In 2007 Russians are said to have invested over US $ 4.2 bn in property. While a big chunk of this was in domestic property a significant proportion were deals done in Russia for property abroad. On top of this there are the offshore deals done by Russians buying residences in London, Cannes, New York and other centers which do not appear on Russian statistics.

While much is made of the collapsing fortunes of Oleg Deripaska and other billionaire oligarchs a substantial segment of the Russian middle class who have benefited mightily from eight years of dramatic growth in GDP to an estimated $11,340 per capita in 2008 have ready cash and with the ruble sinking want to invest in tangible assets. Traditionally Russians have put their faith in property and with prices falling round the globe many see this as an ideal time to buy – whether it is an apartment in a beach-front high-rise in Pattaya or a condominium in Florida.

Many international property developers are turning to Russia in search of clients for the first time. They are following on the heels of successful entrepreneurs who have built up a business here for over six years. Among the pioneers was Cybarco, part of the Lanitis Group which opened a representative office in Moscow 10 years ago and has since opened a branch in St. Petersburg.

Their General Manager Eastern Europe, Savvas Pastellis says Cypriot Property sales to overseas buyers peaked in 2007. “In 2008, Russia became the biggest single source of buyers of Cypriot residential properties, overtaking the UK as the British economy started deteriorating. “

Despite an increasing Euro to the detriment of the Russian ruble, Cyprus remains a popular investment haven for Russians and interest remains high although the volume of sales has slackened over the recent holiday period according to Cypriot sources. Mr. Pastellis says the he “will be surprised” if sales of Cypriot properties to Russians reaches 40% of the volume executed last year.

Newer destinations are also beating a path to Moscow investors’ doors. In the wake of the Dubai property boom, the smallest United Arab Emirates state of Ajman is developing huge projects including skyscraper towers. A relatively liberal lifestyle and relaxed liquor laws have attracted residents from Sharjah and neighbouring Dubai swelling the population and promoters hope, purchasers of property in New Ajman along the Emirates Road.

All this focus on the Russian market is attracting the attention of Exhibition organisers as well. While Cybarco’s Pastellis says that a personal recommendation by satisfied buyers is by far the biggest source of new business in marketing international residential properties a public profile helps. His company supports this through participating in most major real estate exhibitions in Russia.

The leading exhibition organiser in Moscow is ITE Group. This British public company has been operating here since the early 90’s and with over 70 trade exhibitions scheduled for 2009 in Moscow, St Petersburg and Novosibirsk is way ahead of the rest and has an enviable track record with 92,000 visitors to the 2008 Moscow International Travel and Tourism Exhibition where 3,000 exhibitors from 118 countries indicating the high level of Russian interest in international travel.

Against ITE, Moscow’s AiGroup is a niche operator specialising in international property and property investment shows. Eschewing the 50,000 square meter space typically taken by ITE for its B2B shows, AiG takes a boutique approach and it’s Moscow shows are mainly held in the T-Module upper level of the Tyshina Trade Centre in central Moscow. AiG has developed a sound reputation for its eight property and investment shows a year in Moscow and St Petersburg backed by 18 years experience in the developing Russian market.

“Many sensible Russians are not eager to advertise their wealth and would not be comfortable visiting a large, ‘public’ exhibition, however a professional Investment Show in a refined, boutique style atmosphere is more suitable”, says Kim Waddoup, AiG’s executive director.

A recent two-day AiG exhibition, The Moscow International Property Show “attracted 6,293 visitors to stands representing investment class properties in 28 countries and left most participants exhausted and out of brochures”, Mr. Waddoup says.

Just prior to that event other organisers launched a similarly named International Property Show Moscow at the Crocus Expo Centre on the fringe of Moscow’s orbital ring road and the paucity of visitors was disheartening. Visitors witnessed heated arguments between the exhibition organisers and exhibitors who had paid up to €485 a metre for their stands.

The organizers claimed the show was “the first transactional trade & public property exhibition in Russia” and said in advance publicity that it was “set to attract high net-worth individuals, commercial and residential investors and specialized visitors from the property industry from Russia and around the world.”

It is these kind of lavish claims that risk undermining the work of established exhibition companies as new exhibitors attracted by them are underwhelmed by the lack of response and could write off the Russian market.

Despite the crisis both of AiG’s autumn events managed an increase in the number of visitors who were all of good quality with a commensurate increase seen in the number of deals that were signed at the shows, according to Mr. Waddoup.

“We have decided not to increase the size of our shows as this allows our regular participants better opportunities to make contacts with the increasing number of visitors,” he said, noting that “Dom Expo in October for example increased their floor space by 30% but were not able to increase the number of visitors. The result was more foreign participants chasing less potential buyers, that is diluting the market”.

The Russians at AiG’s November Tyshina show were searching for investment bargains at the two-day event. With 154 exhibitors it was rated an outstanding success by both participants and organisers. A leading Australian developer, exhibiting for the second time at the show, left delighted with the number and quality of potential clients he had discussions with, reporting more than 60 serious enquiries.

The Bulgarian Salon, with 45 Bulgarian developers was the biggest national presence but exhibitors were also out in force from Spain, Italy, Cyprus, Panama, Turkey and Egypt amongst others, in search of Russian investors. The visitors, largely representing an increasingly wealthy Russian upper middle class were obviously serious in their intent to find worldwide bargains.

Middle class Russians, since the bank crises that enveloped the country from the collapse of the Soviet Union to the 1998 default, have been cautious to commit the bulk of their funds to either banks or the stock market. Property has always been a key element of Russian investment and savings and the many completions, both local and international, have been done for cash.

This makes Russian investors a key target for international property developers. The danger for exhibitors lies in picking the shows with proven track records and expertise at generating Russian footfall.

Bulgarian properties attract Russian buyers RUMENA-BG