Russians do not buy apartments to rent but bet on quickly growing prices which also make the payback period too lengthy for profitable renting, real estate specialists said on Thursday.
Russia is the only country where renting real estate is less profitable than investing in state bonds, although real estate investment is riskier, said Igor Indriksons, foreign real estate investment department head at IntermarkSavills.
"It is much easier to earn money in Russia than abroad but there is no alternative for investment ... This is why Russians buy real estate and do not even rent it," he said.
"They do not want to, because buying real estate is just a way to place your capital. It is like buying a piece of gold."
The payback period for Moscow lease apartments ranged from 13-24 years, compared with 14-20 in Riga, up to 13 years in Cyprus, 15-17 years in Bulgaria, up to nine years in Egypt and 10 years in Panama, said Alexander Ziminsky, head of elite housing department at Penny Lane Realty.
Ziminsky said the rapidly rising prices, triggered partially by rampant corruption, meant that putting money in a bank would bring twice as much profit as letting your apartment.
Russia also lacks such types of real estate as apartments in hotels, leaseback apartments and service apartments, said Gordon Rock President Stanislav Zingel.
"If the investor has a larger budget, he can invest in a portfolio of several such apartments, diversifying his investment by type of apartment, by country or he can buy a whole house to rent out," he said.
Russia also lacks investment funds specializing on apartments and apartment management trust services, he said.
Russian taxation does not favor investment in residential real estate as Russian households pay income tax on gross profit, while in most other states the tax is paid on net profit.
