Moscow Elite Housing Market 2010 results Forecast for 2011 IntermarkSavills Research www.intermarksavills.ru MOSCOW 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 Khamovniki District (half of them – in the Ostozhenka District), approximately 18% – in the Tverskoy District, 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 Garden Ring. 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