EVANS experts have summarized the results of the III quarter 2010 on the residential real estate. Boom in the rental and sale sector anticipated by the analysts has not happened. Moreover, as noted by EVANS experts, compared to the II quarter demand for the purchase of real estate has dropped sharply, while rental demand remains at the same level.

Rent

Demand

At the beginning of the III quarter rental market demand had a downward trend, explained by abnormal weather conditions and seasonal changes. In July, August and even early September, the tenants’ activity was at a low level: compared to the II quarter demand has decreased by 20%. A small increase of interest from tenants became evident only in the last days of September, which allowed to almost reach the previous quarter level by the number of transactions. It is also worth noting that a year ago, in the III quarter of 2009, the activity of the tenants was 15% higher.

The tendency to increased demand for housing quality by tenants continues this year. Customers paid and pay special attention to the quality finishing, renovation, presence of home appliances and sanitary ware. Availability of air conditioners in the apartment, often in each room, became an important requirement during the summer heat.

As before, the most popular were the apartments at an attractive price located in the central districts of Moscow - Arbat, Ostozhenka, Zamoskvorechie, Krasnaya Presnya, Kropotkinskaya, Patriarchy Ponds and Chisty Ponds. The new factor in the rental market is an upward demand for areas close to the business center Moscow City, which is almost completed. Employees of the companies planning to move in this business center, as a rule, consider the proposals in Stalin's period buildings near Kutuzovsky Prospect, which are yet cheaper than the apartments in the center.

Supply

In the III quarter 2010 the number of the new apartments amounted to about 15% of the total share of proposals. It should be noted that fewer objects with a new modern renovation appear in the market. This is due to the fact that during the crisis a very small number of apartments was purchased for further investment, namely for rental business.

Currently, about 39% of the total number of apartments is offered in the low price range (under $3000), almost 46% in the medium price range ($3000 - $6000) and 15% of the high-budget apartments with rental price above $6000 per month. The bulk of the proposals fall on the central administrative district of the capital, and also on the western and south-western direction.

At the moment there are some interesting proposals in the market located in the most popular places. As an example, currently EVANS is offering 2-bedroom apartments where 12 out of 22 windows face Patriarchy Ponds. There are 4 bedrooms, 4 bathrooms, dressing rooms, sauna, Jacuzzi.

Prices

The situation with rental rates in the III quarter can be characterized as ambiguous. Rental prices for high quality, popular apartments has been slowly, but steadily increasing by about 1-1,5% a month. In their turn, the landlords of inexpensive and less attractive apartments were ready to make significant discounts from the original price.

On average, compared to the II quarter 2010 the rental rate in high-price segment has increased by 2% and today it is $ 3400.

"Despite the fact that the crisis is over, the rental market shows no growth, - says Anna Levitov, EVANS Managing Partner. - Foreign companies are not virtually recruiting expats in Moscow at the moment; some of them are entering Russian market for the first time. Unless the situation changes and the number of foreigners working in Moscow increases, it is not worth expecting a significant growth of rental rates in the medium and high price segment. Since our compatriots generally rent cheap apartments and have little effect on the rental prices of more expensive ones”.

Sales

Demand

In the III quarter demand in the market sales of apartments dropped sharply: compared to the II quarter activity of the buyers has decreased by about 30%. It is worth noting that in July and August there were 10% more applications to purchase real estate than in September. 5% more transactions were committed last year at this period than this year.

For buyers important factors when choosing apartments were proximity to the center, location in new luxury or beautiful Stalin period buildings, good layout of the apartments, high ceilings. They also paid attention to availability of parks and prestigious schools nearby. In addition to the center, buyers showed interest to objects on Frunzenskaya and University metro stations because of their proximity to the waterfront and good environment.

Supply

In contrast to the demand, the number of new proposals in the III quarter has increased significantly: compared to the II quarter the growth was about 20%. The peak of new intakes occurred in the second part of September. This is due to the factor that many owners have returned from holidays. The majority of the emerging apartments are located in the central part of the capital.

Out of the total number of proposals the share of 3-room apartments is 39%, 2 and 4-room apartments - 20%, 5-room apartments - 13%, 6 and more rooms - 8%.

The most expensive proposal in the EVANS database for today is 7-room apartment of 400 square meters on Beregovaya street with 5 bedrooms, large living room, 4 bathrooms, dressing rooms, fully furnished, located in a luxury development; and it costs $10 000 000.

Prices

In the III quarter prices on real estate, depending on the state of the object, its location and other factors, adjusted both upwards and downwards. The prices for square meter of separate apartments in new buildings with high-quality finishing and renovation have grown by 5%.

"It’s a good time to buy property for yourself – there is an opportunity to quietly view the apartments and negotiate, there are also many options on the market - says Anna Levitov. - Investment purchases also make sense, but one should carefully choose the object for investment. At the moment we cannot see any conditions for rapid growth in property prices."

Evans Property Services is one of the leading full-service real estate companies with offices in Moscow, Russia and New York City, United States. The company was founded in 1991 by experienced brokers Anna Levitov, graduate of Wharton Business School, and Karina Kheifetz-Sagieva, University of Pennsylvania graduate.

Evans is the member of the American Chamber of Commerce in Russia and Worldwide Employee Relocation Council (Worldwide ERC).