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. Last Updated: 07/27/2016

Arrivals Find Moscow Hive of Realty Activity

Before recently arriving in Moscow, I spent nine years working in Kenya. A typical African country -- stunningly beautiful, but marred by poverty and endemic corruption. The capital, Nairobi, is a city of 2 million people and is generally quite poor. A few modern skyscrapers sit cheek by jowl with dilapidated shanty huts housing the businesses of local entrepreneurs selling anything from a cooking pot to a single cigarette. What property market there is bases itself on a European model, although construction has slowed almost to a stop in the city due to a disintegrating economy, crippling interest rates and a lack of demand for commercial space.

What is noticeable on arrival in Moscow is the vibrant and active real estate market. Older buildings are under development as are new office blocks and retail centers. Moscow's city center is a hive of activity. However, while the market is in place, it is not easily accessible to a newcomer. The property market as understood in Western Europe is still a relatively new concept, but the market is moving very quickly. Although it has been a long time coming, the new Land Code will ultimately speed up the whole process of reform and development.

The demand for office space is growing and there is already upward pressure on class A rent levels. A recent global survey by DTZ indicated that in 2001, Moscow was the 11th most expensive city in the world in terms of overall office occupancy costs. Rents for class A offices are now around the $600 per-square-meter level, including operating costs but excluding VAT. While this is not at pre-crisis levels, it is a figure noticeably higher than last year and is indicative of the growing demand for available space. If the market continues to progress as it is, we see no reason why Moscow will not move into the top 10 in that ranking within two years.

The retail sector is extremely active with relative newcomers such as IKEA and Metro making a huge impact on the market. New restaurants and shops are opening -- and closing -- on a regular basis as the market comes to terms with service standards demanded by increasingly sophisticated customers. Moscow is underprovided in terms of retail space, and there is probably a great deal of steam left in that sector.

In contrast to most cities in Western Europe, the property market in Moscow is in an upward trend. What better time to arrive in Moscow?

Stephen Wilson is the managing director of DTZ Zadelhoff Tie Leung in Moscow.