Apartments – luxury or investment

Recommendation points

• Apartments as a segment of the capital’s luxury real estate market
• Apartments are gaining popularity
• Apartments as an investment object
• Legal aspects
• Perspectives

What is an apartment? Someone thinks – that this is a luxury, but for someone – this is the most suitable object for investment. Legally, an apartment is a number in accommodation facilities with an area of ​​40 square meters, which consists of 2 or more rooms and has all the necessary kitchen equipment.

John Walsom. House Interior.

However, in practice, apartments mean spacious premises of 100-250 square meters in prestigious mixed-use complexes or business centers. One way or another, the apartments are elite real estate. And recently they have become more and more popular and in demand in Moscow.

Apartments as a segment of the capital’s luxury real estate market

In Russia, apartments began to actively enter the real estate market in 2007. This format of real estate in the capital began to be offered within the framework of many projects of mixed-use complexes and public and business centers. Today in the center of Moscow apartments are offered in about 10 multifunctional complexes. According to the information of the Penny Lane Realty agency’s elite real estate sales department, many apartments are offered in the Moscow International Business Center “Moscow-City”, in the MFC Empire Tower, Capital City, Eurasia, Federation, Mercury City Tower.

Apartments are a rather expensive type of real estate. The cost of apartments varies from 5 thousand to 35 thousand dollars per square meter. The price depends on the area, floor, type of house, level of service and even the view from the window. In Moscow, the average cost of apartments is about 8 thousand dollars per square meter. At the same time, 15% of the total supply falls on apartments costing 5-6 thousand dollars per square meter, and 25% are objects worth from 8 thousand to 15 thousand dollars per square meter. Apart from residential apartments, the MFC includes de luxe restaurants, a business center, a shopping center, a beauty salon, a sports club, a sauna and much more. The building of the complex is equipped with underground parking. Residents are provided with a full range of hotel services: maid, concierge service and more.

In the structure of tenants and buyers of metropolitan apartments, which are part of multifunctional complexes, about 70% falls on the share of large companies, among which every fourth is domestic. The remaining 30% are private clients who come to Moscow for business purposes, among them the share of foreigners is up to 40-45%.

Apartments are gaining popularity

People who live outside the capital are mostly interested in apartments in Moscow. The location of the object and its high status are important for them. Also, attention to this type of real estate is shown by high-ranking employees for whom it is inconvenient to travel to their country residences every day, so sometimes they prefer to have apartments in the capital..

Tikhobraz Nikolay. Interior in St. Petersburg. 1844

According to the agency, MIEL-Commercial Real Estate, with a long-term lease (from a year) or when buying an apartment, a potential client is, as a rule, a man (very rarely a woman) aged 30-45 years, with an income of 5 thousand dollars.

The attitude of Russian business towards apartments is gradually changing, this format of real estate is becoming more common.

Among the wishes of consumers and the basic requirements that potential customers place on the apartment rooms, one can name the finishing of the apartments “turnkey” with full furnishings, plus additional service corresponding to hotel service..

The growth of interest in apartments in the capital is caused by the current shortage of 3-4-star hotels and rather high, sometimes not entirely justified, prices for rooms in luxury hotels, as well as by domestic peculiarities of the apartment rental market. The attitude of Russian business towards apartments is gradually changing, this format of real estate is becoming more familiar, widespread and, therefore, more in demand from the representatives of the business elite.

If we consider the demand for apartments on a geographical basis, then 35-40% of the demand falls on the share of tenants and buyers interested in apartments located in the Central Administrative District. Such apartments usually correspond in characteristics to 4-5 star hotel rooms. 45-50% are tenants and buyers who are interested in properties located in the South-Western and Western administrative districts. Their characteristics correspond to those of rooms in 4-star hotels. An additional advantage of these apartments is a highly developed transport and social infrastructure, as well as a fairly favorable environment. Apartments located in residential areas of Moscow account for 10-15% of total demand. Such facilities correspond to the level of service of 3-star hotels.

It should also be noted that in the total demand for apartments in the capital, about 75% of potential customers are interested in renting and only 25% in buying.

Apartments as an investment object

In addition, apartments have recently become a popular purchase among the Moscow business elite. Now, many are also considering this type of real estate as a suitable investment object..

The apartments are interesting for investors, who in the future intend to rent them out to foreign guests. Indeed, as we have already discussed above, more than half of the demand for apartments in the capital falls on foreigners. This is due to the fact that apartments are a type of housing in the western tradition. For most foreigners, this format of real estate is familiar and familiar for a long time..

Igor Tchaikovsky. Time is money. 1999

And since the demand for apartments is large and has only been growing lately, then investing money in this segment of real estate can bring an investor significant profit.

As for investing in the construction of multifunctional complexes with apartments, this is a very difficult project for a developer. Such projects are distinguished by complex professional operation, high costs arising after the expiration of the lease term. In addition, when developing a project, you need to find a suitable location, which must be absolutely perfect. In the case of rental projects, in addition to the construction itself, another point arises – the subsequent management and maintenance of the complex. That is why the construction of multifunctional complexes in the capital is not very active. But due to the fact that demand is growing, in the near future the supply of apartments is likely to also increase. This segment of the elite real estate market has significant development prospects in Moscow.

Legal aspects

Many potential buyers perceive apartments as luxury real estate, the presence of which in the property gives the owners a certain special social status.

However, there are several subtle legal issues here. Due to the fact that the apartments are officially classified as non-residential premises, then, as in any other hotel room, it is impossible to register in them. Nevertheless, for the majority of potential buyers of apartments, this type of real estate is not the main housing, therefore, the registration procedure is not essential for them..

Apartments in Russia no longer surprise anyone, they have become familiar objects on the Russian market.

But for developers, the status of apartments as non-residential premises makes it possible to include them in multifunctional complexes that are being built in areas that were not originally intended for the construction of residential complexes. Many experts note that it is this factor that will affect the development of the capital’s apartment market this year..

Perspectives

Today in Moscow the supply of elite apartments is about 30% of all elite real estate. This indicates that over the past few years, apartments from single offers have grown into an independent and fairly promising market segment, which has already firmly occupied its niche..

It is unlikely that the apartment will be very popular with the general population. This is due to the rather high price and the status of elite housing. However, there is a demand for them, and it is constant and stable..

Some experts argue that due to the fact that the demand for high-quality residential real estate in the capital is unsaturated, the demand for apartments will continue to grow, subject to proper marketing. It is also possible to predict a high demand for apartments in areas of business activity, as well as in traditional “elite” areas of the Central Administrative District. However, there are also opposite opinions, according to which there will not be a significant increase in the supply of apartments in Moscow in the near future..

Time will tell which expert is right. Only one thing can be said with certainty – apartments in Russia are no longer surprising, they have become familiar objects on the Russian market. Every year this segment of the elite real estate market gains more and more supporters and potential clients. And demand, as you know, gives rise to supply.