The development of countryside settlements began in the late 1990s – early 2000s. Unlike today, when elite projects include also townhouses and apartments, only cottages were offered for sale in the first elite settlements.

Most settlements in which now primary sales are underway were delivered in 2006. 

Over the last years, prices of elite countryside properties continued to grow.

Graph. Analysis of dynamics of 1 sq. m. of cottages (taking into consideration adjacent land plots) quarterly from Q2 2007 to Q2 2009, USD/sq. m.

 Source: information supplied by Blackwood

Russia felt the financial crisis for the first time in September 2008. However, developers were reluctant to decrease prices. In Q4 2008, the market came to a standstill and market players adopted a wait-and-see approach. In this period, demand was stagnating. Perspective buyers postponed all purchases of real estate. Overall, from Q4 2008 to Q2 2009, the price reduction of countryside properties amounted to 27%.

The Market Research of Elite Settlements will focus on the analysis of the elite settlement market, its formation and main trends. In order to understand the current market processes and estimate the impact of the financial crisis over the countryside residential real estate market nationwide, we studied the whole elite segment including cottage settlements at the primary and secondary sale stage. 

Our idea was to study the market of organized settlements starting from its formation and review the most important settlements in the elite market of Moscow Region. We also dedicated special attention to the architecture of these settlements and their success factor analysis.

In our Research, you may find complete information about the elite settlements of Moscow Region as well as see various graphic materials, such as maps, graphs, spreadsheets and charts provided with detailed analytical comments.

This survey targets both professional market players (developers, analysts, real estate agents, consultants) and potential buyers of elite residential property who seek to get the whole picture of the elite residential property market. This survey may also be interesting for the companies contemplating elite development projects.

We conducted a complete market analysis based on 112 business class residential complexes currently in the primary market of

Moscow . Most of them are located in WAD and SWAD. As of March 2009, the median price for new business class homes amounted to 205,2 thous. rubles per sq. m. ($6 050 per sq. m.). Three years ago, it was 83,5 thous. rubles per sq. m. ($2 900 per sq. m.).

On the whole, the Research will let you get full understanding of new business class residential buildings market of

Moscow : classification of business class homes, main developers, volume and structure indexes of the primary market, price analysis of supply starting from 2006. We also study the influence of the global financial crisis over the residential real estate market of

Moscow and we give our expert opinion on the market prospects. 

Graph. Dynamics of median price of 1 sq. m. in new business class residential buildings of Moscow

Source: Blackwood research

This Research targets both professional market players (developers, analysts, real estate agents, consultants) and potential buyers of residential properties who seek to get the whole picture of the business class residential property market. This Research may also prove interesting for companies contemplating business class development projects.

Many tenants on the Moscow market signed lease agreements on the top of the market and were forced to accept high rents and unfavorable conditions in the landlord market where there was little space available.

In the global crisis the market has changed into a complete tenant market. There is a 20% vacancy in Moscow , rents have come down and landlords are desperately looking for tenants.

At Blackwood, we can help you renegotiate your current rent agreement to lower rents and more favorable contract conditions (take out penalties, obligations from agreement, etc.). As an intermediary Blackwood will go out on the market and find the best suitable properties that could be an alternative to your current location, thus creating leverage.

Blackwood will use this leverage to negotiate lower rents and a better agreement for you on your existing property. As an intermediary Blackwood will protect your relationship with landlord and make sure you get the best possible deal.

Blackwood will work on a success only fee, allowing you to pay for Blackwood’s services only if savings are achieved.

 See the details here

Over the last few years, the amount of multi-format projects in the countryside real estate market of Moscow Region grew fast but this trend was interrupted by the crisis. At the moment of writing of this Research, the share of mixed development projects reached 15% of the primary countryside market. The most popular combination is cottages and detached houses (townhouses, duplexes, etc.), such projects make up 78% of the primary supply.      

Diagram. Structure of the mixed development segment by type of households, %

Source: information collected by Blackwood

Besides, we review the segment structure by the directions, distance from MKAD, characteristics of households and land plots, infrastructure volume, price indexes, etc. Taking into consideration the reasons why the mixed development segment emerged and its development prospects, we’re safe to say that developers will return to their multi-format projects due to their undisputable advantages and a high level of competition in the countryside market which will only increase after the market stabilizes.  

This Research targets both professional market players (developers, analysts, real estate agents, consultants) and potential buyers of countryside property who seek to get the whole picture of economy class settlements. The Research may also be interesting for the companies contemplating multi-format development projects.

