Moscow Elite Housing Market

2010 results Forecast for 2011

IntermarkSavills Research

www.intermarksavills.ru ELITE HOUSING MARKET 2010 RESULTS. FORECAST FOR 2011

CONTENTS

MOSCOW ELITE HOUSING MARKET

GENERAL OVERVIEW OF PROJECTS ON SALE 4

DEMAND 8

SUPPLY 10

PRICES 12

FORECAST FOR 2011 14

BEST OFFERS OF 2011 15

ABOUT INTERMARKSAVILLS 16

119034 Moscow, Smolensky blvd, 2/40 . Phone: (+7 495) 775 2240 . www.intermarksavills.ru 2 The current overview is purely for information purposes. In spite of the fact that all efforts were taken to provide correct information for it, IntermarkSavills disclaims responsibility 2 for any direct or indirect damage that occurs as result of using this information. This overview is protected by copyright; its partial or whole reproduction in any form without written approval by IntermarkSavills is strictly prohibited. During 2010 approximately 430 apartments in elite new-build residential complexes were sold in Moscow. In 2008 almost the same number of new-build transactions were closed. It is obvious that the market is starting to revive and has returned to pre-crisis demand levels.

The growing demand together with the limited supply caused a dynamic increase of prices in the elite segment. According to our estimates, at the end of 2010 the average price of a square meter in new-build elite residential complexes was 16,900 USD per sq.m. Over the year dollar prices have grown by 35% and now lag behind the pre-crisis maximum level by 26%. Average prices for elite apartments have grown for 14 months in a row. According to our estimates, in 2011 the trend will remain...

Mikhail GAVRILCHUK, Head of New-Build Sales Department, IntermarkSavills MOSCOW ELITE HOUSING MARKET 2010 RESULTS. FORECAST FOR 2011

During the third and forth quarters of 2010 developers started to recommence their new elite projects suspended during the crisis. New projects are now under preparation to be brought to the market in the near future. At present, three are at the construction stage…

Alfi ya ABDULOVA, Head Analyst of Strategic Consulting and Valuation Department, IntermarkSavills

GENERAL OVERVIEW OF PROJECTS ON SALE

A premium-class property needs to have a number of features, these are: a favorable location in the center of Moscow and an Dynamics of new elite housing complexes original architectural design (prepared by a well-known architect released into the market in 2007-2010 bureau. High-quality construction and decoration materials, the complex’s infrastructure, volume, services available to 16 200 000 occupants, and high security level (professional guards working кnumberоличес твof оnew но выхprojects, прое unitsктов, ед. round the clock, technological security systems with video 14 сtotalумм apartmentарная пло flщ oorадь area, квар sq.mтир, кв.м surveillance and gate check, also play an important role). 12 150 000 In 2010, four new projects entered the new-build elite housing 10 market (in one of them sales were resumed after approval of a new concept). The total floor area of apartments 8 100 000 in all new projects is approximately 20 thousand sq.m (115 apartments). 6

Out of 33 residential complexes represented on the market 4 50 000 during the year 6 were almost completely sold out. Sales in two of the complexes under construction were suspended 2 (including one ‘frozen’ since summer 2009). 0 0 Thus as of the end of December 2010 new-build sales had been 2007 г. 2008 г. 2009 г. 2010 г. conducted in 26 elite complexes (excluding the apartments in Source: IntermarkSavills MIBC “Moscow-City”), altogether comprising 2.1 thousand apartments with a total floor area of approximately 340 thousand In terms of elite housing territorial structure construction, a sq.m. significant volume of apartment sales (30%) was observed

Territorial structure of property sales in elite housing complexes represented on the market in 2010, sq.m

ТвTverskoy ерской Khamovniki (without Ostozhenka)

ОсOstozhenkaтоженка

ЗZamoskvorechyeамоскворечье Moscow-City (apartments)

ПресненскийPresnensky ЯYakimankaкиманка ТTaganskyаганский

КKrasnoselskyрасносельский

БBasmannyасманный

0 10 000 20 000 30 000 40 000 50 000 60 000 70 000 80 000

Source: IntermarkSavills

119034 Moscow, Smolensky blvd, 2/40 . Phone: (+7 495) 775 2240 . www.intermarksavills.ru The current overview is purely for information purposes. In spite of the fact that all efforts were taken to provide correct information for it, IntermarkSavills disclaims responsibility 4 for any direct or indirect damage that occurs as result of using this information. This overview is protected by copyright; its partial or whole reproduction in any form without written approval by IntermarkSavills is strictly prohibited. MOSCOW ELITE HOUSING MARKET 2010 RESULTS. FORECAST FOR 2011

in the (half of them – in the Ostozhenka District), approximately 18% – in the , and 14% in the Zamoskvorechye District.

