SOBSTVENNIK: Elite Results of Moscow Real Estate Market
26 December 2012
SOBSTVENNIK: Elite Results of Moscow Real Estate Market
Moscow is gradually becoming not only an expensive but also an elite city. In 2012 budgetary real estate was forced out to the region. And what happened at the metropolitan elite real estate market?
Ekaterina Tein, Partner of Chesterton, when reviewing the results of 2012, noted that in Moscow at the present moment there are 32 elite newly erected buildings at different stages of readiness. 72% of these projects are in Khamovniki. Knight Frank considers that elite market supply has significantly reduced. As estimated by the company’s analysts, notwithstanding the launch of new projects supply in the primary market of elite real estate has decreased by 40% for the year, and at the end of November amounted to less than 450 flats - minimal level over the last six years. Contact Real Estate gives more optimistic data: primary sales in 2012 were carried out in 45 residential complexes of the Central Administrative Area.
Ekaterina Tein emphasises that from the beginning of the year only 10 projects at different stage of readiness have been launched in the market and only two of them (the Barrin House residential complex and the Dom na Smolensom Bulvare residential complex) offered ready-to-sell flats, the rest of complexes offered apartments. Nowadays 19 % of Moscow real estate has been commissioned and 21% are at the stage of excavation. As reported by Contact Real Estate, commissioned projects (11%) as well as projects at the ‘Zero” stage of construction (15%) are in demand. And the main sales (63%) were related to buildings where fa?ade and engineering works were conducted.
The demand for elite real estate is also explained by the fact that many affluent buyers come back from Rublevka to Moscow.“We are watching a reverse influx of elite real estate buyers from the suburbs,” Timur Sukharev, Commercial Director of Restavracia N, stated. “The traffic in the city makes it impossible to live in the suburbs permanently.
It seems that not so many elite buildings have been constructed in Moscow this year. However all the projects have become larger in scale that is why the number of flats in the market has grown if compared to 2011. Contact Real Estate experts note that at the beginning of December 2012 this number increased by 19.3 % compared with the fourth quarter of the previous year. Also the volume of square meters offered increased by 14.7 %
An average price for the year was $21,202 for a square meter. As reported by Chesterton, from the beginning of the year the prices have grown by 5.5%. According to the opinion of analysts of Contact Real Estate, if compared to the previous year, the prices have grown by 19.1%. It should be noted that experts have significant fluctuations but the prices are sure to have grown.
All experts mention that no crisis has happened at the Moscow elite real estate market. Flats from developers were sold best of all. However, there have outlined some tendencies.
Changes in the Moscow Elite Real Estate Market, Extension of Price Range
There have taken place clear differentiation by subclasses within the elite segment. Ekaterina Tein specifies that elite real estate is divided into subclasses by the price of a square meter. Thus, class A(-) flats cost 1.5-2 million in average, class A flats cost about $ 2.5 – 3.5 million and the price of class A(+) flats are over $5 million. It means that, if before the crisis, prices in the elite real estate started from $2 million, now this threshold has become lower. Elite real estate can be bought for 1 million.
So, now an elite flat can be bought somewhat cheaper than before the crisis. But that is not because prices have fallen but because floor spaces have become smaller. Developers do not offer “hippodromes” any more, flats have become more compact. But one-room flats are not a popular item. An elite flat cannot have only one room. The demand starts from two-room-flats. Contact Real Estate mentions that the majority of sales in 2012 concentrated on floor spaces of 100-150 square metres (50% from the total supply).
It is necessary to mention that mainly real estate of class A (48%) are in demand. Flats costing $1-2 million, according to Chesterton, have made 25% of transactions and flats for 2-4 million have made 45%. The number of transactions with very expensive flats has significantly reduced in the total volume of transactions in the market. Now the share of such transactions does not exceed 20%; before the crisis there were over 35% in monetary terms allotted to this segment.
Blurring of Lines of Elite Construction Location
We are used to thinking that elite real estate is located in Ostozhenka. Today this real estate has extended its borderers. The Khamovniki district enjoys great popularity. The major volume of transactions (46%) this year has just been allotted to this district. Undoubtedly, it is also related to the fact that new construction is mainly carried out here: the residential complexes Sadovye Kvartaly, Knightsbridge Private Park, Literator, Barrin House and Na Trubetskoy.
The second place by the volume of transactions is occupied by the Tverskoy district and on the third place there is the famous Ostozhenka, Zamoskvorechye lags behind a little bit. However Ostozhenka keeps being the most expensive district in Moscow.
Forecasts
Chesterton outlines the following tendencies for the year 2013:
• Further change of real estate investment structure. Main investment will be made into elite real estate of classes A- and A. And only new projects will be of particular interest. That is because new elite projects are very well elaborated and differ not only by architecture and comfortable layouts but also by concept in general. Now it is absolutely clear that that older elite projects are quickly becoming outdated. It refers even to projects constructed 3 or 4 years ago.
•The Moscow market, contrarily to the European one, will keep investment attraction.
• Price for elite real estate will grow. The A- class will grow by 7 – 9%, the A class – by 5 – 7 %, and the А+ class by 2%.
Contact Real Estate forecasts that next year 150 – 160 flats will be sold per quarter, that prices will grow by 5 – 7 %, that the demand will shift towards residential complexes at the stage of “zero” cycle in which constriction is carried out under Shared Construction Participation Agreement in accordance with Federal Law No. 214-FZ and apartments will also be in demand.
Source: Sobstvennik