RESIDENTIAL REAL ESTATE Q1 2013 MARKET OVERVIEW

RESIDENTIAL REAL ESTATE MARKET OVERVIEW RESIDENTIAL REAL ESTATE MARKET OVERVIEW Q1 Q1 2013 RESIDENTIAL REAL ESTATE 2013

Content

Summary…………………………………………………………………………………….……………... 3 Residential real estate. . region. Residential construction……………...………….. 5 Residential real estate. Moscow…………………………………………………………………………. 6 Residential real estate. Elite segment. Moscow. Sale..……………………………..………………… 9 Residential real estate. Elite segment. Moscow. Rent………………………….…………………….. 12 Residential real estate. Moscow region……………………………………...... 16 Residential real estate. New Moscow………………………………………………………………..... 19 Countryside. Land market………………………………………………………………………………. 21

All rights reserved. This report has been prepared for information purposes only. The data and information contained herein are the exclusive property of Blackwood Real Estate company. Reproduction of the report in total or in part is allowed only with a prior written permission of the Blackwood real estate company. Quoting is allowed with refer- ence to the source.

RESIDENTIAL REAL ESTATE MARKET OVERVIEW Q1 RESIDENTIAL REAL ESTATE 2013

Russia. Moscow Region. Residential construction According to Rosstat data, 10.4 mln. sq.m. of residential areas Dynamics of residential construction volumes in Russia entered the Russian market. These indices exceeded the indica- tors of the past year by 6%. And the plans for residential delivery also increased: 70 mln. sq.m were planned to be introduced in 2013. For comparison: the delivery indicator stayed at the level of 58-65 mln. sq. m. in the last years.

For the first three months of 2013 the Moscow Region - a sta- ble leader in residential construction of the past years—ranked first by the commissioning volumes. 889 thous. sq.m of residential space were introduced to the market here for the period under consideration. The Krasnodar Kray ranked second by the delivery volumes, 876 thous. sq.m. were delivered here, Tatarstan fol- lowed—759 thous. sq.m. Source: Rosstat By the results of Q1 2013, 636 thous. sq.m. (30 houses) en- tered the Moscow market and more than 300 thous. sq.m. en- Monthly volumes of residential release in Russia tered the territory of New Moscow. All in all, 3 mln. sq.m. of resi- dential space are planned for commissioning in 2013, including 680 thous. sq.m. at the expense of the city budget. The plan for the development of adjacent territories in 2013 constitutes 1.1 mln. sq.m.

Monthly volumes of residential release in Moscow*

Source: Rosstat

* - data on the federal city of Moscow and the Moscow Region are presented with account of change of their border since 1 July 2012 in accordance with the decision of The Council of Federation of the Federal Assembly of the Russian Federation as of December 27 2011. No 560-SF.

Source: Rosstat

Leaders by the construction of residential houses among the entities of RF in January-March 2013, thous. sq.m.*

Source: Rosstat

3 RESIDENTIAL REAL ESTATE MARKET OVERVIEW Q1 RESIDENTIAL REAL ESTATE 2013

Moscow. Supply During Q1 2013 the supply in the primary market of Moscow Supply structure in the primary market by AD of Moscow, was still in the process of increasing by new properties. Even in March 2013 January, which is considered to be a period of low activity in the residential real estate market due to long New Year holidays, the market increased by several new properties. However, as op- posed to the previous periods, almost half of new supply in Q1 2013 consisted of apartment complexes.

All in all, 18 new properties (residential houses, buildings in the structure of residential complexes) entered the Moscow mar- ket in Q1 2013 both in the residential segment and in the seg- ment of apartments. The volume of new supply amounted to about 130 thous. sq.m, almost half of which—apartment com- plexes of comfort-, business– and elite classes. Traditional busi- Supply structure in the secondary market by AD of Moscow, ness and comfort class residential complexes constitute more or March 2013 less similar volume of new supply (by 20%), 10% - new econ- omy class offers. New supply in the elite segment constitutes another 2%. More detailed information for some properties is presented below in a spreadsheet.

The aggregate supply volume in the primary market by the results of Q1 2013 stayed at the level of the previous period and amounted to 1.4 mln. sq.m (with account of apartments and elite new buildings) or 262 properties.

The supply structure in the primary market of Moscow looked Source: Blackwood Company data as follows in Q1 2013: n Q1 2013, comfort class primary segment increased by a new • Business class occupied 43% of the total supply volume; building in a multifunctional complex in Melnikova str. (bld.4), in • Economy and comfort class new buildings constitute al- RC “Life-Volzhskaya” (bld. 6), as well as by two new buildings in most one fourth of the total supply; RC “Wellton Park” (bld. 16, 17). The supply volume in these prop- • Elite new buildings constitute about 12%; erties amounted to about 27.8 thous. sq.m. Moreover, sales were resumed in the buildings of RC “Zagorie”, new volume was re- • Offers in elite, business and comfort class apartment leased in RC complexes—a little bit more than 20%. “Albatros” and “Podsolnukhi”. New offers for sale in a business class segment in Q1 2013 New supply of the economy class segment in Q1 2013 was were presented in RC “Sokoliny Fort” (2, 1st Myasnitskaya str.), represented by a new building in mcr. “Nekrasovka- in RC “Lomonosovsky” (8B, Panferova str.), as well as in some park” (developer is Leksion Development), which offered flats in other residential complexes already presented in the market. the shell&core condition.