Prior to the crisis the leading position in terms of volume of property sales represented on the market was held by MIBC “Moscow-City”. In 2009-2010 only three out of all multifunctional MIBC complexes were selling apartments: “Federation”, “The City of Capitals” and “Imperia Tower”. In the remaining towers sales were halted.

In 2010 elite complexes selling part-time residence apartments (MIBC “Moscow-City” towers and two premium-class projects on the territory of the Central Administrative District of Moscow) were joined by one more apartment project located in the Krasnoselsky District of Moscow.

Elite housing projects selling in Moscow in 2010

MMeschanskyeschansky KKrasnoselskyrasnoselsky

TTverskoyverskoy +

PPresnenskyresnensky + BBasmannyasmanny – +

AArbatrbat KKitai-Goroditai-Gorod – TTaganskyagansky MMIBCIBC ““Moscow-City”Moscow-City” – – + N N –

YYakimankaakimanka – ZZamoskvorechyeamoskvorechye KKhamovnikihamovniki N N – Selling projects – – Sold during 2010 + – New projects (2010) N – Projects expected in 2011

119034 Moscow, Smolensky blvd, 2/40 . Phone: (+7 495) 775 2240 . www.intermarksavills.ru The current overview is purely for information purposes. In spite of the fact that all efforts were taken to provide correct information for it, IntermarkSavills disclaims responsibility 5 for any direct or indirect damage that occurs as result of using this information. This overview is protected by copyright; its partial or whole reproduction in any form without written approval by IntermarkSavills is strictly prohibited. MOSCOW ELITE HOUSING MARKET 2010 RESULTS. FORECAST FOR 2011

Structure of elite housing complexes Distribution of elite housing projects, represented on the market in 2010, by construction stage by year of commission (as of the end of 2010)

огороженнаяnet site area, площадка, 11% 7% работыworks not не in ведутся progress

14% строительствоframe construction каркаса здания 25% 46% ≤ ≤2009 2009 г. отделкаface decoration фас ада 7% 20102010 г. 61% завершающиеfi nish works работы 11% 20112011 г. 18% building fully completed ≥ ≥2012 2012 г. объект полностью построен

Source: IntermarkSavills Source: IntermarkSavills

2008-2009 was the term of build completion for the majority of In terms of floor area of elite housing developments, relatively new elite buildings represented on the market in 2010 (64%). compact residential buildings (up to 10 thousand sq.m.) including The share of elite projects completed in up to 60 apartments traditionally prevail. 2009 and earlier where new-build sales As of now more than 60% The number of large elite projects were not finished comprises 46% of the of elite residential remains at the 2008-2009 level (approx. total number. The share of projects to 20%). be completed in 2011-2012 and beyond complexes on sale have been totals 36%. commissioned. One out of four new projects of 2010 Twice as many as compared will offer not more than 40 apartments, The share of completed complexes grew which results from the crisis, where twofold compared to the end of 2009: to the end of 2009 developers did not release large elite as of now more than 60% of selling elite housing complexes into the market. residential complexes have been commissioned (31% of them were commissioned in 2009). Construction in two projects Structure of elite housing complexes, has been suspended. In other construction sites works are in represented on the market in 2008-2010, progress or construction is nearly completed. by the number of floors

Low- and mid-rise buildings (up to 10 floors) traditionally dominate the elite housing developments, which is connected 80% 2008 г. with certain restrictions regarding the number of floors in new buildings in central Moscow. As a rule, higher buildings are 2009 г. located outside the . 60% 2010 г. A relatively small share of low-rise elite buildings (up to 5 floors) is available due to the fact that investors are not willing to start 40% a project with serious restrictions regarding the number of floors. As a rule this means a low number of property sales and, consequently, reduced project profitability. Exceptions to this are projects with a unique location (Ostozhenka, Arbat, Patriarshy 20% Ponds, and Yakimanka) or reconstructed historic buildings.

