, though — particularly developers who need to create "buzz" and demand for their products — much more needs to be done to stand out from the crowd and generate sales.
Despite the complexity of some of the issues involved, there were a number of unifying themes:
- A key element for success is ensuring you provide a hassle-free product, from finance to due diligence documents to after-sales service and rental management. Make it easy and buyers will tell their friends, and agents will embrace you.
- If you are targeting lifestyle buyers, you will struggle without a waterfront location and convenient facilities.
- Russian investors can achieve 10 percent-plus returns at home. The underlying motivation is security and capital preservation. Think about this in everything you do. It may not be the wisest move to partner with a Bulgarian bank, for example!
- Credibility is everything. Public relations are important everywhere, but getting people to write and talk about you and your destination in Russia is critical.
- There was disagreement on the size of market of internationally focused Russian agents. It is somewhere in the region of 500, but the consensus was that the number of international agents is now growing strongly.
- The biggest surprise was fractional ownership: The Registry Collection presented figures showing a strong start for the concept in Russia. And while sales are still low in absolute terms, our Russian delegates were generally positive about the future for fractional ownership in Russia.
Hard work ahead
Russia is a large, complex and diverse market. Buyers share similar requirements to their Western European counterparts, but there are also clear cultural differences in the way business is done.
The Russian Summit provided the tools to begin doing business in the country, but in the words of Karina Tokhtar, sales manager of FIM Group: "The summit was not meant to be a single event, but a starting point for the work that must be done."
The next Russian Summit event will be held in November 2011.