Overview of the apartment rental market in Moscow based on the results of the first quarter of 2011

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Among the most pronounced trends in the first quarter of 2011, experts in the real estate market note a significant increase in demand for short-term rental apartments, as well as a decrease in the quality supply of housing within the Garden Ring. Let’s take a closer look at the state of the rental market in the capital, which is currently observed..

    • Rental demand is growing
    • The supply of expensive apartments does not keep pace with demand
    • Prices for rental housing in the capital are slowly but surely growing
    • Let’s sum up

    Overview of the apartment rental market in Moscow
    Viktor Vasnetsov. From apartment to apartment. 1876

    Rental demand is growing

    Note that the intensification of demand for rental apartments began only by the beginning of February, due to the January holiday calm in the market. However, in March, demand rose sharply – by as much as 30% compared to January. Analysts note the return of tenants to the elite, expensive housing market. According to the results of the first quarter of this year, the demand for apartments in the budget of $ 7,000 or more increased by one third compared to the fourth quarter of last year.

    There is also an increase in demand for short-term rentals (up to six months). According to the results of the first quarter, the number of people wishing to rent an apartment for a short time increased 3 times. According to many analysts, such a sharp increase in demand in this market segment is due to the opening of a new business season. However, it is still impossible to say that such a surge in activity is caused only by seasonal factors. Another factor influencing the market is the fact that during the crisis, business activity in Moscow has noticeably decreased, and in the last few years, daily rent of apartments has not been in great demand. However, at present, the economic situation in the country as a whole, and therefore in the capital, has somewhat stabilized, which naturally led to an increase in the need for short-term rental housing in Moscow..

    It should be noted that, despite the increased popularity of this format of rental housing, the number of apartments that are offered for a short time remained at the same level. That is, there is an equilibrium of supply and demand.

    The supply of expensive apartments does not keep pace with demand

    In the first quarter of this year, the number of elite and business-class apartments offered for rent increased by 38% of the total supply. If we compare the indicators with the same period last year, then the supply decreased by 20%. According to experts in the real estate market, by the beginning of April there was a sharp decline in the supply of apartments for rent, costing from $ 2,000 to $ 5,000 per month within the capital’s Garden Ring..

    Renting an apartment in Moscow
    Thomas McKnight. Blue couch

    The biggest shortage of apartments offered for rent is currently observed in the Arbat, Patriarch’s Ponds and Ostozhenka areas. During the first quarter of 2011, the number of offered apartments here decreased by 20% and is about 55% of the total volume of rental offers in this price segment within the Garden Ring..

    It should be noted that this price range is one of the most popular and demanded among metropolitan tenants. And the fact that such apartments are gradually becoming a deficit in the rental market is not surprising. However, this trend applies only to high-quality housing, with modern renovation and full furniture. Renting a good and affordable apartment in the above-mentioned districts of Moscow is now extremely problematic. The market situation is also complicated by the fact that the number of parking spaces in the city center is limited, and this factor is necessary for almost all potential tenants of elite housing in the capital..

    Objects are offered on the market at a similar rental price, but with slightly different parameters. For example, in the center of the capital, you can easily rent a two-room or three-room apartment at a price of $ 3000 to $ 5000 per month, only decorated in a classic style. However, according to experts from Penny Lane Realty, the classics are not in great demand among today’s potential tenants. The demand for such interiors is not great – about 20% of the total. There are also offers at prices ranging from $ 2000 to $ 3000 per month, but the conditions do not meet the wishes of those who need business-class housing – Soviet renovation, as well as old furniture and plumbing.

    Given the situation on the rental market in the capital, Penny Lane Realty experts advise potential tenants in the price range from $ 2,000 to $ 5,000 per month, especially in an area with a scarce supply, to be more loyal both in terms of the requirements for the characteristics of the apartment and its location..

    Prices for rental housing in the capital are slowly but surely growing

    Now let’s talk about the dynamics of rental prices in Moscow. According to the results of the first quarter of 2011, 1-room and 2-room business class apartments within the Garden Ring rose by 3-5%. Prices were influenced by the high demand for such housing and the outlined shortage in these areas. 3-room apartments of the same class have risen in price by 2-3%.

    The lowest rental rate for business class housing at the beginning of April is $ 2,700, the top – $ 8000. if we compare rental prices with the fourth quarter of last year, they in this segment increased by 6-9%.

    The cheapest apartment located somewhere on the outskirts of the city will cost about 23,000 rubles. per month. 

    The rent of elite 2-room apartments in the capital has grown by 1.5-3% over the last three months. The rental rate for three-room apartments in the same category has increased by 1-2%. Renting an elite apartment now will cost a tenant at least $ 4000 per month, which is 5-7% higher than the figures at the end of last year. The maximum rental rate for luxury housing is not easy – there are objects on the capital market, the rent of which will cost $ 50,000 per month.

    Renting an apartment in the economy class segment in the capital now also cannot be called affordable. The cheapest apartment, located somewhere on the outskirts of the city, in the Novokosino, Vykhino, Entuziastov Shosse, Teply Stan districts, will cost about 23,000 rubles. per month. In the near Moscow region now you can rent an apartment for 18,000 rubles. per month.

    According to analysts from the TUBAR-Nedvizhimost real estate agency, in March rental rates for economy-class housing increased by 0.3-0.7%. The average rental price for a 1-room apartment in this segment is on average from 27,000 rubles. per month. A 2-room apartment will cost 35,000 rubles on average. per month, and 3-room – from 46,000 rubles. According to experts, the share of economy-class apartments in March accounted for about 72% of the total volume of transactions in the rental market in Moscow.

    Let’s sum up

    The first quarter is over, and according to its results, it can be argued that the market has revived and has overcome some winter stagnation. Demand is growing, supply in most market segments has also slightly increased.

    However, there is a certain shortage of elite housing and business class housing, but this phenomenon is natural and understandable. A potential tenant of housing in this price segment should pay attention to the fact that offers of high-quality housing in the center of Moscow appear, but the demand for them is great and such an apartment will be sold in just a couple of hours. Therefore, you need to respond faster and more quickly to such proposals..

    For the owners of apartments in this segment, experts do not advise sharply raising the price. Despite the scarcity and some hype, a high price can lead to an increase in the exposure period of your property, and as a result, instead of the desired profit, you will receive lost profits..

    Another quite natural result of the first quarter of 2011 is the increase in apartment rental prices. As demand grows, so does the cost of renting housing. Nevertheless, the rise in prices, as we can see, is not large and it is due to the market situation in the real estate market as a whole..

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