“There is a big demand in Russia for updated modern, housing because a lot of their housing stock is from the Soviet era and in desperate need to be replaced by renovated units.”
“Current headline mortgage rates in Russia are around 10% or so, which is extremely high compared to, say, the UK.
“We would expect that figure to come down by 2%, doubling the number of people who can afford a mortgage. In theory, the demand is there so the developers should do well.”
There’s also the option of investing in western companies with Russian exposure, said Schmitz, who names St Petersburg-based developer, Etalon, listed on the London Stock Exchange or Swedish capital markets firm Vostok New Ventures, which invests in Russian consumer sectors.
The fact that President Trump has struck a new tone for American/Russia political relations and could very well lift sanctions is another reason investors should give the region a chance, Geffen adds.
“Given that Russia/US relations are at a multi-decade low, the change in US president means that this relationship can only improve from here,” says Geffen.
“Whereas one cannot expect sanctions to come off in the very short term, there is no doubt that this is highly likely in the medium term, which would provide another good boost for both the rouble and the Russian stockmarket.”
Also, growth expectations for Russia in 2017 remain “unwarrantedly low and easy to beat,” he adds.
“The consensus forecast for Russian GDP this year is currently 1.1%, but we expect growth to be more like 2% as the economy rebounds from recession.”
