News

20/03/14

Prime first-line-from-the-center residences will cost three times cheaper

The premium residential segment is gradually growing out of the boundaries of the Central Administrative District as the number of development sites is rapidly shrinking and the authorities are imposing yet new and new restrictions. Moreover, with an abundance of prime projects, the market lacks offers that meet the requirements of today’s customers. As a consequence, experts of Barkli Corporation conclude that in the years to come both developers and buyers of prime residential property will move to the “first-line-from-the-center”, i. e. districts adjacent to the Central Administrative District and sited within the Third Transport Ring. This location offers premium residential developments with savings up to 200%, while it is as good as property in the Central Administrative District both in terms of its quality and profile.

As of today, only 60 projects in the primary prime property market are at the active selling stage, including only five located outside the Central Administrative District. At first glance, the market may seem saturated, which it is not at all. 38 residential projects have already been commissioned, with few apartments still on sale. “The exposure time for prime property is several years,” says Yekaterina Fonareva, Barkli Corporation’s Commercial Director, “and the project often becomes obsolete before all apartments in it are sold out. Meanwhile, construction technologies are constantly improving, and customers’ requirements are constantly growing. Although a rather impressive number of projects are offered in the market, this segment faces shortages as a matter of fact.”

At the same time, with every year it becomes increasingly difficult to build new projects in Moscow downtown that would meet all up-to-date requirements. New development sites are almost unavailable. As a result, developers are forced to search for new sites. As a rule, they moved west and northwest of Moscow. Many high quality projects have been built in such districts as Shchukino and Ramenki. But they all share a considerable drawback: they are located too far from the city’s center.

For some reason, however, developers have been avoiding districts immediately adjacent to the Central Administrative District. If we look at Moscow’s map, we will see that the boundaries of the Central Administrative District have quite irregular forms and it is quite hard to grasp the logic for including certain neighborhoods within these boundaries. For instance, the Dorogomilovo District starts just in 600 meters from the Garden Ring, but it is included in the Western Administrative District. Meanwhile, it is crossed by Kutuzovsky Prospect, one of the highest profile living spaces in Moscow.

Eight districts outside the Central Administrative District are located within the Third Transport Ring: Dorogomilovo, Donskoy, Danilovsky, Yuzhnoportovy, Nizhegorodsky, Lefortovsky, Maryina Roshcha and Begovoy that might be called the “first-line-from-the-center” districts. Experts believe that these very districts have quite strong outlooks from the perspective of residential development and will be renovated and developed with housing and suite projects in the near future. Their proximity to Moscow downtown and good transport accessibility allows saying that these will be upscale business and premium projects.

High potential development areas in the first-line-from-the-center districts

District Territory
Dorogomilovo Pencil Factory of Sacco and Vanzetti, Industrial Zone No. 39 Berezhkovskaya naberezhnaya
Donskoy Krasny Proletariy Works, 3rd Taxi Park
Danilovsky Part of Industrial Zone No. 27 ZIL, Industrial Zone No. 1 Paveletskaya
Yuzhnoportovy 1st State Bearing Plant, AZLK, JSC Corporation Kometa
Nizhegorodsky Industrial Zone No. 25 Volgogradsky prospekt
Lefortovo Serp i Molot Plant, 101st Central Motor Vehicle Repair Plant
Maryina Roshcha No sites within the Third Transport Ring
Begovoy Moscow Hippodrome, Industrial Zone No. 9 Ulitsa Pravdy, BAT-Yava Tobacco Factory
Source: data by the Research Team of Barkli Corporation

However, Barkli Corporation’s analysts point out that not all these first-line-from-the-center districts can be currently viewed as comfortable for living and not all of them are fit for prime development. For example, a part of the Nizhegorodsky District located within the Third Transport Ring is fully covered by an industrial zone. It lacks both housing and necessary infrastructure. Years of active territory improvements will be required before these areas become fit for residential development. Tne only exceptions are the Dorogomilovo and Donskoy Districts. They contain a minimum number of industrial zones. They represent habitable areas that feature everything required for a comfortable life experience. That is, they can already be developed with prime property. Besides, the Dorogomilovo and Donskoy are prestigious districts for historical reasons, as they are crossed by two high-profile transport arteries: Kutuzovsky and Leninsky Prospects.

There are no residential projects currently underway in Dorogomilovo. The last residential projects implemented here were two premium developments, Kutuzovsky and Kutuzovsky 23. Barkli Corporation’s experts estimate that the average cost per square meter in the local secondary market is $9.7 thousand. Prices in Arbat, an adjacent district, are 10% higher: the average cost in the secondary market is $10.5 thousand in the secondary market, and varies between $11 thousand and $32.3 thousand in the primary residential market: Afanasyevsky and Novy Arbat 27-29, and three suite developments: Turandot Residence, Smolensky de luxe and Novy Arbat 32. Thus, apartments in Dorogomilovo can be bought much cheaper. Moreover, this location is almost as prestigious as Arbat.

In Donskoy District, the average level of prices in the secondary market is $7.2 thousand and unlike Dorogomilovo, its primary market features a premium development, Barkli Residence. This is the first project in Moscow by Robert Stern, an internationally recognized architect (Robert A. M. Stern Architects). The residence consists of two towers with functional apartments and spacious penthouses, and sophisticated amenities including a playground, a fitness facility, a beauty parlor, an office bank, below-grade parking and many other things. As of early March, the average cost per square meter here was $12.2 thousand including finishes. For comparison, i projects offered in the primary market of Yakimanka, a neighboring district, the average cost ranges from $17 thousand to $35 thousand. Thus, the cost per square meter in Yakimanka is higher by approximately 1.5 to 3 times than in the adjacent Donskoy District.

“First-line-from-the-center districts are almost as good as their neighbors located in the Central Administrative District,” says Yekaterina Fonareva. “They offer excellent transport accessibility; they are located in the immediate vicinities of the historical center and near key business areas. At the same time, they have a lower residential development density than downtown and offer prime property for much lower prices. A strong example is Barkli Residence designed by one of the world’s best architect firms led by Robert Stern. Despite all the attributes of the premium segment, apartments in the projects are way cheaper than in residences of a similar level in the Central Administrative District. Today, this project is pioneering the expansion into the first-line-from-the-center segment. High sale rates also witness the high demand for residential property in this area. This means that other prime developers will also come here soon.”

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