Residential real estate market overview Q1 2013

• 10.4 mln. sq.m of residential space were introduced to the Russian market in Q1 2013, according to Rosstat. These indicators were 6% higher than the indices of the past year.

The Moscow Region took the leading position by delivery volumes. Krasnodar Kray ranked second and the Republic of Tatarstan ranked third. By the results of Q1 2013, 636 thous. sq.m were delivered in Moscow and more than 300 thous. sq.m - on the territory of New Moscow.  

• The aggregate supply volume in the primary market remained at the level of the previous period by the results of Q1 2013 and constituted 1.4 mln. sq.m (with account of apartments and elite new buildings) or 262 properties.
• During Q1 2013 the supply in the primary market of Moscow continued to increase by new properties. Even January, which is traditionally a period of low activity in the residential market due to long New Year holidays, introduced several new properties to the market. However, as opposed to the previous periods, almost half of new supply in the period under consideration was apartment complexes. On the whole, during Q1 2013 the Moscow primary market saw 18 new properties (residential houses, buildings in the structure of residential complexes) both in the residential segment and in the segment of apartments. The new supply volume amounted to about 130 thous. sq.m, almost half of which—apartment complexes of comfort, business and elite class. Almost the same volume of new supply (approx 20%) was distributed among traditional residential complexes of business and comfort class, 10% - new economy class offers. Another 2% - new supply volume in the elite residential segment.
• According to Rosreestr Administration, 14, 523 transactions were concluded in Q1 2013, these indices were lower than the indices of the past year more than by 25%. The decline of transactions volume was recorded in March, which was unconventional for this month, however, it may be referred to the change of statistical calculation.

In general, buyers’ activity in the market remained high, which was evidenced by the growth of volume of mortgage transactions—6, 594 mortgage transactions, which was 9% higher than the past year index, and of transactions under equity participation agreements—4, 325 transactions, which was 5 times higher than the indicators of 2012.

The average-weighted rate by mortgage credits in Moscow reached 12.7% at the end of January 2013, the average-weighted credit term by mortgage credits—14.5 years.

• By the results of Q1 2013 the average-weighted supply price in the primary market settled at the level of 196, 570 rub. per sq.m. (exclusive of elite segment, apartments and townhouses), the dollar equivalent—$6, 360 per sq.m. The growth of this index at the level of 5.1% in the ruble equivalent was noted as opposed to the previous period. The analogous increase of the average price in dollars constituted +3.8%. The average supply price in the secondary residential market gained 2.4% versus Q4 2012 up to the level of 207, 340 rub. per sq.m ($6, 710 per sq.m). The analogous increase of the average price in dollars constituted 1.1%.
• By the results of Q1 2013 the supply volume in the primary market of apartments raised by 24.8% and amounted to 305.5 thous. sq.m (about 2, 750 apartments). In Q1 2013 the market of apartments saw 4 new elite apart-complexes, 2 business class complexes, and a comfort class residential complex  “Vodny” (5, Golovinskoe highway). The share of apartments in the supply structure in the primary market of Moscow (within the former borders) raised by the results of the quarter and reached 21.3%.The average supply price in the primary market of apartments lost 3.7% due to the change of the supply structure (the delivery to the market of comfort class). At the end of March 2013 the average supply price constituted 299 thous. rub. per sq.m.
• At the end of Q1 2013 the supply volume accounted for 940 flats in 43 complexes (170 thous. sq.m) in the elite primary market. The aggregate area in supply in the elite primary market increased by 4.5% by the results of Q1. Buyers’ activity declined a little bit, which caused the decline of primary requests for the purchase of elite real estate (-10% versus the analogous index of the past year). And the summary volume of sold residential space in the primary market by the results of Q1 2013 was estimated at the level of 19.7 thous. sq.m (about 90 flats), which corresponded to the index of the analogous period of the past year. The average price in the primary elite market reached $19, 960 at the end of March 2013 (618.8 thous. rub.) per sq.m. Flats in the secondary market were offered at the price of $24, 300 (753.3 thous.rub.) per sq.m. No decline of prices was observed in price-lists, and the prices even raised for flats in some complexes at the active stage of construction (not more than by 5%).
• The growth of tenants’ activity in the elite rental market of Moscow was observed already in February. The largest supply volumes in the city elite rental segment were concentrated within CAD in the area of Khamovniki (Ostozhenka-Prechistenka), Tverskoy and Arbat. 3-room flats (2 bedrooms) had the leading position in the supply structure by number of rooms. The average area of offered for rent elite flat was at the level of 140 sq.m. The range of $4, 500-6, 000 per flat per month occupied the maximum share in the supply structure, however, in general, the supply was distributed rather evenly.

