Demand for moscow property exceeds supply

Photo credit: John Leach

The agent's latest reports show that interest from wealthy buyers in luxury flats in the Russian capital has reached levels last seen before the recession.

Spacious apartments spanning 220 to 250 sqm are the most popular, making up 31 per cent of the market's total supply but wanted by 46 per cent of buyers.

Olga Bogoroditskaya, Head of Residential Key Client Relations, Knight Frank, says: “In 2008-2009, we observed a drop in demand for large space flats as a result of the influence of financial crisis, however since 2010, the interest of buyers towards such properties began to restore. Today, flats with 3-4 bedrooms equipped with en-suites and walk-in closets for each bedroom are in high demand."

Indeed, with a lack of supply now on the market, buyers are increasingly turning to other methods to secure enough living space, knocking together neighbouring flats until a new wave of luxury residential projects enter the market and rebalance supply and demand.

In the  country, though, homes are in short supply too.

Sales of prime residential property in the new-build country sector worth under $2m jumped 13 per cent in 2013, but no luxury developments were launched int he last year.

"All 43 gated communities that opened their sales in 2013 were “economy” and “business” class," explains Knight Frank, with over 40 per cent of new projects in the country launched east and south of Moscow.

Prices are now rising moderately, with average country new-build values climbing to $4,050 per/sqm. Prices in the re-sales market were $4,789 per/sqm.

"About 800 houses in 30 high-quality new-build schemes qualifying as luxury are now available on the country market of Moscow. Given the lack of new high-end projects, sustainable sales rate and a favorable macroeconomic situation, the new-build country market should experience a shortage in supply," continues Knight Frank.

Andrey Solovyev, Head of Country Houses Department, Knight Frank, adds: “Client demands to the quality of country property (location, engineering systems, infrastructure and clear title) are growing alongside with the possible shortage of luxury accommodation. No more than half of all the supply currently available on the market meets the customers’ expectations. Buying a country house is not regarded as an investment or business, but is prompted by family care and improving the quality of life.”