Real estate market monitoring, July 2013

The monitoring highlights the development results of residential and commercial property markets in Moscow and in the Moscow Region in July 2013.

At the end of July 2013 the supply volume gained 1.6% in the market of elite flats and amounted to about 1, 820 flats and apartments with the summary area of about 290 thous. sq.m. The share of apartments in the market accounted for 44%. A landmark event of the past month was the commissioning of flats in the premium class residential complex Barkli Residence under construction at 1, Ordzhonikidze street (Donskoy district. SAD). No other new properties entered the market in that month. By the results of July 2013 the average supply prices in the primary market of elite flats and apartments declined by 1.6% and 1.3% respectively due to the change of the supply structure. Elite flats with account of the premium class segment were offered at the price of $17, 770 per sq.m on average, elite apartments – at the price of $15, 150 per sq.m. The average price in the secondary residential market remained almost intact - $24, 000  per sq.m.

The office property market experienced moderate activity of tenants and buyers of high-quality office premises in June 2013. The aggregate volume of lease transactions amounted to approx 10 thous. sq.m (see the Table below). Several large transactions were announced in the sale and purchase segment during January 2013. The owner of the Metropolis shopping and entertainment mall (the total area – 311 thous.sq.m), Morgan Stanley Real Estate company, decided to sell 20% of the mall to the American fund Hines CalPERS Russia Long Term Hold Fund. The exact sum of transaction was not reavealed, however, according to the market experts’ announcements, it might reach about $225 mln. Another investment event of July was Enka Holding’s decision to acquire 44% of Moskva-Krasnie Holmi OJSC (the Riverside Towers business center, the Swissotel Krasnie Holmi hotel). the complexes were located at 52, Kosmodamianskaya emb., bld.6, 13. 

In July the construction of the second stage of the Metropolis shopping and entertainment mall in the Leningradskoe highway was announced. As far as the demand for retail areas is concerned, the opening of the first in Russia fast food restaurants of the Quiznos chain took place in St.-Petersburg in July. Moreover, it was reported about the planned introduction of Forever21 chain of clothing shops to the Russian market. The minimal indices of the level of vacant areas (1-3%) were preserved in the street retail segment in July, there was no substantial dynamics of rental rates.

The main event of the Russian hotel market in July was the official opening of the Four Seasons Hotel Lion Palace in St.-Petersburg. As far as the Moscow Region was concerned, the planned opening of the hotel under the Hyatt Regency brand in the Istrinskoe water reservoir was announced in July. July was marked by the preservation of international hotel operators’ high activity in regional cities. Thus, it was reported about signing the agreement for the management of the DoubleTree by Hilton hotel for 200 rooms in the Resort prospect in Sochi. The hotels under the management of Carlson Rezidor Hotel Group were planned for opening in Pulkovo and Ufa.

The active introduction of new settlements was under way in the residential countryside market of the Moscow Region in July 2013: for the past period the sales opened in four projects. The main products in the new supply delivered to the market since the beginning of the year have still been land plots without compulsory building contracts in economy class cottage settlements. The supply prices did not go through any tangible changes in the countryside residential market: the average price level remained stable.