Suburban real estate in the Moscow region – trends and prospects

Recommendation points

• Contract settlements and multi-format settlements are rapidly returning to the market
• Business class will be the leader in the structure of new settlements in 2011
• In terms of demand in Q1 2011, economy class properties are in the lead
• How much is a country house in the Moscow region currently worth?
• Summing up

Based on the results of the first quarter of this year, it became clear that business-class objects are returning to the suburban real estate market near Moscow.

Lev Aronov. Coast. The buildings. Trumpet. 1956

As some experts suggest, this segment may become dominant by the end of the year. In this price segment, in the first three months of 2011, 60% of the total number of new settlements entered the market. Business class also became the leader in price growth – in the period under review, this segment rose in price by 6%, despite the fact that elite suburban housing remains stable in terms of prices, and the economy class even lost a little in price.

Contract settlements and multi-format settlements are rapidly returning to the market

According to the analytical center of JSC OPIN, in 2011, due to the saturation of the suburban real estate market with land plots without a contract (UBP) and the transition of some developers to more expensive market segments that require a well-thought-out competitive concept and sufficient financial investments at the initial stage of construction, the market will appear no more than 50 new objects. Of these, according to analysts’ forecasts, about 80% will fall on land plots with a contract (USP).

At the same time, it should be noted that plots without a contract are losing their positions – the demand and supply of these objects is decreasing. However, UBP still retain the leadership in the overall supply structure, they occupy 73%, and in the structure of completed transactions they accounted for 82%. Only, it is likely that this is not for long – the tendency of decreasing interest in such sites is obvious.

Another rather curious trend in the first three months of this year is the increase in the share of suburban settlements in which several types of real estate are presented (townhouses, cottages, USP, UBP, as well as apartment buildings) in various proportions and combinations.

Note that the share of UBP in the first quarter of this year was 73%, the share of multi-format villages – 13%, cottages and USP – 11%, and townhouses accounted for only 3% of the total number of objects offered on the market.

It should also be noted that over the past 3 years, the share of townhouses has significantly decreased, as experts say, most of such projects during the crisis were redesigned for the construction of multi-format settlements.

Business class will be the leader in the structure of new settlements in 2011

If we consider all new projects that entered the market in the 1st quarter of 2011, then 60% of them belong to the business class. These projects, as a rule, are distinguished by a good location, interesting architectural and planning solutions, as well as a developed infrastructure within the cottage community or in the immediate vicinity of it. Note that if the number of households in a village does not exceed fifty, then such a village usually has a separate exit to the big water and meets all the requirements for business class housing. Some experts refer such objects to the so-called premium class..

Vinogradov Sergey Arsenievich. At the estate. 1090

The share of other market segments (elite and economical) among the new suburban real estate projects in the Moscow region in the 1st quarter of 2011 accounted for 20% each.

Among the new projects that entered the market in this period were the settlements – “Snow Valley”, “Romashkino” (Simferopolskoye highway), “Pavlovy Lakes” and “Ecopark Ushakovo” (Novorizhskoye highway) and “Medvedevo” (Kievskoye highway).

However, if we consider the objects already existing on the market, then in their structure the economy class offers still lead, their share accounted for 76%, while business class – 17%, and elite suburban housing – only 7%.

Villages that are located within 55 km from the capital are usually used for permanent residence all year round.

In the first three months of 2011, the settlements were distributed very evenly in terms of distance from the Moscow Ring Road. This circumstance was influenced by the fact that the process of building more and more distant from the capital territories began more actively. Thus, the share of objects located at a distance of more than 55 km from the Moscow Ring Road accounted for 54% in the period under review, and 46% – to villages within 55 km from the Moscow Ring Road. Conventionally, it is possible to classify areas far from the Moscow Ring Road as settlements used for seasonal living. The same villages that are located within 55 km from the capital, as a rule, are used for permanent residence all year round.