Moreover, the growth of a number of requests was observed in the market. But there was no growth of demand volume in quantitative terms. Khamovniki, Arbat and Tverskoy districts were traditionally the most popular ones. The most frequently requested  flats for rent in the elite segment were 2– and 3-room flats.  The budget of up to $3, 000 per month occupied the main share in the supply structure by rooms. The level of the average requested budget was $5, 500 per flat. At the end of Q1 2013 the average level of rental rate reached the index of $8, 900 per flat per month. The growth for the quarter constituted 5%.

• The beginning of 2013 started traditionally by the beginning of the “season” - the period of active supply and search of cottages for rent. The main supply volume was concentrated in  Rublevo-Uspenskoe direction. The average area of offered for rent cottage settled at the level of 550 sq.m. The houses at the price of $5, 000-$10, 000 per month occupied the maximum share in the budget structure.

The maximum supply volume was also concentrated in the Rublevo-Uspenskoe highway. The average requested budget constituted $13, 760 per house per month. And the main demand was concentrated in the budget of $5, 000-$10, 000 per month.

The average level of rental rate reached the index of $16, 900 per house per month. The growth for the quarter reached 2.5%.

• During the first months of 2013 the primary market of New Moscow experienced stable price situation in the condition of supply volumes increase. The prices in new buildings of New Moscow did not undergo considerable changes in Q1 2013. At the end of March 2013 the price level of new buildings equaled to 86, 000 rub. per sq.m., which was higher than the index of December 2012 by 1%. The prices gained 1% in American currency as well, and the average supply price constituted $2, 792 per sq.m.
• Positive price dynamics was noted in the primary market of the Moscow Region upon high indices of supply volume and rather high level of buyers’ activity. The average level of prices in new buildings of the Moscow Region gained 2.8% in ruble equivalent and constituted 72, 300 rub. per sq.m, therefore, exceeding the pre-crisis index by 6%.

And the market increased by offers in more than 100 addresses in Q1 2013, the supply volume reached 1, 230 houses at the end of March 2013 (+1% versus December 2012).

The development of countryside residential real estate market took place at high paces in Q1 2013: for the past period the market saw 15 new settlements, which was higher than the average quarterly index of the last years.

The format of townhouses was still the most popular segment for the countryside development: 10 of 15 delivered to the market projects offered for sale semidetached houses. Despite developers’ high activity, no elite class project was announced in Q1 2013. Economy class projects still prevailed in the new supply (8 of 15 settlements). The mid-distance belt is under the most active development - 15-30 km from MKAD (33% of new supply).

The price situation in the countryside residential real estate market remained stable in 2013” the growth of prices was insignificant. And a fluctuating dynamics was still relevant in some projects: the average price level was gradually growing in the most liquid settlements, while in the less successful projects, including the completed ones, the price decline was observed. At the end of Q1 2013 the average supply prices in the countryside residential real estate market turned out to be the following: the price of 1 sq.m of a cottage (including the price of land) amounted to $4, 840 in elite settlements, to $3, 330 in business segment settlements, to $1, 600 in economy segment settlements.  

The main trends of the countryside residential real estate market in Q1 2013:

• Growth of developers’ activity;
• Development of townhouses format;
• Appearance of new complex multiformat development projects.

In general, the preservation of the main trends is expected in 2013: the increase of economy class projects and the lack of high-quality supply. The most in-demand  segments will still be land plots without building contracts, as well as high-quality ready cottages in residential settlements at high readiness stage. The growth of prices at the level of 5-10% is possible in the most liquid projects at high readiness stage.