Prime Residential Real Estate Market Moscow
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+5% increase in the weighted The supply average price since the shrank down beginning of the year to 2 500 units PRIME RESIDENTIAL REAL knightfrank.com/research ESTATE MARKET MOSCOW Q1 2020 PRIME RESIDENTIAL REAL ESTATE MARKET. MOSCOW Supply Not a single new project entered the high- number of flats and apartments decreased end residential real estate market in Q1 by 4% to about 2,500 units, with the 2020. The only property that contributed to cumulative area amounting to 310,000 the growth of new supply was a premium sq m, over the past three months. The class Turgenev project in Sretenka. The volume of supply that included some major Andrey Solovyev sales were launched at this property at the properties launched last year, increased by Director of City Sale Department, Knight Frank end of last year. 4% yoy, while their cumulative area grew by 6% over the same period. Due to the combination of the limited new supply and the strong demand, the total “The economic situation at hand, which came as a result of the crude oil price changes along with the ruble crash and Key indicators. Dynamics the COVID-19 pandemic, is truly unique. It is pretty difficult to make any long term Elite Premium Supply Dynamics* Dynamics* market projections at this point. However, segment segment we still expect the prices for high-end new- Total supply, pcs. 720 -8% 1,790 -2% built properties to increase gradually by the Average price, thousand end of the year, due to the growing cost of 1,252 8% 632 4% rub./sq m construction. The developers, similarly to the former crisis periods, are holding back Average area, sq m 150 -1% 112 1% on the new launches, but the customers still Average price, mln rub. 188 8% 71 5% can get lucky and find a liquid offer at a pre- crises price, both on the new-builds market Elite Premium Demand Dynamics** Dynamics** and on the re-sales market.” segment segment Total supply, pcs. 60 -41% 180 10% Average price, thousand 1,053 17% 546 -4% rub./sq m Average area, sq m 160 4% 114 7% Average price, mln rub. 168 22% 62 3% * Q1 2020/Q4 2019 ** Q1 2020/Q1 2019 Source: Knight Frank Research, 2020 Key findings Supply structure by class Supply structure by property type The supply shrank down to 2,500 units due to the lack of new launches and the demand remaining strong. Elite Premium Flats Apartments The average weighted square meter price grew for the supply priced under 849,000 rubles per sq m (+5% since the beginning of the year). Khamovniki district moved down from its leading position in the structure of transactions for the first time in a long while to yield to Ramenki district, with 29% 71% 44% 56% its share of 19%. Source: Knight Frank Research, 2020 Source: Knight Frank Research, 2020 2 PRIME RESIDENTIAL REAL ESTATE MARKET. MOSCOW Share and average price of supply by district Сокол Аэропорт Щукино Савеловский Сокольники Преображенское Marina Roshcha Tverskoy Sretenka Izmajlovo 13% Begovoy Meshhanskij 4% 96 mln ₽ 124 mln Khoroshevskiy ₽ Krasnosel'skij Presnensky Chistye prudy 1% 135 mln 15% ₽ 71 mln ₽ Basmannyj Patriarshie prudy Arbat Krylatskoe 1% ₽ 485 mln 8% ₽ 118 mln Lefortovo Perovo Ostozhenka–Prechistenka Tagansky 5% 99 mln 4% ₽ 307 mln ₽ Dorogomilovo Dorogomilovo Zamoskvorech'e 17% ₽ 46 mln 4% ₽ 99 mln Pluschikha Yakimanka Ryazanskiy 6% 106 mln 7% ₽ 122 mln ₽ Juzhnoportovyj Danilovskiy Ramenki Khamovniki 7% ₽ 115 mln 8% ₽ 100 mln Kuz'minki Gagarinskiy Share Average Ochakovo-Matveevskoe in the total supply price > 200 mln rub. Akademicheskiy 100–200 mln rub. 9% ₽ 76 mln < 100 mln rub. Nagatinskij Zaton Lomonosovski Kotlovka Nagatino-Sadovniki Ljublino Prospekt Vernadskogo Nagorniy Pechatniki Obruchevskiy Source:Troparevo-Nikulino Knight Frank Research, 2020 Turgenev 3 PRIME RESIDENTIAL REAL ESTATE MARKET. MOSCOW The Top-3 leading districts by the concentration of supply hasn’t changed over Primary market supply structure the past three months, with Dorogomilovo district leading the way with its share of 17%. Almost all the supply consists Up to 50 50–100 100–150 150–200 Over 200 of Poklonnaya, 9 at the location, while mln rub. mln rub. mln rub. mln rub. mln rub. Kutuzovskiy, 12, which has recently received the commissioning permit, only Up to 100 sq m 28.1% 8.2% 1.4% 0.4% 0.1% has a few units left. Presnenskiy district 100–150 sq m 2.1% 23.1% 8.5% 1.3% 1.2% came in second (15%). This location has been sticking to the top lines of the rating 150–200 sq m 