0% ≤ 55 этажейfl oors 6-106-10 этажейfl oors 11-1511-15 этажейfl oors >> 15 flэтажей oors

Source: IntermarkSavills

119034 Moscow, Smolensky blvd, 2/40 . Phone: (+7 495) 775 2240 . www.intermarksavills.ru The current overview is purely for information purposes. In spite of the fact that all efforts were taken to provide correct information for it, IntermarkSavills disclaims responsibility 6 for any direct or indirect damage that occurs as result of using this information. This overview is protected by copyright; its partial or whole reproduction in any form without written approval by IntermarkSavills is strictly prohibited. MOSCOW ELITE HOUSING MARKET 2010 RESULTS. FORECAST FOR 2011

New premium-class projects released into the market in 2010:

Renovated residential building in Prechistenka Meating House

Prechistenka St., 13 (15 apartments) Myasnitskaya St., estate 9-11 (32 apartments)

Petrovsky Dom Chistye Prudy Club Residence

Petrovsky Boulevard 21 (38 apartments) Barashevsky per., 10 (31 apartments)

119034 Moscow, Smolensky blvd, 2/40 . Phone: (+7 495) 775 2240 . www.intermarksavills.ru The current overview is purely for information purposes. In spite of the fact that all efforts were taken to provide correct information for it, IntermarkSavills disclaims responsibility 7 for any direct or indirect damage that occurs as result of using this information. This overview is protected by copyright; its partial or whole reproduction in any form without written approval by IntermarkSavills is strictly prohibited. MOSCOW ELITE HOUSING MARKET 2010 RESULTS. FORECAST FOR 2011

In 2010 the demand for some major elite residential complexes almost returned to pre-crisis levels and amounted to 7-8 transactions per month. One of the reasons for the positive dynamics is the ricocheting of the deferred demand. Another important factor is the transfer of more and more projects to participatory share construction contracts.

Liliya ZAINULLOVA, Sales Manager of In-town Residential Real Estate Department, IntermarkSavills

DEMAND *

According to IntermarkSavills estimates, by the end of 2010 One of the positive factors of 2010 is the resuming investment the actual capacity of the new-build elite housing market transactions for elite apartments. (taking into account only closed transactions) was about 70,000 sq.m or approximately 430 sold apartments in new In terms of elite apartment territorial structure demand developments. The average number (excluding MIBC “Moscow-City”), the of transactions a month was about 35 leading position belongs to a most apartments. As compared to the previous prestigious Khamovniki District with a lot year, the number of closed of construction in progress (including As compared to 2009, the number of new-build transactions construction near Ostozhenka) accounting closed new-build transactions in the for approximately 35% of closed new- elite segment increased by more than in the elite segment build transactions. Zamoskvorechye and 35% and practically equaled the level increased by more than 35% Tverskoy District apartments are also in high of 2008. Last year lagged behind 2007 and practically equaled demand: 20% of transactions each. There in terms of the total number of closed is a significant growth in buyer interest in transactions by less than 30%. the level of 2008 projects located in the Presnensky District (17% of transactions). It is worth mentioning that the confidence of potential buyers in the ability of developers to complete the projects underway Analysis of the apartment demand typology shows that is growing: projects at the earlier construction stages are premium-class apartments with a floor area of up to 200 sq.m generating more interest. More than 30% of transactions were remain in the highest demand (approx. 80% of all closed closed in projects to be commissioned after 2010. deals).

Dynamics in the number of completed sales transactions Dynamics in the number of completed sales transactions on the new-build elite housing market in 2007-2010 on the new-build elite housing market in 2009-2010, monthly

700 150 000 50 заключенныхcompleted sales сделок 600 суммарнаяtotal fl oor area площадь 40 реализованныхof sold apartments, квартир sq.m., кв.м 500 100 000 30 400 20 300 50 000 200 10

100 0 I II III IV V VI VIIVIIIIX X XI XII I II III IV V VI VIIVIIIIX X XI XII 0 0 2007 г. 2008 г. 2009 г. 2010 г. 2009 2010

Source: IntermarkSavills Source: IntermarkSavills

* Demand here means an estimate number of actual closed transactions for premium-class apartments in Moscow from January to December 2010

119034 Moscow, Smolensky blvd, 2/40 . Phone: (+7 495) 775 2240 . www.intermarksavills.ru The current overview is purely for information purposes. In spite of the fact that all efforts were taken to provide correct information for it, IntermarkSavills disclaims responsibility 8 for any direct or indirect damage that occurs as result of using this information. This overview is protected by copyright; its partial or whole reproduction in any form without written approval by IntermarkSavills is strictly prohibited. MOSCOW ELITE HOUSING MARKET 2010 RESULTS. FORECAST FOR 2011

In 2010 the number of completed transactions for 3 - 4+ room Typology of apartment demand in elite housing complexes apartments increased (by 80% vs. 70% in 2009). The demand represented on the market in 2008-2010 for 1-room apartments “not typical” of expensive projects (% of the total number of sold apartments) decreased by 6% (10% of all sales vs. 16% in 2009).

