q1 2011 elite residential real estate market · 2014-07-13 · real estate market moscow knight...

OVERVIEW

Q1 2011ELITE RESIDENTIAL REAL ESTATE MARKET Moscow

Knight Frank

EXECUTIVE SUMMARY• HighactivitywasobservedonMoscow’seliteresidentialrealestatemarketinQ12011.Averagepricesontheprimary

marketgrew10.7%,surpassing«pre-crisis»indicators.InMarch2011arecordnumberofdealswasrecordedfor2010-2011.

• Forthefirsttime,theaveragepriceofsupplyontheprimarymarketsurpassedtheaveragepricepersquaremeteronthesecondarymarket.Suchagrowthinpriceswasfacilitatedbyincreasedattentionfrombuyerstothemarketforelitenewbuilds:ThequantityofdealswithnewbuildsinQ12011surpassedthequantityofdealsonthesecondarymarkettwofold.

• Apricecorrectioncontinuesonthesecondarymarket.Asignificantincreaseinthevolumeofsupplywasobserved.Thesecondarymarketpracticallystoppedbeingfilledbyapartmentslessthan$2mln:InQ12011theshareofsuchapartmentsinnewsupplyequalledonly6%,andthisconsideringashareintotalsupplyof11%.Basicsupplyonthesecondarymarketnowstartsat$2mlnandhigher.

• AsmallgrowthwasobservedinherentalmarketduringMarch,afterafallthathasbeencontinuingsinceOctober2010.

Q1 2011 ELITE RESIDENTIAL REAL ESTATE MARKET Moscow

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OneofthemaineventsofQ1ontheeliteresidentialrealestatemarketwasanannouncementfrоmS.Sobyanin,Moscow’smayor,aboutabanonconstructionofresidencesinsidetheThirdTransportRing.Thisbandoesnotrefertoprojectsthathavealreadybegunconstruction,aswellasprojectswithprepareddocumentation.Thisbanhasalreadybeenreflectedontheelite

apartmentmarket:Bytheendofthequarter,buyeractivitygrewtorecordindicatorsfor2010and2011andinMarch68dealsinelitenewbuildswereclosed.Manydevelopersarehaveoperationallyreactedtotheincreaseindemand,havingincreasedpricesalreadybytheendofthemonth.ThatinAprilafurtherincreaseinpricesfromtheremainingdevelopersawaitsusisnotexcluded.

MOSCOW. ELITE RESIDENTIAL REAL ESTATE MARKET

Key indicators. Urban real estate

Market segment

Average prices, $/sq m; rental rates, $/month

Change in average prices / rental rates, %

March 2011 Q1 2011 For March 2011 For Q1 2011 For 12 months

Primarymarket

23,084 22,403 2.5 10,7 18,9

Secondarymarket

22,225 22,248 0.2 -2,61 -9,7

Rental* 6,439 6,400 0.9 -5,7 -2,5

*Ratespresentedforapartmentswithatotalareaof80-150sqmwithhigh-qualityfurnishingsSource:KnightFrankResearch,2011

Almost 80% of deals in Q1 on the primary market were closed with budgets up to $5 mln, with the most popular apartments remaining those with prices from $1 to 3 mln, as usual.

Distribution of deals on the primary market based on budget limitations

less than $1 mln

from $1 to 3 mln

from $3 to 5 mln

Source: Knight Frank Research, 2011

4% 11%

58%

19%

4%4%

from $5 to 7 mln

from $7 to 9 mln

more than $9 mln

The average price of supply on the primary market sharply increased, having surpassed the average price of supply on the secondary market for the first time. This was facilitated by both a traditional removal of cheap supply and an increase in prices from many developers $/sq m

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Primary market Secondary market


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Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

2010 2011

Elena Yourgeneva DirectorofResidential

«Right now on the market a distinct increased demand from buyers of elite residences is being observed as sales in new projects are going actively and much of the best supply is already leaving the market. To those who are planning to acquire apartments in the near future, we recommend not prolonging this questions, as selection with each day decreases and prices increase.

The growth in average prices during Q1 has already surpassed the growth for all of 2010. We anticipate prices to grow on average 15% during H1 and to 25% for the year. With regards to the most new projects that have recently entered the market, prices are growing significantly at higher rates and supply is contracting perennially due to the large attention of buyers on such projects.»

www.knightfrank.ru

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Notinallcomplexesontheprimarymarketwasthegrowthinaveragepricesfacilitatedbyachangeinpricingpoliciesbydevelopers.Inaseriesofprojects,pricingremainedatthelevelsof2010,butthankstoaremovalofcheapsupplyaveragepricesgrew.

