2011 COUNTRY REAL ESTATE MARKET Moscow
EXECUTIVE SUMMARY• Thecountryrealestatemarketwasdevelopinggraduallyduring2011.Theaveragepriceonthe
primarymarket(newbuilds)hasreached$4,300persqm,havingrisenby8%overthisperiod.Onthesecondarymarket(re-sales),theaveragesupplypricehasrecorded$6,100persqm,withamoresignificantannualincreasingof18%.
• Thelevelofdemandcouldbecharacterizedasquitehigh.Atthesametime,thebuyers’interesthassetforarisingtrend:thenumberofrequestshasincreasedtwotimesover2011.Themaindemandhasbeenfocusedonthemostliquidpropertieswithinthepricerangeupto$3,000,000inalreadycompletedcottagesettlementsorthosenearingcompletion.
• Thevolumeofnew-builtpremiumclasssupplyhasbeenmoderatein2011.Thoughasignificantnumberofpremiumclassandbusinessclassprojectswasannounced.Apositivetrendofthelastyearisthatdevelopersstartedtodeveloptheprojectsthathadbeenpreviouslystoppedonthebeginningphase.
OVERVIEW
2011COUNTRY REAL ESTATE MARKETMoscow
2
Key events
• Oneofthemostsignificanteventsinthecountryrealestatemarketin2011wasthedecisionoftheMoscowGovernmenttoextendthebordersofMoscow.Weexpectthepricesofthelandincludedintothenewterritorytoriseinlong-termperspective.
• Also,possibleinclusionofSkolkovointotheMoscowterritorywasannounced.
DuetothistheinterestforSkolkovskoyehighwayhasrisenamongpotentialclients,andthedemandforthislocationisnowincreasing.
• ThepossiblerelocationofgovernmentdepartmentstotheterritoriesnearRublyovo-Uspenskoyehighwaymightincreasethedemandforcountrypropertiesandalsomakeapositiveinfluenceontherentalmarketalongthislocation.
COUNTRY REAL ESTATE MARKET
Andrey SolovyevHeadofCountryHousesDepartment,KnightFrank
"2011 actually showed a moderate growth
of suburban real estate market. We see a
progress in this direction in early 2012:
the number of applications for the purchase
of suburban real estate continues to
increase. Natural constraining factors
for transactions today are the future
elections of the president of the Russian
Federation, as well as the expectation
of a possible European financial and
political crisis.
Knight Frank team is optimistic
about the future. We see the interest of
the developers to be back to projects in
all areas of the Moscow region. This year
Knight Frank will bring to the market
a country village located on Rublevo-
Uspenskoye highway 5 km from Moscow,
and will continue to work on the project
Pavlovo on Novorizhskoe highway, 14 km
from Moscow. Our company also begins
to offer apartments in multistoreyed low
rise houses outside the city.
We are sincerely grateful to our customers
for yet another interesting and effective
year and look forward to continue and
strengthen our mutually beneficial relations
in 2012!"
Annual change
Primary Market Secondary Market
Averagepriceperproperty,includingland($persqm)
+8% +18%
Newsupply -11.6%
Buyersactivity 2times
Source:KnightFrankResearch,2012
Main indicators
Averagepriceperproperty,includingland($persqm)
Primarymarket 4,300
Secondarymarket 6,100
Newsupply,numberofsettlements 38
Source:KnightFrankResearch,2012
www.knightfrank.ru
3
Supply
Generally,thevolumeofnew-builtsupplystaysatthelevelof2009-2010,buttheproportionofclassesischanging.Thus,only5%ofthetotalsalesopeningsin2011belongtoprimeclasssegment.Butthequantityofnew-builtprimesettlementsontheprimarymarkethasrisenifcomparedwithpreviousyears.Whilein2009thelargestpartofnew-builtsettlementsbelongedtoeconomyclass,nowbusinessandprimeclassescomprise32%ofthetotalvolumeofsupply.Weexpecttheshareofbusinessandespeciallypremiumclasssettlementstogrowfurtheron.