Some economy, comfort and business class properties introduced to the market in Q1 2013* Material of Address Name Developer Class AD District walls 2, 1st Myasnitskaya str. Sokoliny fort Don-Stroy Business EAD Bogorodskoe Monolith Novie Chere- Lomonos- 8B, Panferova str. Lomonosovsky Business SWAD Monolith mushki ovsky The intercrossing of Chistova str., Malisheva str., Shkuleva str. and 7th Life-Volzhskaya GC Pioneer Comfort SEAD Tekstilschiki Monolith Tekstilschikov str., bld. 6 Khoroshevo- Karamishevskaya emb., bld.16, 17 Wellton Park Krost Comfort NWAD Monolith Mnevniki 1, 3 Melnikova str., bld. 4 - Promstroyinvest Comfort SEAD Yuzhnoportovy Monolith Luberetskie aeration fields, quarter 4, Leksion Develop- Nekrasovka-park Economy SEAD Nekrasovka Panel bld. 3 ment Source: Blackwood Company data

* - information, concerning elite class properties and apartment complexes, is presented in the corresponding sections

4 RESIDENTIAL REAL ESTATE MARKET OVERVIEW Q1 RESIDENTIAL REAL ESTATE 2013

Moscow. Demand In Q1 2013, according to Rosreestr Administration data, 14 Dynamics of a number of registered deals, Moscow 523 transactions* were concluded in Moscow, which were lower than the past year indices by 25%. The decline of volume of transactions was recorded in March, which was unconventional for this month, however, it may be referred to the change of cal- culation procedure. On the whole, buyers’ activity stayed high in the market, which was indicated by the growth of mortgage deals volumes and transactions concluded according to equity participation * agreement. Thus, 6 594 mortgage transactions were concluded in Q1 2013, which was 9% higher than the past year index. The largest increase was noted for the transactions con- Source: Rosreestr Administration cluded according to equity participation agreements. All in all, 4, 325 transactions were concluded in Q1 2013, which exceeded Volume of indebtedness under credits provided to individu- the indicators of 2012 almost fivefold. Volumes of indebtedness under credit for the purchase of residential space, including under mortgage credits, continued to grow. The average weighted mortgage rate in Moscow, accord- ing to Bank of Russia data constituted 12.7% by the end of January 2013**, the average weighted term of credit by mort- gage credits - 14.5 years (173.5 months).

* - according to federal law No 302−FZ as of 30.12.12, registration of residential premise sale and purchase agreement has been cancelled since March 1. Only the transfer of right for the alienated property is subject to state registration.

** - the latest available data as of the date of the overview release Source: Bank of Russia data Moscow. Prices

By the results of Q1 2013 the average-weighted supply Dynamics of prices, Moscow price in the primary market settled at the level of 196, 570 rub. per sq.m. (exclusive of elite segment, apartments and townhouses), the dollar equivalent—$6, 360 per sq.m. As opposed to the previous period the growth of this index in ruble equivalent was noted at the level of 5.1%. The analo- gous increase of the average price in dollars constituted +3.8%.

The average supply price in the secondary residential market gained 2.4% versus Q4 2012 up to the level of 207, 340 rub. per sq.m ($6, 710 per sq.m). The analogous in- crease of the average price in dollars constituted +1.1%.

By the results of Q1 2013 the average supply prices in the primary market depending on class were established at the fol- lowing levels:

Source: Blackwood Company data

5 RESIDENTIAL REAL ESTATE MARKET OVERVIEW Q1 RESIDENTIAL REAL ESTATE 2013

Moscow. Prices

• Economy class - 118, 010 rub. per sq.m ($3, 820 per Average prices in the residential market by districts of Mos- sq.m); cow, $ per sq.m, March 2013

• Comfort class - 145, 690 rub. per sq.m ($4, 720 per sq.m);

• Business class - 228, 690 rub. per sq.m ($7, 400 per sq.m).

And the trend of prices growth was noted in all the seg- ments of the primary residential market. The most consider- able growth (+6.8%) was noted in the comfort class segment, which was caused by the growth of prices in several proper- ties, and among other things by the growth of construction readiness stage, as well as by the delivery of new properties at rather high prices (the average supply price in new build- ings of RC “Wellton Park” in March 2013 constituted more than 195, 00 rub. per sq.m). Business class new buildings* increased in price by 4.6% by the results of Q1 of the current year due to the raise of prices and to the change of the sup- ply structure in the segment (during the period under consid- eration the segment increased by new properties, among which were the properties at the high readiness stage: fin- ished and commissioned RC “Lomonosovsky” entered the market at the prices of 230, 000 to 280, 000 rub. per sq.m). Economy class segment gained 4.3% by the results of Q1 2013.

The lowest prices in the primary market in Q1 2013 were recorded in administrative district (1 property was implemented here—mcr. Zeleny Bor, as well as in South-East administrative district, where the main supply volume was Source: Blackwood Company data presented within the framework of mcr. Nekrasovka-park lo- cated beyond MKAD in the area of Nekrasovka. The average supply prices in these AD settled at the level of 99, 140 and 114, 615 rub. per sq.m. respectively. Moscow. Trends and forecast The aggregate supply volume in the primary market by the Already started apartment complex in the structure of MFC results of Q1 2013 remained at the level of the previous period “Vodny” will soon be joined by apartment complex “Tsritsino-2”, and constituted 1.4 mln. sq.m. (including apartments and elite MFC “Fili-Grand”, etc. new buildings) and 262 properties. Nevertheless, new projects in a traditional segment are also Currently, the market continues its stable development. The expected to enter the market. Business class will include RC growth of prices in the market may be characterized as moder- “Donskoy Olymp” (SAD, Serpukhovsky Val), “Red Site” (CAD, ate with traditional seasonal fluctuations. The supply in the mar- Sergey Makeev str.), as far as the comfort class is concerned, ket is constantly increasing by new properties in all the seg- mcr. “Tsaritsino” will continue developing, economy class antici- ments. The deterioration of macroeconomic situation due to the pates the delivery of RC “Varshavskie Kholmi” (SAD, near Annino events in Cyprus did not affect the Moscow real estate market. metro station and Akademika Yangelya str.) from PIK group of company, as well as new buildings in RC “Nekrasovka-Park”. In the short term the market will actively increase by new supply in the segment of apartments. And if until quite recently this segment was represented predominantly by high-budget supply (business and elite class properties), then the project expected for entering the market, including rather large ones, are referred to the comfort class.