40% 2008 г. The average floor area of a new build premium-class apartment sold in 2010 was approximately 165 sq.m, which is 3% more 2009 г. than in 2009 (approx. 160 sq.m). In 2008 the average floor area 30% was 168 sq.m. 2010 г. In terms of the price structure of closed sales, apartments from 20% 10 to 15 thousand USD/sq.m hold a leading position (approximately 50% of demand). Compared to 2009 the number of sales in the price range of up to 10 thousand UDS/sq.m increased 1.5-fold, and as compared to 2008 it was a fourfold 10% increase. Demand for the most expensive apartments (over 25 thousand USD/sq.m.) was almost equal to the level of 2009, but as compared to 2008 it has dropped almost twofold. 0% < 100 sq.m 100-150 sq.m 150-200 sq.m 200-250 sq.m > 250 sq.m < 100 кв.м 100-150 кв.м 150-200 кв.м 200-250 кв.м > 250 кв.м Budgets of up to 3 million USD were typical of 80% of sales Source: IntermarkSavills on the new-build elite housing market (the same situation as in 2009). As compared to 2009 the number of sales closed within a budget of up to 2 million In comparison with the previous year a USD increased by 10% (56% vs. share of demand for elite apartments Budgets of 1-2 million USD 46% in 2009). Demand for the with a floor area of less than 100 sq.m are in highest demand and account most expensive apartments (from moved to the segment of apartments 5 million USD and upwards) dropped with a floor area of 100-150 sq.m. The for 45% of sales on the new-build by 30% in comparison with 2009 demand for the largest apartments elite housing market (and by 53% in comparison with (from 250 sq.m) in 2010 accounted for 2008). approximately 10%.

Pricing structure of completed sales of apartments Budget structure of completed sales of apartments in elite housing complexes in elite housing complexes represented on the market in 2008-2010 represented on the market in 2008-2010

50% 60% 2008 г. 2008 г.

50% 2009 г. 40% 2009 г.

40% 2010 г. 2010 г. 30% 30% 20% 20%

10% 10%

0% 0% < $10K10 тыс .$ 10 $10-15K - 15 тыс .$ 15 $15-20K - 20 тыс .$ 20 $20-25K - 25 тыс .$ > > 25 $25K тыс.$ << 1 mlnмлн .$$ 11-2 - 2 mln млн $.$ 22-3 - 3 mlnмлн .$$ 33-4 - 4 mlnмлн $.$ 4 4-5 - 5 mlnмлн .$$ >> 55 млнmln.$ $

Source: IntermarkSavills Source: IntermarkSavills

119034 Moscow, Smolensky blvd, 2/40 . Phone: (+7 495) 775 2240 . www.intermarksavills.ru The current overview is purely for information purposes. In spite of the fact that all efforts were taken to provide correct information for it, IntermarkSavills disclaims responsibility 9 for any direct or indirect damage that occurs as result of using this information. This overview is protected by copyright; its partial or whole reproduction in any form without written approval by IntermarkSavills is strictly prohibited. MOSCOW ELITE HOUSING MARKET 2010 RESULTS. FORECAST FOR 2011

Developers in Moscow have lost half of their buyers in 2009 and had to change their methods dramatically to concentrate on the individual interests of each client. Developers use all means to attract buyers to projects: from unique crediting programs and availability of installment payments to changing concepts of the projects. Ekaterina PKHIDO, Sales Manager of In-town Residential Real Estate Department, IntermarkSavills

SUPPLY *

According to IntermarkSavills estimates, by the end of 2010 in favour of the most compact ones by elite sector standards. the volume of new-build premium-class residential property Yet there is still a disproportion in the sector of properties with a in Moscow included approximately 940 apartments in new floor area of less than 150 sq.m: the current demand exceeds buildings (approximately 160 thousand sq.m). the supply by 7%.