0.0% 5.6% 5.6% 3.4% 2.3% since the beginning of last year after Lucky 200–250 sq m 0.0% 0.1% 0.5% Residential Quarter was launched, with 1.3% 2.5% a bit over half of the units of the district Over 250 sq m 0.0% 0.0% 0.1% 0.7% 3.3% accounting for the latter. Tverskoy district (13%) rounds out the Top-3. This location boasts with the largest number of new- Source: Knight Frank Research, 2020 builds compared to the others. On the experience of the crisis and the post- Supply structure by the construction stage crisis 2008 and 2015, this year we expect the developers to launch to the market less new properties than, say, a year earlier. We already know several examples of the properties that rescheduled their launch of sales from Q1 2020 for a later time. Thus, for instance, the elite and premium residential markets grew by only nine new properties over 2015, their cumulative number of units 13% 43% 5% 5% 34% Beginning Construction Facade Fit-out Already amounting to 390. Compare this with 18 of works of the ground part works works delivered properties with the total of 2,480 units in 2019. Source: Knight Frank Research, 2020 Dynamics of average price and supply volume Supply volume Average price thousand sq m thousand rub./sq m 325 900 300 850 275 800 250 750 225 700 200 650 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2018 2019 2020 Source: Knight Frank Research, 2020 4 PRIME RESIDENTIAL REAL ESTATE MARKET. MOSCOW Demand As for the high-end new-builds market, the number of transactions in Q1 2020 It is worth mentioning that the epidemic and the departments of the Federal Service basically matched that of last year. Thus, situation, namely the obligatory isolation of of State Registration, Cadastral Records and about 240 flats and apartments were sold the population, has affected the demand for Cartography switched to a limited schedule in January throughout March, which is this segment of the market. Thus, some of the and stopped receiving citizens in person in a 10% less than over the first three months requests have shifted to the country market wide array of Russia’s regions, which prevents in 2019. However, it is worth mentioning (both rent and sale), as such housing is safer in signing the residential sale deals. Due to that the transactions have dropped by 40% terms of the virus issue, as the contact with other the mentioned issues, there will be a large in the elite class, which is more likely due people is scarce. Apart from that, it has become backlog of demand mounting up during the to the strong demand for the segment last impossible to show the properties, which is next one or two months, which may burst out year. Meanwhile, the situation is reverse specifically important when buying expensive in Q3 2020 provided the quarantine is over. in the premium class, with the demand having grown by 10%. The Top-3 best- residential units. The Multi-Functional Centers selling properties is composed of namely the properties of the premium level, i.e. Lucky, Vishneviy Sad, and Poklonnaya, 9. Primary market transactions structure The elite class, despite the decrease in the figures, featured a growth in the qualitative Up to 50 50–100 100–150 150–200 Over 200 indicators. Thus, the average transaction mln rub. mln rub. mln rub. mln rub. mln rub. price increased by 22% yoy to 168 million Up to 100 sq m 30.4% 8.0% 0.8% 0.0% 0.0% rubles, while the average area of the deal 100–150 sq m 3.0% 25.7% 4.2% 1.7% 0.0% grew by 4% to 160 sq m. The average 150–200 sq m 0.0% 7.2% 7.2% 0.4% 3.0% transaction price for premium class 200–250 sq m 0.0% 0.4% 0.8% properties amounted to 62 million rubles 1.3% 1.7% (3% annual growth), the average area of Over 250 sq m 0.0% 0.0% 0.4% 0.4% 3.4% the deal amounting to 114 sq m (7% annual Source: Knight Frank Research, 2020 growth). Vishneviy Sad Lucky Vorobyev Dom Snegiri Eco 5 PRIME RESIDENTIAL REAL ESTATE MARKET. MOSCOW Khamovniki district shifted down from its leading position in the structure of Share of transactions by district transactions for the first time in a long while to yield to Ramenki district, with its share of 19%. The latter had been attracting a great Ramenki Arbat Tverskoy Other deal of demand during 2019. Vishneviy Sad Residential Complex is another property 6,8% 6,7% that is on the market in this district. Phase II Zamoskvo- Khamovniki Yakimanka 19,4% 11,4% of the property was launched in November rechye Presnensky Dorogomilovo last year. Also, the market grew by Reka 5,5% 4,6% 4,2% project in the summer 2019.