* - detailed analysis of this segment was carried out in Blackwood Company research “Business class primary market research, Moscow”

6 RESIDENTIAL REAL ESTATE MARKET OVERVIEW Q1 APARTMENTS* 2013

Moscow. Sale. Supply, prices In Q1 2013 the market of apartments in Moscow increased Complexes with apartments sold in the primary market of Mos- by the following properties: “U Patriarshikh” (11, M. Kozikhinsky cow in Q1 2013 per.), “Turandot Residences” (24-26, Arbat str.), “Golden Mile Private residences” (9/14, Ostozhenka str.) and MFC “IQ Quar- ter” (MIBC Moscow-City, site No11). Business class segment enlarged by RC “Khoroshy dom” (9, 2nd Khoroshevsky pr.) and loft-project “Loft-Park” (9, 2nd Khoroshevsky pr.) and a loft- project “Loft-Park” (46, Mikhaylovskaya str.). Moreover, the sales were launched in comfort class apart-complex “Vodny” (5, Golovinskoe highway) at the end of March 2013.

By the results of Q1 the supply volume in the primary market of apartments went 24.8% up and amounted to 305.5 thous. sq.m. (about 2, 750 apartments). Apartments were offered in 40 complexes. The share of apartments in the supply structure in the primary market of Moscow (within the former borders) raised by the results of the quarter and constituted 21.3%.

The average supply price in the primary market of apart- ments declined by 3.7% by the results of Q1 2013 due to the change of the supply structure (the delivery to the market of the comfort class properties). The average prices in the business and elite class apartments increased by 1 and 8.6% respec- tively. By the end of March 2013 the average supply price in the primary market of apartments constituted 299 thous. rub. per Source: Blackwood Company data sq.m. This index settled at the level of 483.6 thous. rub. per Supply structure in the primary market of apartments by dis- sq.m. in the segment of elite apartments, at the level of 170 tricts of Moscow, March 2013, % thous. rub. per sq.m. in the segment of business class apart- САD 51,1% ments, and 123.5 thous. rub. per sq.m. in the comfort class seg- SEAD ment. 1,5% SAD 0,2% SWAD Moscow. Trends and forecast 1,0% NEAD In Q1 2013 the segment of apartments reached the maxi- 1,4% EAD mum share (21.3%), however, it was not the limit yet. In Q2 1,7% NAD WAD NWAD 2013 the market will see apartments in MFC “Fili-Grad” (5, Bere- 32,8% 6,1% 4,3% govaya str.), “TriBeCa APART-MENTS” (35, N.Krasnoselskaya Source: Blackwood Company data str., bld. 48/50), “Bruce Boutique Apartments” (2/14 Brusov Dynamics of average prices in the primary market of apart- per.), the open sales will start in “Borisovsky dom” (63, Kashir- ments and the supply structure by classes skoe highway, bld.3), mcr. Tsaritsino-2 (11, Elevatornaya str.). Moreover, apartments were announced in RC “Komsomolsky de luxe” (1, Komsomolsky pr.) and MFC with apartments in Berezhkovskaya embankment. thou. rub. business elite comfort The segment of apartments will probably go through per sq. m changes on the legislative level. Currently, the draft regulations 500 450 483,6 for city planning is under development, it covers the issue of 400 350 social and cultural facilities planning for apartment properties. 300 On the one hand, it will be a burden for developers, on the other 250 200 170,0 hand, it will be a considerable plus for buyers and, consequently, 150 it will raise demand for this segment practically to the same 100 50 123,5 level as the level of residential projects upon complying with all .11 .12 .11 .11 r.12 y y g p

the requirements of the correspondent class. p Jul.11 Jul.12 A Apr.11 Oct.11 Oct.12 Jan.12 Jan.13 Jun.11 Jun.12 Feb.12 Mar.12 Feb.13 Mar.13 Jan-11 Se Feb-11 Mar-11 Nov.11 Dec.11 Au Aug.12 Sep.12 Nov.12 Dec.12 Dec-10 Ma Ma

Source: Blackwood Company data * - detailed analysis of the market of apartments was carried out in the research of Blackwood Company

7 RESIDENTIAL REAL ESTATE MARKET OVERVIEW Q1 ELITE RESIDENTIAL REAL ESTATE 2013

Moscow. Sale. Supply By the end of Q1 2013 the supply volume in the elite primary Elite new buildings sold in the primary market in Q1 2013. market* of Moscow amounted to 940 flats in 43 complexes (170 thous. sq.m). The summary area in the supply in the elite pri- mary market by the results of Q1 gained 4.5%. In Q1 2013 the market enlarged by three new properties: RC “Grand deluxe in Pluschikha” (4, Pogodinskaya str.), 1, Plotnikov per., RC “Bulgakov” (25, B. Kozikhinsky per.).

The supply volume in the secondary market constituted 1, 100 flats (230 thous. sq.m) by the end of Q1 2013. By the results of the quarter this index declined by 4% versus December 2012.

About 30% of all the elite supply was represented by flats, measuring 151-200 sq.m. The average area of properties on offer in the primary and secondary market reached 203 sq.m in March 2013.

The leader by the supply volume was still Khamovniki dis- trict—the most developed district of CAD. The sale of large high- quality complexes became possible due to active withdrawal of industrial zones. More than 70% of the supply of the primary market and 40% of the secondary one were noted in the area of Khamovniki.

As far as the long-term projects are concerned, the introduc- tion of a new club house in the area of Ostozhenka, the second Source: Blackwood Company data stage of RC “Sadovie Kvartali” and a residential part of RC Supply structure of elite new buildings by districts of CAD, “Wine House” in the Sadovnicheskaya street, where the sale of March 2013, % loft-apartments is under way, is possible. Moreover, in Q 1 2013 the news about the site at 21, Kotelnicheskaya embankment, where the construction of a high-quality residential complex had been planned already before the crisis, appeared in the market.

Urban Planning and Land Commission of Moscow agreed with city development plan for land for the construction of an administrative and educational and a residential complex on this territory, the surface area of which will constitute 16.75 thous. sq.m., as well as an underground parking for 110 parking lots.