According to totals from Q1, average prices on the elite new-build market surpassed «pre-crisis» indicators.

Atthemarket’speakin2008theaveragepriceontheprimarymarketwasequalto$22,762persqm,andbytheendofMarch2011thisindicatorreached$23,084perspm.Growthforthequarteraccordingtototalsequalled10.7%,whichishigherthantheindicatorforallof2010(in2010averagepricesontheprimarymarketgrew7.6%).Thetotalvalueofsoldapartmentsequalledapproximately$410mln,whichisalmosthalfofthetotalvalueofapartmentssoldduring2010.

Avisiblyexpressedgrowthperiodbeganontheeliteresidentialmarket.Developersarebeginningtoliftprices,becausetheyarenotreadytosellthecurrentvolumesatpricesof2009-2010.Workforallprojectsonthemarketwasstartedpriortothecrisisandsalespriceswereincludedintheeconomicsoftheseprojectsthatwerehigherthanthoseseenin2009-2010.

Currently,seeingtheincreaseddemand,developersarecorrectingpricesbyincreasingtheminpreparationforamarketentryatthoseindicatorlevelsincludedintheprojectseconomics.

PRIMARY MARKET

Prices of supply. Change

Average prices, $/sq m Change in average prices, %


23,084 22,403 2,5 10,7 18,9

Source:KnightFrankResearch,2011

The largest growth in average prices for Q1 2011 was recorded in «Impersky Dom», a residential complex, at 27.5%, with «Legenda Tsvetnogo» not far behind at 25.4%


Italyanskiy kvartal, Fadeeva st., 4

Chetyre Solnca,Tatarskaya Bolshaya

st., 13

Sadovye kvartaly,Efremova st., 12

Afanasyevsky, Afanasyevsky Bolshoy

lane, 24

Legenda Tsvetnogo, Tverskoy blv., 2

Imperskiy dom,

Yakimanskiy lane, 6

0 10 20 30

27,5%

25,4%

16,2%

10,4%

10%

9,5%

%

Total area of sold apartments Average price on the primary market


In contrast to the splash of sales at the end of the summer and beginning of autumn in 2009, caused by a lowering in prices practically to their minimum, as well as by sever al sales events conducted by developers, a growth in sales during Q1 2011 occurred on a background of a growth in prices

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17 000III II III IV

2009

III II III IV

2010

I

2011

$/sq m ‘000 sq m,

Olga Bogoroditskaya Director,KeyClientManagement

«Today we observe a situation that is characteristic for “pre-crisis” markets. In many new projects that are already in the beginning phases, 25-50% of apartments are sold. During the crisis, buyers preferred to buy residences in complexes with a high level of completion, but now we see a restoration of trust towards developers and a larger quality of deals in new projects»


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InQ12011,thefiveprojectsintheprimarymarketwiththehighestsaleswere:Italyanskiykvartal,LegendaTsvetnogo,Trilogiya,Sadovyekvartaly,ChetyreSolnca.GrowthinaveragepriceofTSPforthequarterequalled15,1%.

InQ12011,saleswereopenedinfourprojects,amongwhichthreeprojectsthatareenteringthemarketforthefirsttime:BarkliVirginHouse(Zachatevsky1stlane,8),BarkliPark(SovetskoyArmiist.,6),aresidentialcomplex

onTrubetskayaMalayast.,28,bld.2,aswellasaresidentialcomplexlocatedatBurdenkost.,11,whichchangeditsdeveloperandopenedsalesafterredevelopmentoftheproject.

Q1 2011

SalesinTSPasshareinthetotalquantityofsalesontheprimarymarket

62%

AveragepricesofsupplyinTSP,$/sqm

15,308

AveragepricesofpurchasesinTSP,$/sqm

12,507

AveragevalueofpurchasedapartmentsinTSP,$

1,870,000


Map of the new projects


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Dubrovka

Okhotny Ryad

Ul. 1905 Goda

Krasnopresnenskaya

TaganskayaKievskaya

StudencheskayaKutuzovskaya

Sportivnaya

Leninsky Prospekt

Vorobievi Gory

Smolenskaya

Park Kulturi

Frunzenskaya

Shabolovskaya

Kropotkinskaya

Polyanka

Oktyabrskaya

Paveletskaya

Tretyakovskaya

Begovaya

Chistie Prudy

Arbatskaya

Mayakovskaya

Belorusskaya

Tsvetnoy Bulvar

Mendeleevskaya

Novoslobodskaya

Kurskaya

Krasnye Vorota

Komsomolskaya

Prospekt Mira

Sukharevskaya

Rizhskaya

Kitay Gorod

Borovitskaya

Pl. Revolutsii

Lubyanka

Chekhovskaya

Baumanskaya

KrasnoselskayaElektrozavodskaya

Sokolniki

Savelovskaya

Marksistskaya

Dobryninskaya

Serpukhovskaya

Proletarskaya

Volgogradsky Prospekt

Rimskaya

Dynamo

Avtozavodskaya

Kozhukhovskaya

Tulskaya

Vistavochnaya

Mezhdunarodnaya

Turgenevskaya

SretenskiyBulvar

Trubnaya

Barrikadnaya

Third Transport Ring

Garden Ring

Leninsk

y Av.