Abigpartofnew-builtcottagesettlementsissituatedalongNovorizhskoyehighway:salesherewereopenedin15projects.Onlyoneofthesesettlementsbelongstotheprimeclasssegment,therestofthemrefertothebusinessclassandeconomyclass.ThesecondplacefornewsettlementopeningsbelongstoKaluzhskoyehighway:7newcottagesettlements.Kievskoyehighwayisonthethirdplace,followedbyDmitrovskoye,Rublyovo-Uspenskoye,MinskoyeandIlinskoyehighways.28%ofnew-builtsupplybelongstootherlocations.
NewprimeandbusinessclassprojectsonRublyovo-Uspenskoye,Novorizhskoye,DmitrovskoyeandKievskoyehighwayswereannouncedin2011.Inthenearestfuture,oneofthemostactivecountrypropertymarketplayersexceptspecializeddevelopmentcompanies(OPIN,Gletcher,VillagioEstateetc.)willbefinancialstructuressuchas
Sberbank,VTBandothers,thatgotlandsbydebtcommitment.FiveprojectsaretobeexecutedonRublyovo-Uspenskoyehighwayinthenearfuture,whichwillcontributetothevolumeofprimesegmentintotalstock.Newprimeclassprojectswillmostlyberepresentedbycottagesettlementswithmost
liquidobjectsoftoday,i.e.cottagesof200-500sqmonland-plotsof10-20hundredths.
23%
The most of new-built settlements sales openings in 2011 are situated in the Novorizhskoye highway – 38%. Rublyovo-Uspenskoye highway comprises 3% of new-built supply
18%
37%
Novorizhskoye
Kaluzhskoye
Kievskoye
Dmitrovskoye
Source: Knight Frank Research, 2012
28%
Rublyovo-Uspenskoye
Minskoye
Ilinskoye
Others
5%5%
3%3%
3%3%
Class С – economy
Class В – business
Class А – prime
Source: Knight Frank Research, 2012
38 cottage settlements opened sales in 2011, 12 of them belong to prime and business class segments Number of settlements with newly opened sales
by period
50
45
40
35
30
25
20
15
10
5
0
2008 2009 2010 2011
2011COUNTRY REAL ESTATE MARKETMoscow
4
Demand
Generally,buyers’interestindextrendremainspositivewithseasonaladjustments.TheindexkeptrisingthroughSeptember-OctoberbuttraditionallydecreasedbytheendoftheQ4becauseofdecreaseofbuyers’activityduringseasonalholidays.TheindexreacheditsmaximuminOctober2011,havingexceededthepreviousmaximumofJune2011by6%.
Asforthepremiumclassmarketofthehighestquality(classA:cottagesettlementsofthehighestpricessegmentlocatedonRublyovo-Uspenskoye,Novorizhskoye,andMinskoyehighways,notfartherthan25kmfromMKAD(MoscowRingRoad),withhighly-developedinfrastructure),theleadingroleforthevolumeoftransactionsbelongstoNovorizhskoyehighway:72%ofalltransactions.Suchleveloftransactionsisduetothehighestconcentrationofprimeclasspropertiesalongthisdirection–about83%oftotalvolumeoftheprimarymarketsupplyinthehighestpricesegment.ItisfollowedbyRublyovo-Uspenskoyehighway–19%ofalltransactions.Minskoyehighwaycomprises9%ofprimeclasssegmenttransactionsinthehighestpricesegment.
23%
Demand leader in the prime-class cottage settlements in 2011 was Novorizhskoye highway, where the volume of sold proper-ties was 72% of all highest price range transaction volume
72%
19%
Novorizhskoye
Rublyovo-Uspenskoye
Minskoye
Source: Knight Frank Research, 2012
9%
*Index of clients’ requests for country properties. The level of January 2009 is taken as 100
Source: Knight Frank Research, 2012
Buyers’ interest index reached its maximum level of 660 points in October 2011. This value exceeds the previous maximum of June 2011points
700
600
500
400
300
200
100
0 jan. 11 feb. 11 mar .11 apr. 11 may 11 june 11 july 11 aug. 11 sept. 11 oct .11 nov. 11 dec. 11
www.knightfrank.ru
5
Commercial terms
Theriseofaveragepriceontheprimarymarketismainlyduetodepletionofcheapersupply,whiletherearelotsofquiteexpensiveprojectsremainingonmarket.Atthesametime,pricegrowthistakingplaceincottagesettlementswheredevelopmentreachesitsfinalstages.Theaveragepriceontheprimarymarketreached$4,300persqm,thatis8%higherthanitwasintheendof2010.Thesecondarymarketshowsevenbiggerriseofaverageprices:18%peryearwiththevalueof$6,100persqm.