Supply structure in the secondary elite residential market by Supply structure by area of flats in the primary and secondary districts of CAD, March 2013, % elite residential market, March 2013, %

Source: Blackwood Company data Source: Blackwood Company data * - exclusive of apartments, which are considered in “Apartments” section

8 RESIDENTIAL REAL ESTATE MARKET OVERVIEW Q1 ELITE RESIDENTIAL REAL ESTATE 2013

Moscow. Sale. Demand In Q1 2013 buyers’ activity declined a little bit, which caused Dynamics of demand* in the market of high-budget residential the decrease of a number of primary requests, concerning the space, % purchase of elite real estate (-10% versus the analogous index of past year).

The summary volume of sold residential space in the primary market by the results of Q1 2013 was estimated at the level of 19.7 thous. sq.m (about 90 flats), which corresponded to the index of analogous period of the past year.

Such residential complexes as “Literator”, “Knightsbridge Private Park” and 24, Smolensky boulevard were of the highest demand. The majority of requests were for Khamovniki (35% of requests), Tverskoy (22% of requests), Presnensky (18% of requests) and Arbat (12% of requests) districts. * - requests for the purchase of residential space from Blackwood Company, January of the corresponding year - 100%

Demand structure by areas of flats, Q1 2013 Demand structure by budgets, Q1 2013

Source: incoming requests to Blackwood Company Moscow. Sale. Prices Source: incoming requests to Blackwood Company Dynamics of the average prices in the elite residential market The average price in the elite primary market reached $19, 960 (618.8 thou. rub.) per sq.m. at the end of March 2013. The flats in the secondary market were offered at the price of $24, 300 (753.3 thous. rub.) per sq.m on average.

By the results of Q1 2013 the average dollar price of elite residential supply did not undergo any tangible changes: +0.6% in the primary market and –0.3% in the secondary one. The av- erage ruble price raised a little bit both in the primary and in the secondary markets: 2.2% and 1.3% respectively.

No price decline was observed in price-lists, the prices even raised for flats in some complexes at the active construction stage (not more than 5%).

The most expensive new buildings in Moscow, March 2013 Price, Address District $ per sq.m 8/9, 1st Zachatievsky per., CAD/Khamovniki up to 63 200 RC “Barkli Virgin House” (Ostozhenka) 8, Granatny per. CAD/Presnensky up to 45 000 RC “Granatny Palace” 16, Kooperativnaya str. CAD/Khamovniki up to 40 000 RC “Knightsbridge Private Park” 12A, Bogoslovsky per. CAD/Presnensky up to 40 000

CAD/Khamovniki 13,Prechistenka str. up to 40 000 (Ostozhenka) Source: Blackwood Company data Source: Blackwood Company data

9 RESIDENTIAL REAL ESTATE MARKET OVERVIEW Q1 ELITE RESIDENTIAL REAL ESTATE 2013

Moscow. Sale. Prices Average prices for elite residential space, March 2013 Current average prices are still below the pre-crisis level by 2.2% in the primary market and by 9% in the secondary one. Nevertheless, considerable change of the supply structure due to delivery of new projects at rather low prices has the main im- pact on the situation when the level of prices has not reached the pre-crisis one.

More than 60% of supply in the elite market of flats were sold at the price of more than $3 mln. The most in-demand budget ($1-$2 mln.) equaled to only 15.9% of supply. The average sup- ply budget amounted to $4.1 in the primary elite market and to $5.1mln. in the secondary one in March 2013. These indices did not change versus the level of December 2012.

Moscow. Sale. Trends and forecast The main trends of the elite residential market in Q1 2013 include:

− the growth of the supply volume, introduction of new projects to the market;

− minor decrease of primary requests concerning the purchase Source: Blackwood Company data of elite real estate versus the analogous period of the past Supply structure by budgets in the primary and secondary elite year, and the volume of sale of flats in this segment was pre- residential markets in Moscow, March 2013, % served at the level of the analogous period of the past year;

− stagnation of the average prices of supply, increase of prices for some properties (not more than 5%).

According to our forecasts, new properties will continue to enter the market, however, the delivery of the largest projects is expected not earlier than Q3-4 2013. It is possible that new com- plexes with finished flats will appear in the market. The prices will grow more actively for some projects at active stage of con- struction. The growth of average price indices will in most likeli- hood be insignificant and will not exceed 5-7% by the results of the year. Source: Blackwood Company data

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RESIDENTIAL REAL ESTATE MARKET OVERVIEW Q1 ELITE RESIDENTIAL REAL ESTATE 2013

Moscow. Rent. Supply The growth of tenants’ activity in Q1 2013 was noted already Dynamics of new supply*, % to the base period in February—the number of new offers in the base of the com- pany increased versus January (the base month) more than by 2.5 times and more than by 3 times in March. Such burst of ten- ants’ activity represented a traditional spring “peak” of the rental market, which was characteristic of the market on the whole, and of the elite segment in particular.

The largest supply volumes in the segment of elite city rent in Q1 2013 were concentrated within CAD in Khamovniki (Ostozhenka-Prechistenka), Tverskoy and Arbat areas—the summary share of their supply exceeded 60% of the total supply volume of elite flats in the center of Moscow. Presnensky district occupied high share in the overall supply structure as well, first of all, due to apartments in MIBC Moscow-City towers. The main *- flats in the base of Blackwood Company; supply volumes beyond CAD were concentrated in west districts January of the corresponding year - 100% of Moscow, where large number of business and premium class new buildings were located.

3-room flats (2 bedrooms) had the leading position (about Supply structure by districts of CAD, Q1 2013 40%) in the supply structure. A little bit less supply volume was concentrated in the segment of 4-room flats.

The average area of offered for rent elite flats was at the level of 140 sq.m.

The maximum share in the supply structure by price (almost 20%) was occupied by the range of $4, 500-$6, 000 per flat per month at the end of Q1 2013, however, on the whole, the supply was distributed rather evenly in the budgets of $3, 000 to $10, 000 per month.

