News in Brief

Housing sales rose 6 percent year on year in 2012 as Moscow’s south-west expansion boosted supply.
Vladimir Filonov / MT

Residential Market Edges Higher after Moscow Doubles its Territory

By Irina Filatova and Mark Gay, The Moscow Times


A new dynamic has emerged in the secondary market since the end of 2012. While the Russian mass market is focused solely on price, and pursuing cheaper homes regardless of quality, this has started to impact more expensive districts, according to Dmitry Taganov, Head of Real Estate Analysis at INKOM.

"The market has slowly started reacting to the demand of the mass customer who is oriented upon buying cheap and not always quality accommodation. So demand for economy class flats is rising while interest in expensive residences is falling which, of course, affects prices," Taganov said. In January the cost of a square meter in the central district fell by 0.3 percent. Flats in brick Stalin buildings cheapened by 0.5 percent. The general fall in prices across the premium sector was 0.2 percent.

As the secondary market in the central district declined, prices per square meter in all districts except for the center rose, by between 0.2 and 0.6 percent. The least popular area remains the north west. The volume of homes on the market inside the Moscow ring road as of the end of January was 42,600. Of these, 19 percent were in the central district, 14 percent in the western districts, with other sales distributed fairly evenly across the city.

In terms of price range, 42 percent were in the price category of 5 to 10 million rubles or between $167,000 and $334,000.  The most widely offered apartments are in panel buildings, 43 percent, followed by brick, 28 percent.

The distribution of apartments by size is: two-room, 32 percent; three-room, 32 percent; single room, 21 percent; and four plus, 16 percent.

Growing housing stock caused by Moscow's territorial expansion resulted in the city seeing an increase in the number of deals involving existing residential properties last year, analysts said Monday.

The number of sold and purchased properties increased by 6 percent in 2012 year-on-year to 96,600 items, according to the Federal Service for State Registration, Cadaster and Cartography. This growth rate is likely to continue this year unless there is a negative effect from the volatility on external markets facing the debt crisis, analysts said.

Astrum Hotel Shelkovo
Vienna International

Technical Factors

The natural demand for Moscow housing boosted the number of deals in the first half of 2012 by 5.1 percent from the same period a year earlier, according to real estate agents MIEL. But the 6.7 percent growth in the second half resulted primarily from the increase in the capital's housing stock after its area more than doubled in size, the company said in a statement.

The number of deals is likely to remain at the same level this year, said Alexei Shlenov, chief executive of MIEL's real estate brokerage unit. However, the growing affordability of mortgages might stimulate buyers' activity this year if mortgage rates remain unchanged, Shlenov said. Mortgage rates averaged 12.5 percent as of the end of last year. The number of mortgage deals has been growing since the start of the crisis, increasing from 7 to 8 percent of all housing deals in 2009 to about 30 percent last year.  

This year's growth is expected to be primarily of a technical nature, as the housing stock on the recently annexed territories expanded the supply, said INKOM's Taganov.

As a result of the Kremlin's initiative, 148,000 hectares of Moscow region land to the south and southwest of the city were added to Moscow on July 1 last year.  But increasing buyers' activity is unlikely to affect prices significantly, with analysts expecting a moderate growth of about 6 percent this year. Prices for existing housing in Moscow increased by 3.8 percent in 2012 to average 173,200 rubles ($5,248) per square meter, Taganov said.

Mercury City Tower
Vladimir Filonov / MT

Moscow City Drives Increase in Office Volume

Projects in Moscow City will account for almost 40 percent of the stock on course for delivery in 2013. These include the Eurasia Tower and Mercury Tower. Cushman & Wakefield expects about 600,000 square meters of office space to be delivered in total this year. According to the same research, tenants leased more than two million square meters of office space in Moscow in 2012, slowing towards the end of the year but still ahead of 2011.

New 5-Star Hotel to Boost the Luxury Sector

Vienna International Hotelmanagement AG will open the Astrum luxury hotel in Shelkovo near Moscow at the end of 2013. The owner of the property is Shelkowskij Holding. Combining a 3,400 square meters spa and a 1,900 square meters conference area, the hotel is aimed at the wellness holidays and conference segment.

The newest hotel in the greater Moscow region is being built on 27 floors in Shelkovo, about 20 km from the Russian capital, in an urban agglomeration with a population of 1 million.