Not so long ago, the world-famous billionaire Donald Trump visited Russia. During the trip, he mentioned the idea of investing in the construction of a skyscraper in Moscow. The skyscraper will be similar to Trump Tower in New York. What is so exciting about the Moscow housing sector for Donald Trump? Didn’t he make a mistake when investing in Russia? Let’s ponder on these questions together…
Foreing Investments In Russia
Russia hasn’t been popular among foreign investors over the last few years. As for American investors, they mainly invest in production, mining, trade and financial sectors. Amid relative stability in the Russian housing market this year, domestic investors have been active as well. As for foreign investors, Russian fixed property isn’t still attractive enough for foreign investors.
Still, foreign investors are getting increasingly interested by relatively high yields in the Russian housing sector, which are much higher than those seen in the West. The biggest thing that really scares foreign investors away is high insurance risks along with underdeveloped legislation and construction policies along with overall economic uncertainty.
On top of that, some other emerging and developed economies offer more beneficial conditions in terms of investing in their construction sectors and housing markets. For example, the continued eurozone crisis made the Greek and Spanish housing markets a lot cheaper, though fewer investors want to invest in the housing markets of crisis-ridden countries. Still, there are many options in the Asian-Pacific region. At the same time, the situation in the US housing market seems to be improving, which forces American investors to return home.
Still, experts say that the Russian housing market is still vulnerable to local and external economic shocks. The Russian economy may still see some crisis phenomena in the near future, they say. The Russian housing market is still yielding to some other emerging markets in terms of investment attractiveness.
Investing In Moscow Fixed Property
The Moscow market of commercial fixed property is looks controversial for investors as well. This year, renters and buyers have been very careful when making their decisions.
The demand for offices has dropped by 55% since 2012.At the same time, the property available for renting is growing at the expense of new business centers that are currently under construction or have just been built. There is excessive supply.
Donald Trump’s Intrigue
What made the world-famous billionaire, investor and the owner of the USA’s biggest construction company invest in the construction of a 58-storey building in Moscow?
This is the 3rd time, Mr, Trump is going to invest in Russia. In 2004, he was thinking about reconstructing 2 Moscow hotels – “Rossia” and “Moskva” (Russia and Moscow). In 2008 he was going to construct a chain of hotels and luxury residential property in Moscow, St. Petersburg and Sochi. However, those ideas remained unfulfilled.
What is this new project for the owner of millions of square meters of fixed property in the USA, Canada, Turkey, South Korea and other countries around the globe? According to Forbes, Mr. Trump’s fortune is currently estimated at $3,5bn! He is the author of several books, a businessman, a showman, a politician and a former candidate for the post of the US President.
The say that one of the reasons is his high risk tolerance. Hi is not afraid of risky investments and mistakes. In the 1990s his business went bankrupt because of major debts. His companies went bankrupt several times over the last 10-15 years.
Another reason is his name. He knows that when he enters the Moscow market, this will definitely make it more attractive form other investors. This will contribute to his construction project. His name is like a brand that adds weight to his office buildings, thereby making more liquid and prestigious.
That is why a lot of construction companies are willing to pay Mr. Trump a lot of money in order to make him the face of their projects. In fact, most of the projects associated with his name aren’t owned by him. It is highly probable that Trump is participating in the Moscow project just to make money on his own name…