Source: Blackwood Company data

Supply structure by number of rooms, Q1 2013 Supply structure by budgets, $ per month

Source: Blackwood Company data Source: Blackwood Company data

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RESIDENTIAL REAL ESTATE MARKET OVERVIEW Q1 ELITE RESIDENTIAL REAL ESTATE 2013

Moscow. Rent. Demand Seasonality influenced the demand in the elite rental seg- Demand dynamics*, % to the base period ment as well. During Q1 2013 the growth of a number of re- quests was observed. Thus, the number of incoming requests to the company had increased 1.5 times by March versus January indices.

As a rule, the search of flats for rent after the New Year holi- days is resumed at this time both by Russian and foreign clients and is continued till the end of summer.

But no growth of demand volumes in quantitative terms was observed—the market was rather stable and the level of de- mand had stayed at a high level already for a long time.

The most popular districts among tenants were traditionally *- requests to Blackwood Company; Khamovniki, Arbat and Tverskoy districts. And the areas of January of the corresponding period- 100% Chistie Prudi () and Moscow-City (Presnensky district) were of the highest demand. Demand structure by districts of CAD, % of the total number of requests The most frequently requested flats for rent in the elite seg- ment were 2– and 3– room flats (37% and 35% respectively), which was quite regular: as a rule, clients’ minimum request was the availability of a separate bedroom and a living room.

The budget of up to $3, 000 per month had the main share in the structure of requests by budgets. The most expensive flats - $10, 000 per month and more were of the lowest demand.

The level of the average requested budget in Q1 2013 stayed at the level of $5, 500 per flat.

Source: incoming requests to Blackwood Company

Demand structure by number of rooms*, % of the total number Demand structure by budgets, $ per month, % of the total num- of requests ber of requests

* - requested minimal number of rooms Source: incoming requests to Blackwood Company Source: incoming requests to Blackwood Company

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RESIDENTIAL REAL ESTATE MARKET OVERVIEW Q1 ELITE RESIDENTIAL REAL ESTATE 2013

Moscow. Rent. Rates Dynamics of rental level in Q1 2013 in the elite rental resi- Dynamics of the average rental level, $ per month dential segment turned out to be positive and reflected the influ- ence of a seasonality factor: the increase of demand volumes upon stably limited volume of high-quality supply.

By the end of Q1 2013 the average rental rate reached the index of $8, 900 per flat per month. The growth per flat consti- tuted 5%. The rental level of the past year (with account for sea- sonal declines of the end of 2012) was exceeded by 3.5%.

The most expensive district by the results of Q1 2013 was Presnensky district due to the predominance of expensive apart- ments in Moscow-City in the supply structure—the average level of rental rate in this district stayed at the level of $12, 500 per month. traditionally turned out to be the sec- Source: Blackwood Company data ond by price characteristics ($11, 700 per flat per month). Rental rate by districts of CAD, March 2013, $ per month The average level of rental rate was much lower in other districts. The lowest prices were noted in Meschansky district.

The maximum level of price asked for a flat rent in Moscow turned out to be at the level of $82, 860 (a flat in one of the mod- ern elite houses in Ostozhenka) by the results of Q1 2013. In other regions of Moscow the prices also reached rather high indices: Chistie Prudi (Krasnoselsky district) - $50, 000, Pres- nensky—$35, 000. Remarkably, such flats, despite high level of prices succeeded in finding tenants. However, the level of $30, 000-$35, 000 per month still remained a psychological threshold for conclusion of transactions.

The average level of discounts provided by landlords in the course of negotiations stayed at traditional level of 3-5%.

Source: Blackwood Company data The average level of rental rate, depending on the number of The most expensive flats for rent in Moscow, March 2013 rooms, March 2013

Average level of rental rate, Rental price, Number Address District Area, sq.m $ per month. $ per month CAD/Khamovniki- 1 room 2, 500 Barikovsky per. 540 82, 860 Ostozhenka

2 room 5, 600 CAD/Khamovniki- Butikovsky per. 293 60, 000 Ostozhenka 3 room 8, 200 Sretensky boul. CAD/Krasnoselsky 400 50, 000 4 room 9, 500 8, Presnenskaya emb. CAD/Presnensky 250 35, 000 5 and more rooms 12, 500

Source: Blackwood Company data Source: Blackwood Company data

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RESIDENTIAL REAL ESTATE MARKET OVERVIEW Q1 ELITE RESIDENTIAL REAL ESTATE 2013

Moscow Region. Rent of cottages

The first decade of 2013 was traditionally the beginning of Dynamics of supply volumes of cottages* the season—the period of active search and renewal of supply of cottages for rent. The volumes of new supply in the company base raised versus January indices 1.5 times.

The demand, rather high during the whole year, had also increased by the end of Q1. With account of the current lack of liquid supply, including the one in the format of organized rent, the properties with optimal quality-price ratio were leased very quickly.

The main supply volume was concentrated in west directions and Rublevo-Uspenskoe direction remained the permanent leader. 40% of the overall supply volume were offered here. Novorizhskoe and Volokolamskoe directions followed and took *- properties in the base of Blackwood Company; 1/5 of the total supply volume. This trend, owing to the status of this direction, has been pre- The average area of offered for rent cottage was at the level served for many years. Novorizhskoe direction stably took the sec- of 550 sq.m. ond place due to its active development and rather convenient transport accessibility. The houses at the price of $5, 000-$10, 000 per month had the main share in the budget structure, the share of houses of- The average requested budget in the countryside rental mar- fered for $10, 000-$15, 000 was a little bit lower. ket amounted to $13, 760 per house per month at the end of Q1 2013. And the main demand was concentrated in the budget of $5, The maximum demand volume in Q1 2013 was concentrated 000-10, 000 per month . in the Rublevo-Uspenskoe highway.

Supply structure of cottages by directions of the Moscow Supply structure of cottages by budgets, Region, Q1 2013 $ per month, Q1 2013

Source: Blackwood Company data Source: Blackwood Company data Demand structure of cottages by directions of the Moscow Re- Demand structure of cottages by directions of the Moscow Re- gion, Q1 2013 gion, Q1 2013

* - the choice is not limited by one direction Source: incoming requests to Blackwood Company Source: incoming requests to Blackwood Company

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RESIDENTIAL REAL ESTATE MARKET OVERVIEW Q1 ELITE RESIDENTIAL REAL ESTATE 2013

Moscow Region. Rent of cottages The maximum level of rental rate requested for a countryside Rental rate for elite cottages by directions of MR, March 2013, $ house by owners was noted in the Rublevo-Uspenskoe highway per month (the supply prices here reached $150, 000 per house per month). The highest level of rental rate was also noted here— $25, 800 per house.

