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. Last Updated: 07/27/2016

Rents Revive, Bargains Still Abound




One of the biggest engines driving developments in the city's residential real estate market right now is the increasingly dynamic retail market.


While the market has started to gather steam after a long, post-crisis lull, the effects from the boom in new malls, hypermarkets and shopping centers are changing the popularity of a number of areas for people seeking moderately priced apartments, real estate experts say. And, as consumer confidence and spending power revive, demand is growing fastest for mid-range rental housing.


For example, rents for apartments near Prospekt Mira and Taganskaya metro stations are starting to inch up. That's because newly opened business centers like Mosalarko Plaza One at Taganskaya and the Olympic complex at Prospekt Mira have brought businesspeople who want to live near work.


"More foreigners and Russians are moving into these areas, so demand has picked up and maybe prices will go up too," said Maria Kupareva, a property consultant at Pulford Enterprises Ltd.


While demand is picking up elsewhere in the residential sector, it has not been strong enough to influence prices, which remain at rock bottom.


That's what Dmitry, a consultant at a Western multinational, found this year. Two years ago, he found that his desire to move out of his parents' apartment and find a place of his own close to work was an impossible dream.


Rents in the downtown district of Tsvetnoi Bulvar near his office started at $600 a month for the cheapest one-room apartment. Not able to sink such a sum into housing, Dmitry stayed at home.


Then came the financial crisis, and apartment rents dropped quickly. Housing that once went for $800 a month could now be had for $300 to $500.


When Dmitry went house-hunting again at the middle of last year, he found that prices had fallen to $200 to $300 for one-room apartments near his office. A couple of months ago, he was happy to find a one-room apartment furnished to the hilt for $300 a month.


And Dmitry is far from alone in embracing the drastic slide in apartment rents. Apartment agencies say business has been picking up over the past year as residents put the initial shock of the nation's financial instability behind them and look for bargains. Rents have fallen by 30 percent to 50 percent across the board, and are now steady in most regions of the city, real estate agencies say.


"It is very difficult to predict if rents will go up," said Kupareva at Pulford. "People who want to rent apartments think that the prices should be cheaper and landlords say they should be higher, so we have some friction going on.


"Demand is growing right now for short-term leases ... and apartments available for one- to three-month leases are being rented the same day they go on the market," she said. "Therefore, I would say rents on short-term leases could certainly go up."


While the 1998 crisis hit prices hard for moderate to inexpensive apartments, luxury flats only dropped an average 10 percent in price - until September 1999. After a string of bomb blasts across the nation that leveled two apartment buildings in Moscow, rents fell for luxury apartments as tenants reconsidered the dangers of a country seemingly under terrorist attack, agents said.


"The bombings affected prices even more than the crisis," said Alla Zemskova, managing broker at apartment leasing agency Delight Real Estate.


"After the bomb explosions, people stopped looking for apartments - or if they looked they wanted apartments with super security."


Apartments that had been going for $6,000 a month were rented out for $2,500, for example, Zemskova said.


Prices for luxury flats remain a bargain; apartments that cost $10,000 last May are now renting for $7,000.


The most expensive neighborhoods continue to be the Arbat and Patriarch's Ponds, but pricey and cheap apartments can be found in any region of the city.


"It depends on the apartment, it depends on the building and it depends on the location," Zemskova said.


Apartment seekers on a budget but wanting to live in a prestigious region can now find studio apartments for as little as $250 a month, though the average is around $360, agencies said. Two years ago such apartments were averaging $500 to $600 a month.


Prices on fancier apartments in elite regions take off rapidly from the average $360. A plush five-room flat will put a tenant back by at least $6,000 a month.


For those in the market for the best, ritzy $14,000- to $17,000-a-month homes are there for the asking.


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Moscow Residential Real Estate Prices


1 room 2 rooms 3 rooms 4 rooms 5 rooms


Expensive


Russian $360 $525 $800 $1,000 $1,500


Russian Renovated $500 $750 $1,200 $1,800 $2,300


Western $800 $1,400 $2,500 $4,000 $8,000


Moderate


Russian $275 $400 $550 $750 $1,100


Russian Renovated $450 $600 $700 $1,100 $1,350


Western $550 $1,000 $1,350 $1,650 $2,500


Inexpensive


Russian $160 $250 $350 $500 $700


Russian Renovated $250 $375 $550 $700 $1,200


Western $350 $650 $800 $1,000 $1,500


Sources: Miel, Pulford Enterprises, Delight Real Estate, Beautrix