Investments into Saint-Petersburg real estate market

"I think discussion about where it is more profitable and safer to invest is from the category of eternal ones. I don’t know who is closer to the truth in this dispute. Taking into account data of researches and quick development of the RBI [Holding Company], I can say that the volume of the primary market of real estate is growing from year to year, and our customers are increasingly interested in what we build. The market has changed after the crisis of 2008. The configuration of Top Ten in the sphere of real estate is different now and only those who actually were reliable and stable could survive. The profile of customers also changed. In the process of choosing the company customers abandoned the principle key factors of which were "living area + price" and started following the principle of "a developer’s reliability + warranty of quality." This situation increases chances of those seeking to invest for a steady income. The RBI is engaged in real estate business for 18 years, and it will be more true to say that we feel and know the market and customers rather than just construct buildings. And this not only gives us confidence in the future, but also allows to work out a clear plan for future growth and development of the RBI.”

Founder and President of the RBI Holding Company, Edward Tiktinsky

1.Real Estate is a source of reliable and stable income

If you're skeptical about the fact that a square meter is a proven and reliable way that allows to not only maintain but also increase funds, consider the following data on primary real estate market of St. Petersburg:

•Favorable market situation characterized by lack of high-quality supply on the real estate market. In 2011, 1300 thousand square meters of dwelling units were displayed for sale and merely everything were purchased. At the same time demand for housing is much higher. According to Petrostat, the demographic situation does not suggest a sharp fall and will remain at the level of 4.5 million people. At the same time the volume of dilapidated housing stock is about 1 million square meters, and lack in housing equals on the average 7 square meters per person in comparison with European countries (it is 24.9 square meters per person in St. Petersburg in 2011 comparing to 31 square meters in European countries). 2008-2009 saw failure in displaying new facilities for sale (construction at over half of St. Petersburg sites was halted, and the pace of construction at others fell almost by half). The market is increasingly differentiated by such parameters as price and quality. Up to 40% of the projects are integrated development projects characterized by low price, long periods of implementation, and underdeveloped infrastructure (including transport infrastructure). Year by year reduction in the number of buildings constructed in areas with already established infrastructure results in increasing demand, which is reflected in the price: by the end of 2011 prices will grow by 10%. In accordance with our outlook for 2012, growth rate will reach 10%.

•Solvency of the population. Recovering after the 2008 crisis the Russian economy gives impetus to the growth of average wages in virtually all sectors. This, in turn, promotes the growth of savings, which in 2010 was 11%, and in 2011 equaled 12%, all these factors confirm the ability of the population to make expensive purchases, including real estate.

•Increase of number of ways to purchase real estate supports the solvency of the population. The development of mortgage programs in terms of reduction of both the first installment and interest rate on the loan makes the instrument more attractive: in the 4th quarter of 2011 the volume of mortgage transactions in the sales structure of "Severny Gorod" reached 60%, and for the RBI this figure equals 10%. Using mortgage schemes people purchase not only residential but also commercial real estate.

•Effective conversion. Entering the market characterized by constant demand and limited supply you can count on a considerable return on investment. Different phases of project construction also help along. Moreover, these basic components of the market, demand and supply, guarantee that you will be able to quickly convert purchased square meters to cash if necessary.

•Investment in primary real estate market gives up to 20% profit per year. Investing in projects of various degree of construction readiness you not only minimize the risks but also increase the profitability of your investments.

2.Property from RBI is an investment guaranteed by experience and reliability of the developer

Operating on the real estate market for 18 years, we faced different situations: periods of growth were followed by recessions and stagnation. Prudent financial policy allowed us to not only overcome these situations, maintaining the required pace of sales and construction of our facilities, but also to remain a profitable company. Experience, knowledge of the market, and the ability to anticipate customers' needs allow us to design projects apartments and commercial premises of which are in demand from the moment the project is displayed for sale. Development of iconic projects in each market segment is our strategy, and 56 projects of different classes total area of more than 855 thousand square meters is the best evidence of its implementation.

 3. How much and how you can earn investing in real estate in St. Petersburg

Of course, speaking of the return on investment, we can’t help comparing tools. According to researches, in 2010 the rate of return on deposits was 6-8% per year, on mutual funds - 0-20%, and on real estate investment – up to 30% per year. The risks are not equal either. If you invest in deposits the risks are medium, and if it is mutual funds or securities the risks are high. If we are talking about real estate and you choose a reliable developer you don’t face any risks as you’ll have assets, that is square meters of modern dwelling. Key factors determining profitability of investments in real estate under construction include the following: degree of construction readiness of the project (20%), conversion of the project from the primary market to the secondary (23%), growth of prices (up to 10% in 2012), and various discounts and special offers from the developer (7%).

4. Low level of the investment demand.

It is a specific characteristic of the primary real estate market in Saint-Petersburg, where investors' share does not exceed 10-15%, as opposed to Moscow market, for example, where this indicator is 40-50%, and it was the reason for one-time release of investment apartments to the market.

5. Possibility of tactical conversions.

Entering the market secured by the constant demand and deficit of supply during the stagnation and expectations period, you can count on even greater return on your investments. Various construction cycles of projects also help to achieve this goal. Investing into projects in various stages of construction completion, you can both minimize your risks and increase your return on investments. At the same time The basic market components of demand and supply currently allow you to convert the acquired sq.m. into cash operatively any time you need it.

6. Investments into the primary real estate market can bring you up to 30% p.a.

Investing into projects in various stages of construction completion, you can both minimize your risks and increase your return on investments.

Therefore, investment into the real estate primary market is still attractive. The sound investment strategy is an investment in a diversified portfolio of projects that are implemented in various market segments and are in various stages of construction completion.

Choose an investment project:RBI Holding projects (pdf, 4,5 Mb).

We are ready to evaluate specifically for you return on your investments in our company projects, depending on the amount and term of your investments, and provide you with all necessary additional information and analytical data.

Please, feel free to contact us by the following phone number: + 7 (812) 320-76-76, +7(812) 327-12-33.