By the end of 1 2013 the average level of rental rate in the segment of high-quality countryside rent reached the index of $16, 900 per house per month. The growth for the quarter ac- counted for 2.5%.

Dynamics of the average level of rental rate for elite cottages, $ per month

Source: Blackwood Company data Source: Blackwood Company data

Moscow. Rent. Trends and forecast Currently, the balance of demand and supply is observed in The growth of price indices is anticipated in the segment of the elite rental market. Generally, the elite rental market is a countryside rent, the peak of which, as a rule, falls at the end of rather stable and tranquil segment in the absence of any exter- summer. And on the whole the supply prices may grow in higher nal turmoil: neither considerable upsurges, nor considerable paces than in the segment of city rent due to the lack of high- drops are noted here. quality supply in the market. The properties with optimal price- quality ratio will still leave the market rather quickly. Nowadays the main changes are referred to the impact of a seasonality factor—both owners’ and tenants’ activity, and, con- sequently, prices will in most likelihood continue to grow till the beginning of summer. And some downward correction of prices should be expected in the summer period.

15 RESIDENTIAL REAL ESTATE MARKET OVERVIEW Q1 RESIDENTIAL REAL ESTATE 2013

Moscow Region. Supply Dynamics of supply volume in the primary market of Moscow Despite authorities’ announcements concerning the recon- Region sideration of contracts and suspension of new permission grants, high construction activity is preserved on the territory of the Moscow Region. The primary market increased by offers in more than 100 addresses in Q1 2013, and the supply volume amounted to 1, 230 houses at the end of March 2013 (+1% ver- sus December 2012).The main volume of new supply was pre- sented in the comfort class—70% of new buildings appeared in the market in Q1 2013 referred to this segment. The economy class segment accounted for 30%.

The enhancement of low– and mid-rise construction develop- ment was observed on the territory of the Moscow Region. 33% Source: Blackwood Company data of delivered to the market properties belonged to the segment of Supply structure of new buildings in Moscow Region by classes, March 2013 mid-rise construction, 16% - to the low-rise construction. They included RC “Almazovo Park”, “Vostochnaay Evropa” near Bol- shie Zherebtsi of Schelkovo region, RC “Vesna” in , RC “Ilyinskaya sloboda” in Ilyinsky settlement of Ramensky region, RC “Pyatnitskie Kvartali” near Saburovo vil- lage of Krasnogorsk region, etc. In addition to offers in residen- tial projects of low-rise and mid-rise development, the sales started in high-rise residential complexes as well in the first months of 2013. They included residential complex “Novoe Pushkino” in Pushkin, RC “Optima-park” in mcr. Skhodnya, RC

“Dom na vidy” in Vidnoe, multifunctional complex “Atletic House” Source: Blackwood Company data in Lubertsi, moreover, the sales started in new buildings of RC “Novokosino-2” in , “Mikrogorod v lesu” near Otradnoe settlement of Krasnogorsk region, etc.

Some residential projects, which entered the market in Q1 2013 Total residential Name of RC Address Developer Class area, sq. m Vesna Aprelevka, RC Vesna, bld. 13. 14 OJCS OPIN/LLC Martemyanovo comfort 28, 090 Almazovo park Bolshie Zherebtsi village, RC Almazovo park, bld. 8, 9 CJSC MC Vostochnaya Evropa comfort 9, 840 Atletik House Lubertsi, MFC Arletik house LLC GSI economy 10, 370 Mikrogorod v lesu Otradnoe, RC Mikrogorod v lesu, bld. 11, 14 LLC Dzhevosset comfort 39, 930 Vostochnaya Evropa Bolshie Zherebtsi vill., RC Vostochnaya Evropa, bld. 7- CJSC MC Vostochnaya Evropa comfort 18, 740 9 Gorod Naberezhnikh , mcr. Klyazma-Starbeevo Urban Group/LLC Eco town comfort 25, 830 Dom na vidu Vidnoe, Leninskogo Komsomola pr-t GC Remix/LLC PLK-Raduga comfort 7, 650

Zagorodny kvartal Khimki, mcr. Ivacino, RC Zagorodny Kvartal, bld. 7, 8, RDI Group/LLC Sheremetyevo-4 comfort 20, 580 17, 18 Ilyinskaya sloboda Ilyinsky settlement, RC Ilyinskaya sloboda, bld. 1-5 GC Morton economy 5, 700 Kvartal Evropa , Sholnaya str, bld. 2-4 LLC Elit Kom economy 8, 160 Novoe Pushkinio Pushkino, RC Novoe Pushkino, bld. 1-3 LLC Flagman economy 34, 020 Novokosino-2 Reutov, mcr. Novokosino-2, bld. 3 IC Expert comfort 49, 940 Optima-park Khimki, mcr. Skhodnya, RC Optima-park, bld. 1-2 LLC GEOKOM comfort 27, 570 Otrada Otradnoe settlement, RC Otrada, bld. 30, 34 LLC Otrada Development comfort 8, 150 Pyatnitskie kvartali Saburovo village, RC Pyatnitskie kvartali, bld. 1, 2 Urban Group/CJSC Sab-Urban comfort 5, 870 Source: Blackwood Company data

16 RESIDENTIAL REAL ESTATE MARKET OVERVIEW Q1 RESIDENTIAL REAL ESTATE 2013

Moscow Region. Demand Number of registered rights for residential premises and transactions with them in Moscow Region, thous.units According to Rosreestr Administration of the Moscow Region the number of registered rights for residential premises declined in the first months of 2013 versus the indices of the end of 2012. In Q1 2013 this index corresponded to 146, 404 units. In com- parison with the previous periods a number of mortgage transac- tions declined considerably (31, 879).