Kutuzovsky Av.

Leningradsky Av.

Tverskaya st.

Novy Arbat st.

Vernadsk

ogo Av.

Mytnaya st.

Enthuziastov hw.

Taganskaya st.Marksistskaya st.

Novoslobodskaya st.

Mir

a A

v.

Rusakovskaya st

.

Barkli Park

Trubetskaya Malaya st., 28, bld. 2

Burdenko st. 11

Barkli Virgin House

Market pulse, TSP (Top Selling Projects)* +15,1%

Distribution of apartments sold in TSP by area

less than 120 m2

from 120 to 180 m2


*Five complexes with the largest quantities of sales

for the quarter comprise the TSP (Top-Selling

Projects). The index is calculated quarterly.

5%

29%

28%

38%

from 180 to 220 m2

more than 300 m2

15000

20000

25000


The total area of apartments in complexes that have entered the market equalled about 35,000 sq m in Q1 2011, which is about 25% of the total supply in December 2010. The change in the volume of supply on the primary market of elite residential real estate in Moscow'000 sq m

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120Sep Oct Nov Dec Jan Feb Mar

2010 2011

www.knightfrank.ru

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AccordingtototalsfromQ12011,supplyinthelowerpricesegmentcontinuedtocontractandbytheendofMarchtheshareofsuchapartmentsequalled11%ofthetotalsupply,comparedto15%attheendof2010.Onecanconfidentlysaythatatthegivenmomentqualitysupplyonthesecondarymarketbeginsat$2mln.

Thevolumeofsupplyonthesecondarymarketofeliteresidentialrealestategrew35.8%duringQ12011.AccordingtotheconditionattheendofMarch2011,thequantityofapartmentsforsaleonthesecondarymarketwasabout820.Suchagrowthinsupplyisexplainedf irstandforemostbyadecreaseinthenumber

ofdeals:InQ12011thequantityofapartmentssoldonthesecondarymarketwas68%lesscomparedtotheanalogicalperiodof2010.

Asontheprimarymarket,theshareofdealswithlargeapartmentswithanareaofmorethan220sqmwassufficientlygreat:InQ1201131%ofdealswithsimilarapartmentswereclosedonthesecondarymarket.44%ofsoldapartmentswereinbudget$2-4mln.

SECONDARY MARKET

Prices of supply. Changes

Average prices, $/sq m Change in average prices, %


22,225 22,248 0,2 -2,61 -9,7


The Arbat area is occupying the leading position according to the number of deals on the secondary market as usual, which is facilitated by both a wide selection of secondary supply and a small assortment on the primary market. During Q1 2011, only one complex held sales on the primary market there


Arbat

Zamoskvorechye

Ostojenka

Tverskoy

Yakimanka

Chistye Prudy

Plushikha

Sretenka

Presnya

Khamovniki

Prechistenka

0 5 10 15 20 25

4%

4%

1%

1%

7%

7%

11%

7%

20%

13%

23%

%

Apartments with a value of $2-4 mln prevailed in the structure of new supply for Q1 2011. The entrance of supply with a value of less than $2 mln practically stopped%

New supply on the secondary market

Total supply on the secondary market


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40

30

20

10

0more than $8 mln

$6-8 mln_

$4-6 mln_

$2-4 mln_

$1-2mln_

less than $1 mln

Distribution of sold apartments by price

less than $1 mln

from $1 to 3 mln

from $3 to 5 mln

3%

20%

44%

17%

14%

from $5 to 7 mln

from $7 to 9 mln

more than $9 mln

2%


Distribution of sold apartments by area

less than 100 m2

from 100 to 140 m2

from 140 to 180 m2

11%

13%

34%11%

31%

from 180 to 220 m2

more than 220 m2



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Averagerentalratesdecreased5.7%inQ12011andinMarch2011reached$6,439permonth,whichis2.7%lessthantheanalogousindicatorfromMarch2010.Moreover,inMarch2011a9%increaseinrentalrateswasobserved.RatesreturnedtothelevelofMay2010.Thequantityofapartmentsofferedforrentismoderatelydecliningasusual ,whichleadstoasmall ,yetstabledemand.

