Soaring Prices Push Expats Into Suburbs

Rising apartment rental rates are putting the squeeze on the city's expatriates, forcing Westerners accustomed to prime real estate to start settling well beyond the familiar streets inside the Garden Ring.

"We are seeing a trend of expats moving to the suburbs," said Michael Bartley, general director of real estate agency Four Squares.

With rents increasing across the board at 15 percent in the first quarter of the year, "People are being forced out of the center," he said.

Expats, once tightly clustered within walking distance of the Kremlin and Arbat, are now being driven beyond the Garden Ring, the 16-kilometer road that encircles the capital's pricey central neighborhoods.

"When people move to Moscow, one of the cast-iron parameters has always been to be inside the Garden Ring. Now expats are realizing that that's no longer feasible," Bartley said. "If you're a lower-level executive, you can't afford to pay $2,500 to $4,000.

"It's always been a bit of an anomaly here," he said. "It's very unlikely to say, 'I want to live within two kilometers of St. Paul's in London."

Inside the Garden Ring, rents for a one- or two-room apartment of 50 to 90 square meters in a typical building now run from $2,500 to $4,000, said Victoria Opolskaya, head of the residential property rental department at Blackwood.

Bartley said an apartment with "decent, European-level repairs" in the center is now starting at $2,500 per month. Outside the Garden Ring, rents are running from $1,500, he added.

Those not willing to downgrade on the quality of their apartments are moving primarily toward Moscow's western and northern districts, Bartley said.

"We had a very fast start [with rising prices] in the first half, then it quieted down. Traditionally in autumn there is an increase, but because of the rapid increase at the start of the year, I don't see how it could continue," he said.

And instead of moving out, some expats appear to be huddling together, looking for roommates or to rent a room in someone else's apartment.

For July through August, the average rent asked for an ordinary room in Moscow was 21,769 rubles ($856), according to data compiled from Expat.ru's online real estate bulletin-board postings.

The average rate for a one-room apartment was 36,459 rubles per month, or 1,181 rubles per square meter. For one-room apartments inside the Garden Ring, the average rental rate was 42,217 rubles, as opposed to those outside, which averaged 32,394.

Landlords were asking for an average of 73,406 rubles per month for a two-room apartment outside the center, or 1,436 rubles per square meter. Inside the Garden Ring, the average asking price was 74,850 rubles ($2,964).