The primary market was rather buoyant in Q1 2013, however the indices of a number of registered transactions under equity participation agreements (17, 335 registered agreements) fell behind the indices of the previous and analogous periods of 2012. Source: data of Rosreestr Administration Dynamics of average-weighted supply price in new buildings of Moscow Region Moscow Region. Prices

For the first months of 2013 the average price level in new buildings of the Moscow Region went 2.8% up in the ruble equivalent and amounted to 72, 300 rub. per sq.m, therefore, exceeding the pre-crisis index by 6%. The increase of the aver- age supply price (by 2.6%) up to the level of $2, 348 per sq.m was recorded in American currency as well.

The increase of the average supply prices was conditioned by the price level advance in new buildings in the near distance Source: Blackwood Company data belt, where the main volume of new buildings was concentrated. By the results of the past quarter the prices grew by 4% on aver- Average-weighted supply prices for new buildings in towns of Moscow Region, $ per sq.m., March 2013 age to the level of 450 rub. per sq.m in towns and settlements, bordering the capital (up to 5km from MKAD).

The price level gained 3% in the comfort class due to the introduction of a rather large volume of supply on the territories of Moscow vicinity, while in other segments (economy class and business class) no considerable price changes took place.

Moscow Region. Trends and forecast

In the first months of 2013 a positive price dynamics was noted in the primary market of the Moscow Region upon high indices of the supply volumes and a rather high level of buyers’ activity. On the threshold and during the period of summer holidays some demand decline on the part of buyers is possible, which, in the conditions of high indices of the supply volumes in new buildings of the Moscow Region will contribute to the preserva- tion of the price level. We anticipate that the price growth will not surpass 5-7% in 2013.

Source: Blackwood Company data

17 RESIDENTIAL REAL ESTATE MARKET OVERVIEW Q1 RESIDENTIAL REAL ESTATE 2013

New Moscow*. Supply Dynamics of supply volume in the primary market of New The primary residential market of New Moscow experienced Moscow the increase of supply volumes. In Q1 2013, 202 properties pre- sented offers for sale, which was 2.5% higher than the indices of the previous period. And about 6, 620 flats were put on sale (+13% versus Q4 2012).

Despite the increase of supply volumes, new projects en- tered the market in limited quantities. New offers were mainly represented by flats in separate buildings of earlier commis- sioned residential complexes.

All in all, for the period under consideration the sales started in 20 addresses (10% of the total supply in Q1 2013). Mainly, Source: Blackwood Company data new offers were presented in economy class segment and in- Supply structure of new buildings in New Moscow by cluded new buildings in RC “Pervy Moskovsky” in Moskovsky classes, March 2013 town, RC “Peredelkino Blizhnee” near Rasskazovka village. Comfort class segment enlarged by offers in new buildings of RC “Nikolin Park” near Nikolo-Khovanskoe village.

New projects included residential complexes “Buninsky” near Stolbovo village (8 km from MKAD along the Varshavskoe high- way) and “Zelenaya ” in Marushkino settlement (15 km from MKAD along the Borovskoe highway).

New buildings located in the vicinity from MKAD prevailed in the supply structure of the primary market of New Moscow. Of- Source: Blackwood Company data fers in the territorial belt of up to 5 km from MKAD, the main sup- Supply structure of new buildings in New Moscow by dis- ply volume of which was concentrated in Kommunarka settle- tance from MKAD, March 2013 ment, accounted for approximately 30%. Almost half (49%) of all the offered new buildings of New Moscow was presented in towns and settlements within 6-15 km from MKAD. They in- cluded properties in Moskovsky, Scherbinka, Maryino settle- ment, etc.

Source: Blackwood Company data Some residential projects introduced to the market in Q1 2013

Total residential Name Address Developer Class area, sq.m

Buninsky Stolbovo village, RC Buninsky, bld. 11, 14 GC PIK/OJSC Status Land economy 23, 420

Zelenaya Moskva Marushkino settlement, RC Zelenaya Moskva, bld. 3, GC Leader Group economy/ 31, 180 4, pr. 3 comfort Nikolin Park Nikolo-Khovanskoe village, RC Nikolin park, bld. 3, Sezar Group /OJSC Istochnik comfort 18, 060 10 Pervy Moskovsky Moskovsky, RC Pervy Moskovsky, bld. 1, 6, 14 IG Absolut/OJSC Sovkhoz economy 49, 240 Moskovsky+

Peredelkino Blizhnee Rasskazovka village, RC Peredelkino Blizhnee, (1 IG Absolut/OJSC Oleta economy/ 73, 920 stage) bld. 7, (2nd stage)bld. 1, 2, 3, 7, 9 comfort Source: Blackwood Company data

* Detailed analysis of the primary market of New Moscow was carried out in the research of Blackwood Company “Residential real estate market overview. New Moscow. July 2012”

18 RESIDENTIAL REAL ESTATE MARKET OVERVIEW Q1 RESIDENTIAL REAL ESTATE 2013

New Moscow. Prices

The prices in the primary market of New Moscow did not Dynamics of average-weighted supply prices in new buildings undergo any tangible changes in Q1 2013. At the end of March of New Moscow 2013 the price level of new buildings corresponded to 86, 000 rub. per sq.m, which was higher than the index of December 2012 by 1%. The prices in American currency gained 1% as well, and the average supply price amounted to $2, 792 per sq.m. Since the moment of announcement about the annexation of south-west territories to the structure of the capital, the prices for flats in the primary market of New Moscow advanced by 35% in the ruble equivalent and by 22% in dollars.

The largest increase of prices in the period under considera- tion was noted in economy class new buildings—by 3%. The average price in this segment corresponded to 82, 100 rub. per sq.m. Source: Blackwood Company data business class flats were offered at the price of 125, 700 rub. per The prices for flats in business and comfort class houses sq.m on average, comfort class flats were offered at the price of stayed practically at the same level. At the end of March 2013 84, 800 rub. per sq.m.