MOSCOW. ELITE APARTMENT RENTAL MARKET

Rates*. Changes

Average rental rates, $/month Change in average rental rates, %


6,439 6,400 0,9 -5,7 -2,5

*Ratesareofferedforapartmentswithatotalareaof80-150sqmwithhigh-qualityfurnishingsSource:KnightFrankResearch,2011

In Q1 2011, the geographic distribution of supply practically did not endure any changes compared to the analogous period of 2010.

The leading area is Tversky, which did not change and whose market share equals 21% as before. Supply in Sretenky and Khamovniky significantly grew. Supply decreased in Patriarshie Prudy and Arbat

Q1 2011

Q1 2010


Tverskoy

Arbat

Chistie Prudy

Presnenskiy

Zamoskvorechye

Sretenka

Khamovniki

Patriarshie Prudy

Ostojenka

Tagansky

%0 5 10 15 20 25


By the end of January, average rental rates for elite apartments ended their fall and in March 2011 a small growth was recorded$/month

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2009

III II III IV III II III IV

2010

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2011

III IV

2008

The quantity of apartments up for rent decreased 6.2% according to totals from Q1 2011Apartments


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0I II III IV I II III IV I

2009 2010 2011

The distribution of supply on the rental market for elite apartments at the end of Q1 2011 by area

from 80 to 100 m2

from 101 to 150 m2


12%

25%

46%

17%

from 151 to 200 m2

from 201 to 500 m2

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OVERVIEW

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EuropeBelgiumCzechRepublicFranceGermanyHungaryIrelandItalyMonacoPolandPortugalRomaniaRussiaSpainSwitzerlandTheNetherlandsUKUkraine

AfricaBotswanaKenyaMalawiNigeriaTanzaniaUgandaZimbabweZambiaSouthAfrica

AsiaCambodiaChinaHongKongIndiaIndonesiaJapanMalaysiaSingaporeSouthKoreaThailandVietnam

AustralasiaAustraliaNewZealand

Middle EastBahrain

Office Real EstateStanislav [email protected]

Warehouse Real Estate, RegionsViacheslav Kholopov [email protected]

Retail Real EstateJulia [email protected]

Professional Consulting ServicesKonstantin [email protected]

Elite Residential Real EstateElena [email protected]

Financial Markets and InvestingEvgeniy [email protected]

Valuation ServicesOlga Kochetova [email protected]

Saint PetersburgNikolai Pashkov

[email protected]

KyivMikhail [email protected]

Marketing, PR, and Market ResearchMaria [email protected]

EstablishedinLondonmorethanacenturyago,KnightFrankistherenownedleaderoftheinternationalrealestatemarket.Withofficeslocatedglobally,KnightFrankisabletoprovideafullrangeofservicesintherealestatemarketallovertheworld.

TogetherwithNewmarkCompany,KnightFrank’sstrategicpartner,thecompanyencompasses209officesin47countriesacrosssixcontinents.

KnightFrankhasbeenasymbolofprofessionalismfortensofthousandsofclientsallovertheworldfor113years.After13years,KnightFrankhasbecometheleadingcompanyinthecommercial,warehouse,retailandresidentialrealestatesegmentsoftheRussianrealestatemarket.Morethan500largeRussianandinternationalcompaniesinRussiahavealreadymadeuseofthecompany’sservices.

KnightFrank’semployeesareprofessionalconsultantsinvariousfieldsconnectedwithrealestate,suchasrentandsaleofproperties,selectionofproperties,attractionofinvestments,consulting,valuation,marketresearch,marketingandprojectpromotion,propertyandassetmanagement.

Weofferthefullrangeofconsultingservicesnotonlyfordevelopersandowners,butalsoforrealestateusers;bothlegalentitiesandindividuals.Now,thecompany’sstaffconsistsofmorethan330employees.

ThisandotherKnightFrankoverviewscanbefoundonthecompanywebsitewww.knightfrank.ru.

© Knight Frank 2011

Thisoverviewispublishedforgeneralinformationonly.Althoughhighstandardshavebeenusedinthepreparationoftheinformation,analysis,viewsandprojectionspresentedinthisreport,nolegalresponsibilitycanbeacceptedbyKnightFrankResearchorKnightFrankforanylossordamageresultantfromthecontentsofthisdocument.Asageneralreport,thismaterialdoesnotnecessarilyrepresenttheviewofKnightFrankinrelationtoparticularpropertiesorprojects.

ReproductionofthisreportinwholeorinpartisallowedwithproperreferencetoKnightFrank.

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q1 2011 elite residential real estate market · 2014-07-13 · real estate market moscow knight...

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