In terms of the territorial structure of the current At the beginning of 2011 the average floor supply, the Khamovniki District holds the area of a supplied elite apartment is leading position (42%) and is followed by the The average fl oor area approximately 170 sq.m, which is 3% more Tverskoy District (31% of supply). A significant of a supplied than the average floor space of an apartment increase in supply in the Tverskoy District elite apartment purchased in 2010. One of the reasons for this compared to the end of 2009 is determined change is an increase in demand for relatively by release of areas reserved earlier by the is 170 sq.m compact apartments (80-100 sq.m). developers in a large residential complex under construction. In terms of the pricing structure of supply throughout 2010 the main volume of supply showed a tendency to a high level Analyzing the typology of apartment supply in 2009 and of prices. In 2009 the major share of elite properties for sale 2010 compared to 2007-2008 we can note a fast reaction (44% of areas) was offered at up to 10,000 USD/sq.m. In 2010 of developers to a decreasing interest in large apartments 54% of supply was offered at 10,000-15,000 USD/sq.m.

Territorial structure of supplied apartments Supply to demand structure ratio for apartments in elite housing complexes represented on the market in elite housing complexes represented on the market in 2010 in 2008-2010 (by the end of the year) (by the end of the year)

50% 40% 2008 г. Currentтекущее supply предложение 35% 40% 2009 г. Demandспрос 30% 2010 г. Deдефfi citицит / surplus / профицит 30% 25%

20% 20% 15%

10% 10%

5% 0% 0% << 100100 sq.mкв.м 100-150100-150 кв sq.m.м 150-200150-200 квsq.m.м 200200-250-250 кв sq.m.м >> 250 sq.mкв.м

Tverskoy -5% Tagansky районы

Тверской Khamovniki е Presnensky Таганский скворечье есненский Хамовники Other districts -10% Zamoskvorechye

Source: IntermarkSavills Source: IntermarkSavills

* Supply here means an estimated number of premium-class apartments offered for sale in Moscow by the end of December 2010

119034 Moscow, Smolensky blvd, 2/40 . Phone: (+7 495) 775 2240 . www.intermarksavills.ru The current overview is purely for information purposes. In spite of the fact that all efforts were taken to provide correct information for it, IntermarkSavills disclaims responsibility 10 for any direct or indirect damage that occurs as result of using this information. This overview is protected by copyright; its partial or whole reproduction in any form without written approval by IntermarkSavills is strictly prohibited. MOSCOW ELITE HOUSING MARKET 2010 RESULTS. FORECAST FOR 2011

Pricing structure of apartment supply Budget structure of apartment supply in elite housing complexes in elite housing complexes represented on the market represented on the market in 2008-2010 in 2008-2010 (by the end of the year) (by the end of the year)

60% 50% 2008 г. 2008 г.

50% 2009 г. 40% 2009 г. 2010 г. 40% 2010 г. 30%

30%

20% 20%

10% 10%

0% 0% < < 10 $10K тыс . $ 10 $10-15K - 15 тыс . $ 15 $15-20K - 20 тыс . $ 2 0$20-25K - 25 тыс . $ > > 25 $25K тыс.$ < 1 mlnмлн .$$ 11-2 - 2 mln млн $.$ 22-3 - 3 mln млн $.$ 3-4 3 - 4mln млн $.$ 44-5 - 5 mln млн $.$ > 5 млнmln .$$

Source: IntermarkSavills Source: IntermarkSavills

There is a notable disproportion between the current supply list) prices for the projects represented on the market. Many budget structure and the retrospective demand of the past year developers are still willing to make additional discounts when for properties costing less than 1 million closing sales. In case of a one-off payment USD (the current demand exceeds the By the end of 2010 vendors often offer a 5% discount on supply by 7%). The indicated budgets the average budget the price stated in the price-list. Certain that accounted for over 13% of demand in projects offered even more interesting 2010 are typical of 6% of supply only. of an elite apartment financial terms during the year. for sale had grown by 27% By the end of 2010 the average budget for as compared to 2009 and The most expensive elite segment an elite apartment for sale had grown by new-build supply was recorded in the 27% as compared to 2009 and amounted amounted to approximately Khamovniki District: a penthouse with to approximately 2.8 million USD (in 2009 2.8 million USD a floor area of 826 sq.m. for 28.9 million it was 2.2 million USD). In 2007-2008 the USD. And the cheapest one – in the average budgets amounted to 3.3-3.4 million USD. Tverskoy District: a one-room apartment with a floor area of 52 sq.m. for 637 thousand USD. Speaking of the current pricing and budget structure of supply we have to understand that it is based on the official (price-

