Money talks, but the ruble roars

Alicante's sluggish real estate market is finding salvation in Russian investors Local business community realizes it has a potential goldmine on its hands

Russian travel agents visit Torrevieja in Alicante province.
Russian travel agents visit Torrevieja in Alicante province.

In Alicante, the euros are flowing in from Moscow. Russians have become the saviors of the Mediterranean province's property market and tourism sector, and now that Cyprus - their former Eden - has been bailed out by the EU, Russians are turning to Alicante to lay down their money. First they come on vacation for a few days to check out the beaches and the climate on the Costa Blanca, and later they return to purchase a holiday home, cash in hand - no down payments, no mortgages necessary.

Clients from Russia have overtaken the British in the foreign home-buyer ranking. Half of the 7,000 residences sold to non-Spaniards in Alicante province last year went to Russian families, a market that represented less than five percent of the total just four years ago.

"We have clients looking to buy something inexpensive, no more than 70,000 euros, and then we have other clients seeking luxury properties for half-a-million euros and more," says Alex Citnik, a Russian real estate agent who works for Innova Dom Invest in Torrevieja.

"The British are now the main foreign home-sellers and Russians are the main foreign home-buyers," says Antonio Navarro, president of the Torrevieja Residential Tourism Association, who admits that this "sustained and growing" demand by Russians began five years ago and has not stopped since.

Most pay in cash and need assistance from somebody who speaks Russian

Elena Granados, of the realtor Remax Ábaco, where Russians represent 70 percent of sales, admits that they are "special" clients. "They look around a lot and they think it over; they come several times and compare, but in the end they buy," she says. Most pay in cash and request assistance from somebody who speaks their language and understands their culture.

What with the Russians buying and the British selling, the area of La Vega Baja is experiencing a new property boom that places Alicante at the top of the Spanish list of existing home transactions. According to Public Works Ministry figures, the province topped the list of home sales to foreigners during the first nine months of 2012. Most of the total of 2,501 transactions involved Russian buyers. Málaga was a distant second on 1,111.

According to data released by Provia (Association of Real Estate Developers of Alicante), 1,442 title deeds were signed in 2011, while last year they went up to 2,016, representing a 40-percent increase. Jesualdo Ros, the secretary of Provia, admits it's an "important" market whose clients sometimes arrive here planning to spend 120,000 euros but end up "investing a lot more if they like the house."

On May 4 and 5, the luxury hotel Villa Gadea in the seaside town of Altea is organizing an international real estate fair sponsored by Excellent Choice, a property firm that specializes in the international market. One of its managers, Olessa Uteva, trusts that the event will be a meeting point for developers, builders and companies willing to sell to foreigners.

"This year we are noticing a greater desire to buy and invest," says Uteva, who has been working locally in the sector since 2009. Navarro, of the Torrevieja association, concludes that the Russians are the foreigners who are investing the most in real estate in La Vega Baja, acquiring the most expensive homes for an average of 202,000 euros, followed by Norwegians, Belgians and French clients.

Beginning this month, L'Altet airport is running two daily flights to Moscow and one to St Petersburg. The numbers speak for themselves: in 2010, Spain welcomed 30,951 tourists from that country; in 2011 it was 53,084 and the following year 84,684. This season, up to 119,000 plane seats are on offer, an 88-percent rise compared with last summer.

Tourism is the other sector that seeks to attract the attention of Russia's new middle classes. "We have a goldmine that we have yet to exploit," says Antoni Mayor of Hosbec, the Benidorm Hotel Association. He says that in the last four years, the number of Russian visitors to Alicante province has grown 40 percent. And industry professionals are perfectly aware that while the average European tourist spends around 700 euros, the Russian spends more like 1,700 euros. No wonder the Costa Blanca is going Slavic.

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