Review of the real estate market in Moscow and the Moscow region for 2011

Recommendation points

• Increase in transactions involving a mortgage loan
• Increase in transactions in the low-rise sector
• Improving the quality characteristics of residential complexes
• Increased demand for new buildings
• Decrease in demand for elite offers
• Expansion of Moscow
• The most interesting new buildings in Moscow and the Moscow region in 2011
• Forecast for 2012

Usually, on the eve of the New Year, it is customary to summarize and analyze what new has happened over the past 12 months, which surprised and pleased the almost completed year. Specialists of the real estate market of the Russian capital were no exception, in particular, experts from such leading agencies as MIEL-Nedvizhimost and Azbuka Zhizni, who have already drawn conclusions based on the results of their work during the year..

So, according to the real estate agency MIEL-Novostroyki, in 2011 on average in Moscow the cost of 1 square meter in a new building reached 204 thousand rubles, while in the Moscow region this figure was set at 64 thousand rubles.

Apartments in new buildings in the cities of the Moscow region attract the attention of buyers precisely due to their lower cost, despite the often difficult situation with the transport interchange and the long time spent on trips to the capital.

Increase in transactions involving a mortgage loan

The decrease in mortgage interest rates, which was observed throughout 2011, led to the fact that the number of transactions involving the attraction of mortgage lending increased significantly. On average, the number of real estate transactions using credit funds increased by 8-10%, according to experts, the mortgage lending market has come close to pre-crisis indicators and may reach the 2007 level already next year..

Mortgage rates in 2011 decreased to 12.5%, for comparison – in 2010 this figure was 13.1%, and in 2009 – 14.3%. The increase in the popularity of mortgages is also facilitated by the fact that already from January 1, 2012, it becomes possible to use maternity capital to repay the mortgage loan and make the first payment for the purchased housing.

The average size of a mortgage in Moscow was 3 million rubles, most often the loan is taken by borrowers for 20 years, the popularity of mortgages for a shorter period is much lower.

Also in 2011, many Russian banks have reduced the size of the down payment, if previously real estate buyers had to pay an amount of at least 30% of the value of the property, now the average down payment is set at 20%, and in some banks – 10%.

Thus, we can talk about a positive trend in the mortgage lending market and an increase in the number of transactions involving borrowed funds..

Nevertheless, as experts note, even despite such a decrease in rates, mortgages are still inaccessible to most residents of the capital..

Increase in transactions in the low-rise sector

In addition to the fact that the interests of many real estate buyers rushed towards the Moscow region, in 2011 there was also an increase in the popularity of country houses, the so-called “one-story sector” (although most modern cottages are still being built in 2-3 floors).

The demand for cottages in the Moscow region on average during the year grew by 2-3% per month, the demand for land plots without a contract is also growing, which remained the most demanded product in the suburban real estate market.

Ben Grasso. Ungrounded. 2011

According to experts, there is currently an excess of demand over supply and a shortage of economy-class cottages and high-quality townhouses.

The average cost of 1 square meter in the suburban real estate sector during 2011 changed little – it increased by only 2-3%, and among the elite suburban real estate there was even a decline in value – by 3-5%.

Novorizhskoe direction remains the leader in real estate transactions.

Improving the quality characteristics of residential complexes

In 2011, there was finally a tendency to improve the quality of newly erected residential complexes, and not only in relation to the building materials used, but also a more attentive attitude to the infrastructure of the residential complex..

Developers began to pay more attention to the convenient layout of apartments, the presence of commercial real estate in the complex, which, after the building is commissioned, will become new shops, beauty salons and cafes. Increasingly, developers are trying to attract the attention of buyers with a cozy, green courtyard in front of a multi-storey building, a playground and the availability of parking spaces.

Increased demand for new buildings

Experts unanimously note that over the past year, buyers’ demands have changed – interest in apartments in houses that have been built over the past 10 years has grown significantly.