119034 Moscow, Smolensky blvd, 2/40 . Phone: (+7 495) 775 2240 . www.intermarksavills.ru The current overview is purely for information purposes. In spite of the fact that all efforts were taken to provide correct information for it, IntermarkSavills disclaims responsibility 11 for any direct or indirect damage that occurs as result of using this information. This overview is protected by copyright; its partial or whole reproduction in any form without written approval by IntermarkSavills is strictly prohibited. MOSCOW ELITE HOUSING MARKET 2010 RESULTS. FORECAST FOR 2011

During 2010 the overwhelming majority of developers raised their prices for elite housing property. As a result, by the end of the year the average market dollar prices of the elite apartments supply had grown by more than a third. In 2011 the increase of prices will continue: in Moscow the prices for elite apartments will always be higher than the economically feasible ones due to the ‘capital syndrome’… Kristina TOMILINA, Sales Manager of In-town Residential Real Estate Department, IntermarkSavills

PRICES

During 2010 prices for new elite property grew. By the end The positive dynamics in the growth of the dollar prices can of December the average market price for premium-class be partly explained by technical factors: such as the rising residential complexes under construction amounted to level of building preparation and disappearance of low-cost 16,900 USD/sq.m. (530 thousand rubles per sq.m.). apartments (within a budget of less than 1.5 million USD). A relatively sharp surge in prices was registered in the key By the end of 2010 the total increase in unit prices for elite projects on the market in Q2 2010 (45% of the total supply of new-build properties reached 35%. By the elite properties were accumulated in these beginning of 2011 the average market price As compared projects); it was caused by the significant for premium-class residential complexes increase of prices (up to 10-20%). under construction equaled the level of Q3 to the market bottom 2007. reached in October 2009, By the end of 2010 average prices announced dollar prices increased by developers increased by over 25% in over The peak level in the average prices for 20% of projects, and in two complexes the elite apartments was reached in July 2008 by almost 40% by the end prices grew almost twofold. In one fifth of (22,950 USD/sq.m.). The current average of 2010, and the ruble projects average prices increased by 15-25%, ruble price for elite properties has almost prices – by 50% and in 40% – by 5-10%. In 12% of projects the reached the pre-crisis peak level; and the price of a square meter hardly changed at all, dollar price is lagging behind it by 26%. As and in 8% it reduced slightly. compared to the market bottom reached in October 2009, the dollar prices increased by almost 40% by the end of 2010, and By the end of 2010 the maximum asking price for certain the ruble prices – by 50%. apartments on the market reached 50,000 USD/sq.m.

Dynamics in average market prices Dynamics in average market prices of apartments on the new-build elite housing market in 2005-2010, USD/sq.m. in elite residential complexes under construction (by the end of the quarter) January 2009 – November 2010

$25 000 максимальноеmaximum fall inпадение prices (comparedцены (от докризисного to pre-crisis максим maximum)у ма) 80% ростgrowth цены in pricesпо отношению compared ко to"дн theу " ‘marketрынка bottom’ $22 500 70% отношениеcurrent price тек –у щеpre-crisisй цены maximumк докризисном ratioу максиму му 60% $20 000 50% $17 500 40%

$15 000 30% 20% $12 500 10%

$10 000 0% USD/sq.m RUR/sq.m -10% долл. США/кв.м рур б./кв.м $7 500 -20% $5 000 -30% IV I II III IV I II III IV I II III IV I II III IV I II III IV -40% 2005 2006 2007 2008 2009 2010 -50%

Source: IntermarkSavills Source: IntermarkSavills

119034 Moscow, Smolensky blvd, 2/40 . Phone: (+7 495) 775 2240 . www.intermarksavills.ru The current overview is purely for information purposes. In spite of the fact that all efforts were taken to provide correct information for it, IntermarkSavills disclaims responsibility 12 for any direct or indirect damage that occurs as result of using this information. This overview is protected by copyright; its partial or whole reproduction in any form without written approval by IntermarkSavills is strictly prohibited. MOSCOW ELITE HOUSING MARKET 2010 RESULTS. FORECAST FOR 2011

Differentiation of average prices and budgets on the new-build elite housing market by districts of the Central Administrative District of Moscow (at the beginning of 2011)

District Unit cost, USD/sq.m. Average budget, USD minimum maximum weighted average