We also note the fact that in recent months a clear tendency has been noticeable – the supply in the direction of Novorizhskoe highway is rapidly decreasing, and on Dmitrovka and Rublevka it continues to grow.

At the moment, about 140 cottage settlements of all formats and classes are offered on Novorizhskoe highway.

Despite the fact that the Rublevo-Uspenskoe highway over the last 3 years has almost fully realized its potential for development, this direction at the end of the 1st quarter of 2011 occupies 23% of the total supply structure in all projects of elite cottage settlements.

In terms of demand in Q1 2011, economy class properties are in the lead

According to the results of the first three months of 2011, the highest demand (82% of all concluded transactions) was used by land plots without a contract. Finished cottages accounted for only 4% of total demand, and other types of housing – 14%.

Demand for economy-class cottage settlements increased significantly, which amounted to 78%, while business class was in demand only among 14% of potential buyers, and only 8% of demand fell on elite properties.

Camille Pissarro. Red roofs. 1877

If we consider the structure of demand for the purchase budget, then there are no major changes. The most popular are objects worth up to 500 thousand dollars. However, recently there has been some smoothing in the structure of demand for the cost of suburban real estate. Now the determining factor when buying a country house is not so much the budget as the quality of the project.

Another notable trend in the 1st quarter of 2011 is the activation of high-budget buyers. The share of demand for elite properties worth more than $ 3 million was 8%.

The demand for suburban real estate near Moscow depends less and less on direction. This is influenced by the appearance on the market of good and high-quality offers in a variety of areas. The leader in terms of demand in the first quarter is still Novorizhskoe highway (20% of the total number of requests). However, almost the same level of demand was observed in the direction of Kievskoye highway (18%), Kaluzhskoye highway (15%). At the same time, Rublevka is somewhat losing its popularity among potential buyers..

How much is a country house in the Moscow region currently worth?

Note that since the middle of last year, there has been a steady upward trend in prices for high-quality suburban real estate near Moscow. Prices rise by about 3-7% per quarter, depending on the type of property. Modern sellers respond quickly enough to changes in demand and make price adjustments.

According to the results of the 1st quarter of this year, the highest price increase was observed in business-class settlements, which amounted to 6%. In the elite segment of suburban real estate, prices are quite stable – the price increase was noted at the level of 0.5%. Economy-class villages have somewhat lost in price – minus 0.5%. The decrease in prices in this segment is due to the fact that at the moment there is the greatest competition – new projects enter the market, as a rule, at the average offer price, which is slightly below the market. This trend is likely to continue until the end of this year..

In absolute terms, the average cost per sq. m of home ownership (cottage with land) in the elite segment of the market is about 5 thousand dollars. In business-class settlements the average price is at the level of 3450 dollars per sq. M of a house, in economy-class projects, 1450 dollars per sq. At the same time, there are objects in the suburban housing market in the Moscow region, where a square meter costs up to 12 thousand dollars. This is usually due to the large area of ​​the adjoining plot.

According to some experts, prices in the business class segment will continue to grow by about 5-7% per quarter. Sufficient stability will be observed in other segments.

Summing up

The situation that developed in the first quarter of 2011 on the suburban real estate market near Moscow can be characterized as positive, with a noticeable trend of development and revival of this market sector. Obviously, the anti-crisis option of suburban construction – land plots without a contract – noticeably lose their popularity in the context of the general recovery of the Russian economy, and the growth of effective demand.

Also positive is the upward trend in the quality of development of new projects of cottage settlements in the context of intensified competition for potential buyers. Consequently, the quality of the offer is growing, which undoubtedly only plays into the hands of buyers..

Ready-made objects that have good consumer properties: infrastructure, location, etc. are becoming more and more popular..

It is expected that in the II quarter of 2011 the demand for finished suburban housing will grow by about 20%. This will happen due to the deferred demand that formed during the crisis and post-crisis periods..

According to the results of the first quarter of 2011, we can safely say that the suburban real estate market has overcome the crisis, and in this sector in the future there will be an increase in both demand and quality supply..