Omsk flat recoups initial investment after 16 years
In a recent study by analysts at the federal portal "World of Apartments", the profitability and payback periods of buying an apartment on the secondary market for rental purposes were examined across various Russian cities.
### Current Market Trends
Recent trends in the secondary market have shown decreases in apartment prices in several cities, such as Moscow (-4%), Izhevsk (-3%), and Rostov-on-Don (-2%). This decrease could potentially make buying apartments for rental purposes more attractive due to lower purchase prices, which may improve profitability.
Cities with lower property prices and higher rental demand, like Bryansk, Smolensk, and Ulyanovsk, tend to offer better rental yields, as the lower purchase costs contribute to improved profitability. However, some cities, such as Perm and Yekaterinburg, have seen price increases in the secondary market, which could affect profitability and payback periods if the rental market does not match these price rises.
### Changes Over the Past Year
Over the past year, residential real estate prices in Russia have generally increased, which could impact the profitability of rental investments. Despite these increases, the secondary market has experienced fluctuations, with some cities experiencing price drops and others seeing increases. This variability suggests that investors should focus on cities with stable or decreasing prices to maximize profitability.
Investors may need to adjust their strategies based on local market conditions. For cities with rising prices, it might be beneficial to invest in cities with stable or falling prices to maintain profitability.
### Notable Findings
The study found that the most profitable city for apartment owners was Astrakhan, with a yield of 9% per annum and a payback period of 11.2 years. Grozny was the third most profitable city, with an 8.4% yield and a payback period of 11.9 years, while Nizhny Tagil was the second most profitable city, with an 8.6% yield and a payback period of 11.7 years.
In contrast, Moscow had the longest payback period for renting out property at 26.4 years, with an average yield of 3.8% per annum. Omsk, with a yield of 6.1% per annum, had a payback period of 16.5 years, and Saint Petersburg had a yield of 4.9% and a payback period of 20.4 years.
Overall, the profitability and payback periods of buying an apartment to rent out in Russia's secondary market depend heavily on local market conditions and the ability to find affordable properties with strong rental demand.
Pavel Luzhenko, the general director of the federal portal "World of Apartments", noted that the profitability of buying property for rent has increased over the year. According to the portal, rental prices increased by 23% over the year, while the cost of buying an apartment increased by only 9%. This trend suggests that buying an apartment for rental purposes could continue to be a viable investment option in the near future.
I'm not sure about the specific investment strategy in various cities, but considering the recent market trends and the study's findings, it might be wise to examine cities like Bryansk, Smolensk, or Ulyanovsk for their lower property prices and higher rental demand, which could potentially lead to improved profitability. However, cities such as Perm and Yekaterinburg, with rising prices, might require a more nuanced approach to maintain profitability.
In light of the findings discussed in the study, it might be crucial to adjust strategies based on local market conditions, potentially focusing on cities with stable or decreasing prices to optimize profitability in the long run.