But the demand in the secondary real estate market has slightly decreased – buyers have become much more demanding, when choosing a property, they pay attention not only to the condition of the apartment, but also to the infrastructure of the area, the availability of a convenient transport interchange, the layout of the apartment, so that apartments in houses in need of reconstruction, no longer satisfy potential future owners.

Geimran Baimukhanov. Construction. 2009

However, interest in new buildings is growing only as they are built and the date of delivery of the house is approaching, still a very small number of buyers are ready to invest in new housing at the stage of “digging a pit”.

Decrease in demand for elite offers

In 2011, economy class apartments and country houses remained the market leaders in sales, accounting for more than 90% of all transactions. The demand for elite, expensive housing located in the Central District of the capital decreased slightly, by only 3-5%, but this still caused a slight decrease in the cost per square meter in such areas as Chistye Prudy, Kropotkinskaya, Sretensky Boulevard, Tverskaya and Krasnye Vorota. On average, the cost of 1 square meter in such prestigious areas decreased in dollar terms by 2-4%, which, of course, did not make elite real estate more affordable for Muscovites.

We can also note a decrease in demand for multi-room apartments – in 2011, four and five-room apartments became even less in demand. Residents of the capital, who can afford such an expensive purchase, are increasingly opting for suburban real estate.

Expansion of Moscow

The main news of the capital’s real estate market, which is associated with the main expectations of investors and buyers, as well as the most ambitious changes, experts unanimously call information about the expansion of Moscow’s territory and the transfer of government agencies outside the central regions.

Sergei Sobyanin, the mayor of the capital, recently announced that a tender for the creation of a unified urban agglomeration on the territory of New Moscow will be announced by the end of 2011, so that leading architectural companies have a chance to take part in the design of the new image of the capital..

The development of new territories by developers will bring not only the appearance of new buildings, but also an increase in the cost of apartments in the settlements newly annexed to Moscow, however, while talking about the significant impact of the authorities’ initiative on the real estate market is not necessary – it will rather become an event already next year.

The most interesting new buildings in Moscow and the Moscow region in 2011

Among the new buildings erected in 2011 in the Central District of the capital, experts point out Knightsbridge Private park, the sale of apartments in which began only at the end of November. The residential complex located in Khamovniki has a well-developed infrastructure and was named the most anticipated proposal of 2011.

The most popular new buildings in 2011 in the Central District were the residential complexes Sky House, which also became the tallest new building in the center of the capital, the English Quarter and the Italian Quarter, which accounted for more than 50% of all sold apartments in new buildings in the Central Administrative District.

The most expensive new building of the year was the Barkli Virgin House complex, located on Ostozhenka, on the territory of the “golden mile”; a world-famous designer Kelly Hoppen was involved in the construction of this facility..

The largest new residential complex in the center of Moscow in 2011 was Sadovye Kvartaly, with an area of ​​11 hectares.

Among other interesting proposals, experts note the massive construction of residential complexes in Balashikha and the Butovo-Park residential complex.

Forecast for 2012

According to experts, if the trends of 2011 continue in the next year, then 2012 may bring the following changes to the real estate market:

• the number of transactions involving mortgage loans will continue to increase, an increasing number of buyers of apartments and houses will apply to banking institutions. The growth in the number of mortgage transactions may be 35-40%;
• demand and new supply will continue to shift towards the Moscow region, as the central districts of Moscow have practically exhausted their development opportunities, and too high prices are forcing buyers to look for new housing in remote areas;
• development of new forms of living space, such as lofts, townhouses, apartments, country one-story complexes;
• increasing the level of work of developers and the quality characteristics of housing;
• the rise in prices per square meter in Moscow and the Moscow region is likely to remain at the same level, that is, no more than 5-8% per year, in line with the inflation rate. Although, the international consulting company Knight Frank, having analyzed 29 cities located in 5 regions of the world, predicts that the rise in prices for Moscow real estate will be higher – about 20% in 2012. Experts associate this forecast with an increase in the attractiveness of the Russian capital, including for foreign investors, which in turn will be facilitated by the expansion of Moscow’s territory..