Basmanny $25 000 = $35 000 = $29 000 = $3 186 000 = Presnensky $7 700 = $43 200 = $23 500 = $5 173 000 = Yakimanka $13 000 = $44 200 = $20 600 = $5 246 000 = Khamovniki $8 000 = $50 000 = $17 800 = $3 005 000 = Tagansky $9 300 = $40 000 = $15 900 = $3 143 000 = Krasnoselsky $10 000 = $30 000 = $15 100 = $2 754 000 = Zamoskvorechye $11 200 = $19 000 = $14 200 = $2 393 000 = Tverskoy $8 100 = $23 100 = $13 600 = $2 099 000 =

(Ostozhenka St., estate 11/17,13/12). The minimum prices are typical of complexes in an early stage of construction and in Dynamics in average market prices on the new-build elite some cases are less than 8,000 USD/sq.m. housing market by districts of the Central Administrative District of Moscow in 2008-2010, USD/sq.m (by the end of the year) The cost of elite apartments in buildings under construction changes considerably depending on the location and level of $30 000 2008 г. building preparation of the residential complex. At the end of $28 000 2010 the highest weighted average supply prices were recorded $26 000 2009 г. in the , due to the release of a completed residential complex with high prices into the market. Then follow $24 000 2010 г. the Presnensky, Yakimanka and Khamovniki Districts. The $22 000 minimum price in the premium-class sector is typical of properties $20 000 in the Tverskoy District. Differentiation of average prices for elite property in different districts of the Central Administrative District $18 000 sometime reaches twofold. $16 000 $14 000 In 2010 prices for elite residential complexes increased in all $12 000 districts of the Central Administrative District. The most significant growth was recorded in the Presnensky District: almost twofold. $10 000 In the Krasnoselsky and Khamovniki Districts prices went up by 40% and 35% respectively. The growth in the Tverskoy, Tagansky Tverskoy Tagansky Тверской Якиманка Таганский Basmanny Yakimanka Хамовники Khamovniki

and Yakimanka Districts was a bit lower (19%, 16% and 14% Presnensky Басманный Krasnoselsky respectively). The price surge in the Presnensky District was Пресненский Замоскворечье Красносельский caused by open sales that started in one of the projects. Zamoskvorechye Source: IntermarkSavills The increasing activity on the elite housing market, the shortage of supply and the rising level of completion of the selling now. In 2011 the growth of prices for Moscow elite housing properties (in 2010 about 20% of properties were completed) property will continue. However, unlike the pre-crisis period now – all these factors brought about the positive dynamics in the it will be much smoother and the prices will not reach the pre- price of a square meter that has been continuing for 14 months crisis maximum during 2011.

119034 Moscow, Smolensky blvd, 2/40 . Phone: (+7 495) 775 2240 . www.intermarksavills.ru The current overview is purely for information purposes. In spite of the fact that all efforts were taken to provide correct information for it, IntermarkSavills disclaims responsibility 13 for any direct or indirect damage that occurs as result of using this information. This overview is protected by copyright; its partial or whole reproduction in any form without written approval by IntermarkSavills is strictly prohibited. MOSCOW ELITE HOUSING MARKET 2010 RESULTS. FORECAST FOR 2011

FORECAST FOR 2011

• In 2011 we forecast stabilization of demand for in-town elite housing property at the level of 2010. The dynamic price increase in 2010 will require quite a lot of time for the customers to get used to the current prices. The monthly number of new-build transactions will remain at the same level as during the last months of 2010: 30-35 sold apartments per month.

• The current average price of one sq.m. on the new-build elite housing market is approximately 5% higher than the fair level. This is due to the fact that after the significant growth of the number of transactions in Q1 and Q2 2010 the developers have pushed up prices for apartments suddenly and very often for no good reason. That is why in 2011 the growth of prices for elite new-build housing will be mainly of ‘technical’ nature: 1-1.5% a month. Thus, by December 2011 the average price for new elite buildings will reach 18,000-18,500 USD/sq.m.

• New-build elite residential complexes costing 10,000-15,000 USD/sq.m and having a high level of building preparation will be in highest demand by the buyers. However, due to foremost disappearance of such offers from the market it will be more difficult in 2011 to choose a good option within this price range than it was in 2010.

• The actual elite housing supply will remain at the level of the end of 2010 – approximately 900-1000-1200 apartments available to buyers. The market consumption will be made up for by new projects released into the market.

