New premium property market. Moscow. 1H 2014

By the end of 1H 2014, the offer in the newly built prime property market was 288 thousand square meters, including 189 thousand square meters of apartments and 99 thousand square meters of suites (around 1,330 apartments and 682 suites). The total offer dropped 3.7% month-on-month.

In 1H 2014, the offer grew 2.3% semester-on-semester. Since the start of the year two new projects the newly built prime property market (a suite development, Residentsia Mone, and a building on 1st Dobryninsky Lane). There was also a new offer in Sadoviye kvartaly residence.

The average volume of new offer in 1H 2014 is estimated at 55 thousand square meters, representing a 30% growth semester-on-semester.

As of the end of June 2014, primary sales were run in 18 residential and 11 suite projects.

The share of suites in the total offer did not change much month-on-month and semester-on-semester and stands at 34%. With its 66% share in the total offer, the Central Administrative District still holds the lead. Outside the Central Administrative District, new premium developments are offered in such districts as Ramenki (Western Administrative District), Shchukino (Northwestern Western Administrative District) and Donskoy (Southern Western Administrative District) where Barkli Residence is offered.

Khamovniki (26% of offer) and Presnensky (28%) are still leading the market in terms of offer, with Khamovniki’s offer only represented by premium residences, including the largest residences in this segment: Sadoviye Kvartaly, BarrinHouse, etc. All new premium projects offered in the Presnensky District are suite developments.

In June 2014, the average offer price of residential developments in the Central Administrative District was $14,850 per square meter (+4.2% month-on-month) and that of suite developments in the Central Administrative District came at $13,000 per square meter (-2.5% month-on-month). The average offer price of apartments in new premium projects outside the Central Administrative District was $12,500 per square meter (+4.2% month-on-month).

Over the first six months of 2014, the average offer price for new premium apartments grew 3-4% in US dollars and 5-6% in rubles. A 4% decrease in the average price was recorded in the suite segment of the Central Administrative District as a new project (Residentsiya Mone) entered the market at starting prices (from $6,000 per square meter).

Summer special offers were launched in June. For many projects, they will last until the end of July. E. g. buyers of apartments in Barkli Residence are offered the Time of Attractive Purchase: you can buy 10 apartments on special terms. Arbat ($21,350 per square meter), Tagansky ($15,600 per square meter) and Ramenki ($14,850 per square meter) are leading the market in terms of prices.

Early in the year the residential property market responded to ruble devaluation by a clear recovery in all segments. On the back of general uncertainty, home property grew more attractive as the only investment option. Even the typically calm periods (from December to February) recorded high market activity. This March, however, somewhat calmed things down due to the active implementation of pent-up demand in the first two months of the year, and the aggravating situation in the Ukraine that made some buyers take on a waiting stance. This market slack, however, did not last long. Already in April, demand stabilized and only by late June there was a traditional decline in buyers’ activity driven by the vacation season.

As to developers’ activity, in the first half of 2014, it was quite high: the total new offer in the new de luxe and premium property segment was around 110 thousand square meters, which was twice as high as in the first half of the last year.

At present, the situation in the de luxe and premium is estimated to be stable. New projects keep joining the offer. As expected, prices for projects at the active construction stage keep growing which is typical for later completion stages. The next price increase for projects underway is expected closer to September.

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