Your possible land-use interests in Russia

Investments in the land - it sounds invitingly and … respectably! If anything, it is the most reliable way of "making the money work".

The RF Land Code enables the foreign nationals, stateless persons and foreign legal entities to acquire into ownership or to rent land plots.

In the overwhelming majority of cases the Russian and foreign nationals have equal opportunities for buying a land plot. However there are restrictions for foreign nationals and legal entities as regards acquisition of land plots into ownership according to  the specific list established by the RF President (for example, on the areas near the state border).  

There is only one significant difference between the investors being RF nationals and foreign nationals. Many land plots having investment potential are the lands classified initially as agricultural ones, and having designated purpose "for agricultural activities". Foreign nationals and legal entities are not allowed to acquire this type of lands into ownership. Therefore they should firstly change the usage mode by performing a number of legally significant operations on transfer of the land into another category, for example, into the category "for construction of industrial facilities", and or on change of the designated use  "for construction of dachas".

Then actions should be taken for increase of the land plot value:  the problem of provision of the land plot infrastructure is being solved, the approach road project is being approved and implemented, permit is received for connection of electricity, a transformer substation and power transmission line is being built, the land plot is fenced along the perimeter, its safeguarding is being arranged. After completion of above described arrangements the value of land plot increases fivefold on average.

Upon investing in land plots one must understand that this kind of investment should be regarded as a long-term investment. Namely the actual period of 3 years is implied, starting from acquisition of land plot having agricultural category and finishing by sale of ready dacha plots or by commissioning of constructed industrial facility.

Very often the investor contributes money and supports an investment project not until the sale of dacha plots to the final buyers or construction of a plant, but until the stage of readiness of all permits, licenses and approvals, when the plot may be further used effectively for earning maximum profit.  

This investment option may be reasonably regarded as a medium term one, since in this case the real minimal period for the project completion may be a year and a half. And the expenses in case of this option are affordable for small-range investments (for example, expenses for a land plot of 3-4 hectares or 300-400 hundred square meters, may fit within 500 000 Euro, and the gained profit will make the same amount). But one should keep in mind that here we are considering an optimistic option of investment project.  

Having prepared the required documents the investor may sell the land plot with the named approvals, licenses and permits for an amount several times exceeding the initial value of the land plot. We may say that the investor acquires a product having high sale value and liquidity.

The optimal solution for foreign investors investing in Russian real estate and land plots would be the engagement of a specialized organization, which will provide professional legal, marketing and accounting support of the project at all stages starting from the instant of investment project idea.