• New elite complexes released into the market will still be one-off projects. In general by the end of the year the new-build supply will be supplemented by 500-600 apartments (5-6 new complexes).

119034 Moscow, Smolensky blvd, 2/40 . Phone: (+7 495) 775 2240 . www.intermarksavills.ru The current overview is purely for information purposes. In spite of the fact that all efforts were taken to provide correct information for it, IntermarkSavills disclaims responsibility 14 for any direct or indirect damage that occurs as result of using this information. This overview is protected by copyright; its partial or whole reproduction in any form without written approval by IntermarkSavills is strictly prohibited. MOSCOW ELITE HOUSING MARKET 2010 RESULTS. FORECAST FOR 2011

BEST OFFERS OF 2011

TRILOGY GARDEN QUARTERS

Trekhgorny Val, 14 (75 apartments) Efremova St.., 12 (920 apartments)

ITALIAN QUARTER ARTHOUSE

Dolgorukovskaya St., 21 (310 apartments) Tessinsky per., 2, 9/16 (30 apartments)

KNIGHTSBRIDGE BARCLAY PLAZA

Kooperativnaya St., 16 (160 apartments) Prechistenskaya Embankment, 17-19 (37 apartments)

119034 Moscow, Smolensky blvd, 2/40 . Phone: (+7 495) 775 2240 . www.intermarksavills.ru The current overview is purely for information purposes. In spite of the fact that all efforts were taken to provide correct information for it, IntermarkSavills disclaims responsibility 15 for any direct or indirect damage that occurs as result of using this information. This overview is protected by copyright; its partial or whole reproduction in any form without written approval by IntermarkSavills is strictly prohibited. MOSCOW ELITE HOUSING MARKET 2010 RESULTS. FORECAST FOR 2011

STRATEGIC CONSULTING AND VALUATION DEPARTMENT

Strategic Consulting and Valuation Department includes four key consulting directions:

• Project Consulting (concept design [including work with the target audience and project infrastructure design] and project management of different format and scale).

• Investment Consulting (project formulation for bringing in third-party investors and partners, formation of package of basic investment and financial documents and investment strategy).

• Independent Assessment of Property and Investment Projects (made by certified valuation experts in compliance with the Russian and international standards RICS). • Property Markets Research and Monitoring.

We are ready to take part in project design and management, from marketing idea and concept design to sales and rent. Our consultants can start work at any stage of the development cycle – both from “scratch” and at the stage of optimization of high profile projects.

We provide services using both international and our own unique methods of information analysis, processing and presentation developed by IntermarkSavills.

In order to improve efficiency of project teams work we bring in leading experts in sales and rentals from different departments of IntermarkSavills and, if required, staff from the British and other offices of Savills.

For more information please contact:

ALEXANDER SHATALOV ALEXANDRA SINILOVA DMITRY KHALIN ALFIYA ABDULOVA

CEO Head of Project Head of Strategic Consulting Head Analyst IntermarkSavills Consulting Department and Valuation Department of Strategic Consulting and Valuation Department

[email protected] [email protected] [email protected] [email protected]

Market Research and Monitoring Department IntermarkSavills monitor the most significant segments of the Moscow Region property market as well as changes in buyer preferences based on the analysis of their own client base. Our analysts have the expertise and methodology to provide a fast and high quality analysis of property markets of other Russian regions even the most remote ones from Moscow. Partnership with Savills enables us to receive information on foreign property markets including an in-depth analysis of concrete projects and a generalized sales experience.

IntermarkSavills is a partnership of two reputable companies represented on the Russian real estate and investment market by a joint brand. Intermark has over 15-years of work experience on the Russian market and is one of the leading real estate companies providing services in the sphere of residential property of the Moscow Region. Savills was founded in the UK in 1855 and now has a wide office network in 40 countries all over the world. In the past eight years it has been ranked number one among professional operators on the UK real estate market. IntermarkSavills is a respected brand among real estate professionals (investors, developers, real estate agents and financial institutions).

119034 Moscow, Smolensky blvd, 2/40 . Phone: (+7 495) 775 2240 . www.intermarksavills.ru

The current overview is purely for information purposes. In spite of the fact that all efforts were taken to provide correct information for it, IntermarkSavills disclaims responsibility for any direct or indirect damage that occurs as result of using this information. This overview is protected by copyright; its partial or whole reproduction in any form without written approval by IntermarkSavills is strictly prohibited.