Average-weighted supply prices in new buildings of New Average-weighted supply prices in new buildings of New Moscow by classes, March 2013 Moscow, $ per sq.m, March 2013

Source: Blackwood Company data

New Moscow. Trends and forecast

Stable price situation was characteristic of the primary mar- ket of New Moscow in Q1 2013 under the conditions of supply volumes increase. New residential projects entered the market in limited quantities, and the main volume of new supply con- sisted of offers in new buildings of earlier commenced residential complexes, including rather large ones.

In the short term stable indices of primary supply are ex- pected on the annexed territories, which upon the preservation of moderate level of demand on the part of buyers will contribute to the preservation of prices at the same level with possible growth within 0.5-1% per month.

Source: Blackwood Company data

19 ОБЗОР РЫНКА ЖИЛОЙ НЕДВИЖИМОСТИ RESIDENTIAL REAL ESTATE MARKET OVERVIEW Q1 ЗАГОРОДНАЯ ЖИЛАЯ НЕДВИЖИМОСТЬ 1 квартал 2013 RESIDENTIAL REAL ESTATE 2013

Organized countryside settlements. Supply The development of the countryside residential real estate Structure of new settlements delivered to the market, by di- market took place at fast paces in Q1 2013: 15 settlements en- rections and by distance from MKAD, Q1 2013, % tered the market in the past period, which was higher than the average quarterly index of last years.

The format of townhouses is still the most popular segment for the countryside development: blocked dwellings were offered for sale in 10 of 15 introduced to the market projects: RC “ Town” (Kashirskoe highway, 17 km), RC “Kamelot” (Kievskoe highway, 21 km), cottage settlement “Kronburg” (Kaluzhskoe highway, 12 km), CS “Pushkinskoe ozero” (Yaroslavskoe highway, 25 km), “Martemyanovo- Source: Blackwood Company data park” (Kievskoe highway, 25 km), CS “Arkhangelskaya rivi- Dynamics of new settlements delivery to the market, era” (Novorizhskoe highway, 7 km), CS “Lesnaya rezident- April 2011 - 100% siya” (Novorizhskoe highway, 38 km). Moreover, the sales of townhouses within the framework of the projects second stage started in “Artek” and “Ecopark Gorchakovo” settlements.

In addition to it, the preliminary sales were announced in two cottage settlements in the Novorizhkoe highway—CS “Kembridzh” (LLC MC Promsvyaz), CS “Petrovo-Dalnee” (Penny Lane Realty).

Despite developers’ high activity, no elite class project was announced in Q1 2013. Economy class projects still prevailed in the new supply (8 of 15 settlements). Mid-distance belt -15-30 km from MKAD (33% of new supply) was under the most active development.

Source: Blackwood Company data

Organized countryside settlements. Prices The price situation in the residential countryside real estate Dynamics of price for countryside residential space, $/ sq.m market was stable in Q1 2013: the growth of prices was incon- siderable. And the fluctuation dynamics for some projects was still relevant: the average price level was gradually growing in the most liquid settlements, while less successful projects, in- cluding the completed ones, experienced price decline. At the end of Q1 2013 the average supply prices in the countryside residential real estate market turned out to be the following: the price of 1 sq.m of a cottage (including the price of land) reached $4, 840 in elite settlements, $3, 330 in business class settle- ments and $1, 600 in economy class settlements. The situation remained stable in the segment of land plots without building contracts, the price growth of 1 sotka of land constituted 5-10%. On the whole, it may be noted that despite buyers’ rather high Source: Blackwood Company data activity in all the classes, the demand for countryside real estate was still elastic by price—a buyer was still sensitive to the total budget of a purchase (total price of a property) in all the seg- ments, and its price expectations were still lower than the pre- crisis ones.

20 ОБЗОР РЫНКА ЖИЛОЙ НЕДВИЖИМОСТИ RESIDENTIAL REAL ESTATE MARKET OVERVIEW Q1 ЗАГОРОДНАЯ ЖИЛАЯ НЕДВИЖИМОСТЬ 1 квартал 2013 RESIDENTIAL REAL ESTATE 2013

Organized countryside settlements. Demand Clients’ preferences by distance of a property from MKAD, % Buyers’ activity in the countryside high-budget real estate of the total number of requests, Q1 2013 market was rather high in Q1 2013: a number of incoming re- quests to Blackwood Company surpassed the analogous index of the past year almost twice. Novorizhskoe and Rublevo-Uspenskoe directions tradition- ally hold the leading positions in demand for high-budget coun- tryside real estate: by results of Q1 2013 these directions had 35% and 24% of requests respectively. Demand structure by area of land plots, % of the total number

Rating of the main directions by the level of demand for countryside high-budget residential space, % of the total number of requests, Q1 2013

Demand structure by area of cottages, % of the total number of requests, Q1 2013

Source: Blackwood Company data

Cottages of 300-400 and 400-500 sq.m on land plots of up to Clients’ budgets in the segment of high-budget countryside real estate, % of the total number of requests, Q1 2013 15 sotkas were of the highest demand in Q1 2013, and as far as a purchase budget was concerned, the largest one by the re- sults of Q1 2013 was concentrated in the segment of $1 mln. - $.1.5 mln. The trend of decline of the average requested area both of a cottage and of a house land plot should be noted, which to a greater extent was conditioned by their wish to re- duce a total purchase budget.

As far as the demand structure in the segment of land plots without building contracts was concerned, the most in-demand in this segment were the properties, measuring 20-30 sotkas, Source: incoming requests to Blackwood Company in Q1 2013 located in Novorizhskoe and Rublevo-Uspenskoe directions at the price of up to $1 mln. (approx 30% of all the requests).

Main trends and forecasts Main trends of the countryside residential real estate market On the whole, the preservation of the main trends is expected in Q1 2013: during 2013: the increase of economy class projects and the lack of high-quality supply. Land plots without building contracts will • the growth of developers’ activity; remain the most in-demand segments, as well as high-quality • development of townhouses format; ready cottages in residential settlements at high readiness stage. The growth of prices at the level of 5-10% is possible in the most • introduction of new projects of complex multiformat liquid projects at high readiness stage. development.

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