Who would have predicted that Russia would rise from the ashes beating Spain to go through to the quarter finals of this year’s World Cup? Recent reports suggests that the country’s sluggish property market is also raising its game and now staging a gradual comeback.

The Urban Land Institute & PwC’s Emerging Trends report has ranked Moscow bottom choice in its list of cities to invest in for the past three years. Now, evidence indicates that the property market is beginning to show signs of life which may be aided by having the eyes of the world on the World Cup and promoting Russia’s political stability.

A natural resources and consumer-driven country

Tom Devonshire-Griffin, head of Russia and CIS at JLL, said: “Oil prices are over $70 and there is relative stability on the ground. I don’t want to over emphasise things, but the fundamentals are good and this is the best the market has looked for some time. Russia has been both a natural resources economy and a consumer-driven economy. Typically consumer spending accounted for somewhere in the region of 80% of Russian wages because Russians had minimal debt and the cost of housing was low.”

Since early this year, the price of secondary housing per square metre has increased by 2% in many large Russian cities. In April 2018, the news agency Interfax quoted from an online study of World Apartments, which revealed that for the first time in two years over 80% of Russia’s cities have recorded increases in property prices. The study looked at all levels of housing other than the ‘super prime market’ reviewing around 70 cities with populations in excess of 300,000.

World Cup cities – St Petersburg and Sochi see house values increase

The upward trend indicates that although prices have not risen in Moscow, in the World Cup hosting cities of St Petersburg and Sochi prices have increased. In St Petersburg, there has been a 3% uptick to date and secondary housing is achieving around $1,700 per square metre. In Sochi and the cities of Tver, Perm, Tomsk and Makhachkala, house prices have increased by 5 to 6% over the past six months.

The last two previous countries to host the World Cup – South Africa and Brazil – only experienced marginally positive effects, so it is difficult to predict what positive impact the 2018 tournament will have on Russia’s economy and property market and whether more global investors will be prepared to look to take a stake in new developments.

Russian government predict the World Cup will net $31bn

Local Russian media estimates the cost of hosting the World Cup will be in the region of $14bn (£10.5bn) and the Russian government is predicting that over the four-week period the economic gain will be around $31bn (£23.5bn).

Devonshire-Griffin added: “The effect on sentiment for real estate can be incredible. As an investment agent the best 11 days of my career were the 11 days after the end of the Sochi Winter Olympics. That is, until the Russian tanks entered the Ukraine, which highlights the importance for Russia to maintain political stability to capitalise on the benefits that the tournament might bring.

“The effect on Russia’s regions and the regional housing market will be less tangible. The slowdown in the economy resulted in just one new airport and stadium constructed, with the remaining amenities simply refurbished with around $1bn being the overall amount spent per tournament host city.”

“The country’s football team have performed better than ever expected and if Russia can retain political stability then this can only help the real estate market to improve further.”