VEDOMOSTI. REAL ESTATE: Moscow to Lead in Elite Real Estate Prices Growth in 2013
14 December 2012
VEDOMOSTI. REAL ESTATE: Moscow to Lead by Elite Real Estate Prices Growth in 2013
Elite real estate in the Russian capital will cost more than that in Paris and Singapore, as predicted by analysts.
In 2013 Moscow will become a leader by price growth for elite real estate: high-budget housing in the Russian capital is likely to get up by 20%. Growth in the world key elite real estate market will be more modest: not more than 10%, as calculated by analysts asked by Vedomosti.ru. And in conservative markets reduction of prices or stagnation is expected.
At the end of 2012 a square meter of elite real estate in Moscow costs 23.248. The Russian capital has the room for growth. For example, in Monaco a square meter of elite real estate is estimated at $57,849, in London — at $43,498, in Hong Kong — at $30,736 (data by Knight Frank). The level of prices for elite real estate in the Russian capital is now also lower than in Paris ($26,996/square meter), and in Singapore ($27,639/square meter), and in Geneva ($29,711/square meter). However, it has managed to draw ahead of Sidney ($22,828/ square meter), New York (the most expensive being Manhattan — $21 754/ square meter), Tokyo ($20,125/ square meter), Shanghai ($19,600/ square meter), Dubai ($7,900/ square meter) and Miami ($7,072/ square meter).
By the results of 2012, even if elite real estate in Moscow increased in price, then the increase was very sluggish, realtors recall. For example, Dmitry Khalin, Managing Partner of IntermarkSavills estimates price increase only at 2%. Elena Yurgeneva, Regional Director of Real Estate Department of Knight Frank, states that average market prices have fallen by 5%. The highest increase of prices for elite real estate was noted in Miami and Dubai: 10-20% depending on the type of real estate, Knight Frank’s experts say. Analysts remind that markets are overheated, and elite projects in Florida and the United Arab Emirates are non-liquid. Igor Indriksons, Investment Manager, founder of the consulting web site Indriksons.ru, characterises Miami and Dubai as place for speculations and adds them to the top list of the most dangerous cities for investments.
Real estate markets of Monaco, New York and Paris that are traditionally considered conservative have now fallen in price in average by 5% for the year. Among the conservative markets only London and Tokyo have demonstrated a growth of 5-10%. Today both cities are very attractive for investors. Thus, as reported by Cushman & Wakefield, Tokyo has already attracted in the expiring year $23.9 billion of investments and London has attracted $29.3 billion. These are the highest results in the world. Moscow figures are three times lower than those of London: year results are expected to be only from $7 billion to about $9 billion, as forecasted by analysts of the Big Five.
However, in the following year Moscow will have significant chances to catch up with its competitors. In 2012 prices in the elite real estate market are likely to grow up by 15%, Irina Mogilatova, General Director of the Tweed Real Estate Agency, believes. Knight Frank and IntermarkSavills forecast even a higher growth – up to 20%. Among all key elite real estate markets it is in Moscow where maximum increase of prices is likely to be registered because of the restricted supply in the elite segment as well as due to selling out of projects of the de-luxe segment, Yurgeneva explains the high results of the capital.
Olga Arkhangleskaya, Partner, Head of Consultancy Group for Real Estate Companies in the CIS of Ernst & Young, speaks about high demand for elite real estate as the tendency for the future, notwithstanding overestimated prices of supply. “We are watching a reverse influx of elite real estate buyers from the suburbs,” Timur Sukharev, Commercial Director of Restavracia N, stated
If realtors’ forecasts come true, then Moscow where a square meter of elite real estate will cost $27,898, will be able to outrun Paris with its $25,646 for a square meter (will fall by 5% more) and Singapore with $27,639 (stagnation is expected), to almost catch Geneva with $28,225 for square meter (will fall by 5%) and approach Hong Kong with $32,273 for a square meter (will grow by 5%). Records of Monaco and London where prices will keep at the level of the current year will stay unachievable for Moscow.
All in all from the beginning of 2012 in the elite real estate market there have been concluded 400 transactions, the supply has amounted to 1,000 items, an average transaction budget is $3 million, as calculated by IntermarkSavills. Half of the transactions related to the three key projects: Sadovye Kvartaly, Italyansky Kvartal and Barkli Park. About 25% from the total number of transactions were allotted to the projects above $3 million.
Source: Vedomosti. Real Estate