Forecast
Thefurthercountryrealestatemarketdevelopmentdependsonthefollowingfactors:
• Politicalrisks
• Economicinstabilityrisk,thatmaycause:
∙ Financingunavailabilityfordevelopers;
∙ Limitedfinancingforbuyers.
Thesefactorsmaycause,ontheonehand,decreasingofsupplyandasaresultcorrectionofaverageprices,andontheotherhand–decreasingofdevelopers’activityanddecreasingofnew-builtsupply.
Nevertheless,themostprobabledevelopmentscenarioofcountryhousemarketaccordingtoourforecastisslowrise.Increasingofbuyers’interestforprimeclassobjects,riseoftransactionvolumeinhigh-qualitysettlementsandriseofpotentialprojectsannouncedtofurtherexecutiontestifyinfavorofthisforecast.
Source:KnightFrankResearch,2012
Primary market
Source: Knight Frank Research, 2012
2011 saw an increase of prices both on the primary and secondary markets of Moscow Region’s country real estate . On the primary market, the rise was 8%, while on the secondary market the rise was more significant – 18% $ per sq m
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011
Secondary market
Possible development scenario
Probability
Explosivegrowth 10%
Slowrise 45%
Stagnation 25%
Sharpcorrection 20%
Source:KnightFrankResearch,2012
OVERVIEW
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Office Real [email protected]
Warehouse Real Estate, landViacheslavKholopovDirectorviacheslav.kholopov@ru.knightfrank.com
Retail Real EstateSergeyGipshRegionalRetailDirector,[email protected]
Residential Real [email protected]
International Investments [email protected]
Professional Consulting ServicesKonstantinRomanovPartner,[email protected]
Financial Markets and InvestingEvgeniySemyonovPartner,[email protected]
Valuation [email protected]
Marketing, PR, Market Research, HRMariaKotovaPartner,[email protected]
Business [email protected]
Saint PetersburgNikolaiPashkovGeneralDirectornikolai.pashkov@ru.knightfrank.com
KyivYaroslavaChapkoBusinessDevelopmentDirectoryaroslava.chapko@ua.knightfrank.com
EstablishedinLondonmorethanacenturyago,KnightFrankistherenownedleaderoftheinternationalrealestate
market.TogetherwithNewmarkCompany,KnightFrank’sstrategicpartner,thecompanyencompasses244officesin
43countriesacrosssixcontinents.
KnightFrankhasbeenasymbolofprofessionalismfortensofthousandsofclientsallovertheworldfor116years.
After16years,KnightFrankhasbecometheleadingcompanyinthecommercial,warehouse,retailandresidential
realestatesegmentsoftheRussianrealestatemarket.Morethan500largeRussianandinternationalcompaniesin
Russiahavealreadymadeuseofthecompany’sservices.
ThisandotherKnightFrankoverviewscanbefoundonthecompanywebsitewww.knightfrank.ru
© Knight Frank 2012
Thisoverviewispublishedforgeneralinformationonly.Althoughhighstandardshavebeenusedinthepreparationoftheinformation,analysis,
viewandprojectionspresentedinthisreport,nolegalresponsibilitycanbeacceptedbyKnightFrankResearchorKnightFrankforanylossor
damageresultantfromthecontentsofthisdocument.Asageneralreport,thismaterialdoesnotnecessarilyrepresenttheviewofKnightFrankin
relationtoparticularpropertiesorprojects.
ReproductionofthisreportinwholeorinpartisallowedwithproperreferencetoKnightFrank.
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