Investors and construction companies are already eying up the vast chunk of land to the southwest of the city, which is set to be amalgamated into Moscow in the next five years. The city authorities plan to build 60 million square meters of housing and 45 million square meters of administrative and office buildings in the area between the Kievskoye and Varshavskoye Shosses in the next 20 years.

The vastly underdeveloped region is to be transformed into both an administrative and social hub, with transport links to the center and all the benefits of life in the metropolis. But with real estate prices in the region already on the rise, the time to start buying could be now.

Rising prices

Real estate agencies have already recorded a 7 percent jump in house prices in the region on news of the development project. And prices are not expected to stop there, with experts predicting a rise to at least the level of property on the other side of the Moscow Ring Road, traditionally 20-30 percent higher than in the Moscow region. “We could see interest from new buyers especially for newly-built housing, and if these territories will be linked to the city, costs will rise by about 20 percent and become equal to those in commuter districts,” said Anna Levitova, managing partner at the Evans real estate company.

Dmitry Tsvetkov, director of the countryside real estate department at Penny Lane Realty, suggested the likelihood of a “Sochi scenario,” referring to Olympic construction in the Black Sea resort, which caused prices to shoot up, before returning to normal levels. Currently, real estate prices in the area rise as you go west and the closer you get to the center, with properties around the Varshavskoye Shosse cheaper than those in the vicinity of the Kievskoye and Kaluzhskoye Shosses. A 100-meter plot of land in Solnechny Bereg, 35 kilometers from the MKAD on Kievskoye Shosse costs 1.8 million rubles ($65,000), while the same-sized plot on Varshavskoye Shosse starts at 1.2 million rubles (43,000).

Major construction work is currently underway in Gazoprovod village, just south of the MKAD, where the office buildings of energy giant Gazprom are located, and Moskovsky township, 10 minutes drive from Kievskoye Shosse. Analysts say that investing in developments in the region may be risky since it is difficult to predict the outcome of the plans to expand Moscow. There are already vast numbers of unfinished construction projects in the Moscow region, many of which ran out of funding during the 2008-09 financial crisis. Furthermore, developments will be subject to heightened bureaucratic procedures, according to Nadezhda Bashbinar, managing director at Storm Properties. “Real estate projects will now take more time to be approved, which will definitely raise the cost,” Bashbinar said. “Local administrative bodies are already being very careful about giving licenses.”

Opinions divided

For residents of the new district, becoming part of the city is a mixed blessing. Commuters, who have to travel into downtown Moscow on marshrutkas every day, see huge advantages in the new development. “More accessible transport links and improved infrastructure are major priorities for commuters who travel to the city on a regular basis,” said Olga Zbruyeva, head of the client department at the Astera real estate agency. “If for example a new metro line appears there or an extra road, less time will be spent commuting to work and living standards will rise.”

Others may welcome the benefits of becoming residents of Moscow, which include bigger pensions and social benefits, and utility subsidies. But those who value the area for its remoteness are less impressed. “My dacha is located in Bilovo near Kaluzhskoye Shosse and I really wouldn’t like have administrative buildings or a railroad station built near it,” said Anastasia, a doctor who lives in the small town of Troitsk in the Moscow region.

Levitova, of Evans, said dacha owners may have difficulties obtaining compensation for property that is demolished to clear way for new construction developments. “It will now be very difficult to obtain legal ownership for those don’t have it, and to prove the market price of houses for those who have,” Levitova said.

Source: The Moscow News