Russia’s Real Estate Market Resists the Crisis
Although there is a general fall in sales and prices of property worldwide, the luxury real estate market in Russia seems to be weathering the crisis well as Muscovites actively investt in expensive housing. Only in May this year, $90 million worth luxury apartments were sold in Russia. This figure shows a two-fold increase over the corresponding period last year, the international property consultancy firm, Knight Frank states. Since the beginning of 2012 about 300 luxury apartments have been sold on the Russian real estate market. The total value of these sales is nearly half a billion dollars. More averagely and economy-priced real estate also rose, with nearly 7,000 transactions concluded in May.
The demand in the Russian luxury real estate market has increased so rapidly and dramatically that soon this type of housing will be in short supply, according to Yekaterina Teyn, a partner at the Chesterton consulting firm. “There was a certain pent-up demand, because since the end of last year the luxury market slowed down somewhat. Many customers postponed their decisions to buy until the elections were over. Once the elections in March were past, people spent April searching for properties, and in May there were already more purchases,” said Teyn. “The second aspect is the instability of the ruble. After the ruble began to fall very rapidly, many customers also decided to become active. Due to the fact that there is an unstable situation – it is uncertain whether or not there will be a crisis – people have decided to invest in real estate,” she added.
!m[](/uploads/story/105/thumbs/pic1_inline.png)The average price of a recently purchased property is about $3 million. Yet, the most costly deals were made for buildings near downtown Moscow. In one of the most desirable neighbourhoods the price for an apartment reached $8 million. Analysts however claim that the price for luxury apartments fell by approximately one per cent in May. Notwithstanding this figure, the director of the department of luxury real estate at Knight Frank, Yelena Yurgeneva, explained that the this slight decrease in prices is only an illusion.
“Some of the price reduction demonstrated by the results of the study is primarily related to the sharp rise of the U.S. dollar. The fact of the matter is that many developers have fixed the prices in rubles in the new developments, so by the end of the month you may find that the average price has decreased, although this is not really true. We are now seeing a positive trend on the market and very high customer activity. But the range is very diverse. In particular, if we take again Burdenko, 3, then there it is $14,700 – $15,000 (price per m2), which is the lower threshold, and it goes up to $30,000,” said Yurgeneva.