The prices of elite residential properties didn’t undergo any drastic changes, yet, the delivery of many new projects was rescheduled. Business class is the segment most hit by the economic downturn: new projects have been put on hold, demand in settlements under construction is at the lowest level, and price reduction amounts to 20%. As for the economy class segment, it proved to be quite stable, as shows The Research of Countryside Economy Class Settlements. Despite the fact that price reduction sometimes reaches 40%, most settlements that have been coming on to the market since September 2008 are economy class (60%).

Graph. Delivery dynamics of settlements broken down by months, depending upon the class, %

One of the reasons of such stability is a low level of risks: there’s no need for big investments and the target audience is more expanded than in expensive segments. Besides, the economy class segment is not overestimated as other segments.

The financial crisis affected further development of this segment, yet, its prospects remain quite optimistic despite the economic gloom. As the economic situation is unstable, demand for real estate is low and there’s a deficit of funds to complete the projects, developers have to reconsider their concepts using cheaper construction materials or putting for sale land plots without labor contracts. This option is in high demand nowadays as risks of unfinished construction are lower and the buyer needs fewer funds than to buy a plot with real estate or with a labor contract. Most settlements where land plots without labor contract are offered for sale belong to the low-price segment. 

Therefore, in the aftermath of the crisis supply volume is likely to grow. The Research shows that the growth of supply volume doesn’t mean that the quality is improved and as a result, the competitive niche of high quality economy class settlements remains vacant and has good development prospects. 

In this Research, we analyze the supply volume of economy class settlements and the main trends before and during the crisis to identify the principal characteristics of the countryside economy class residential market and its future prospects of development. 

This Research targets both professional market players (developers, analysts, real estate agents, consultants) and potential buyers of countryside residential property who seek to get the whole picture of economy class settlements. The Research may also be interesting for the companies contemplating development projects.

Graph. Supply dynamics in the countryside market broken down by class, %

Under the influence of the global financial crisis, the development of the countryside real estate market and the economy class segment decelerated. Yet, our Research shows that since this segment has specific features, the crisis will lead to the increase of supply volume. It is proven by the fact that the amount of settlements where land plots without labor contracts are offered for sale is growing. Most settlements which have come to the market starting from September 2008 are economy class.

After the economic situation in Russia and in the world stabilizes, we expect the supply volume of economy class residential properties to grow at the same pace.

You can find more information about the supply volume in the economy class residential market in The Research of Countryside Economy Class Settlements.

In our Research, we analyze such characteristics of supply as the direction and distance from MKAD, characteristics of houses and land plots, infrastructure volume, price indexes, etc.

The research targets both professional market players (developers, analysts, real estate agents, consultants) and potential buyers of countryside residential property who seek to get the whole picture of economy class settlements. The research may also be interesting for the companies contemplating development projects.

Nowadays, the real estate market is going through a difficult time as the priorities have changed and the values have been reappraised. Now we’re safe to say that the times when people bought anything that came on to the market are gone. Today, it’s time to make balanced decisions based on a profound multiple factor analysis. And this survey called “Elite residential property market in

Moscow : yesterday, today and tomorrow” is an attempt of such an analysis.

Active development of the elite residential market in Moscow began 10 years ago when new houses completely different from the existing dwelling stock or that under construction were delivered. Throughout its history, not only buyers’ requirements and characteristics of elite houses changed but also prices underwent considerable alterations. Over 11 years, the prices of elite property grew 4,5 times: from $ 4.400 per sq. m. in 1998 to $20.000 in late 2008.

Graph. Dynamics of average price per 1 sq. m. in new elite residential buildings

Source: Source: Blackwood research        

In the end of 2008, there were 40 projects in the market of new elite buildings, and active sales were underway in 37 of them. The majority of these new elite houses are located in Khamovniki and Yakimanka. Supply volume amounts to 730 apartments and several mansions, total area being approximately 150 thous. sq. m. The average size of elite apartments is 196,8 sq. m.

As for the secondary market, supply volume amounted to 160 thous. sq. m. (787 apartments in 66 elite houses). The average size of elite apartments was 208 sq. m. The average price of elite secondary apartments reached $26 000 per sq. m. in the end of December 2008.

The elite residential market is more stable, if the prices in the primary market decreased by 8% over September – December 2008, the prices of elite apartments decreased only by 2%.

World and Russian experience (the crisis of 1998) show that it’s not accidental or temporary, fundamental factors are behind the stability of the elite segment, after the crisis of 1998, prices of elite properties fell 33% and prices for new residential properties in Moscow, 45%.

Elite residential real estate is a unique and exclusive product, and demand for this kind of properties will always remain high. Economy and business class segments are more dependent on borrowed money both in terms of mortgage lending and project financing, that’s why they are more vulnerable given current market conditions. The main factor affecting negatively the elite real estate market is the unstable situation in the country which may force potential buyers to take a wait-and-see approach.

Further price correction is possible across all the segments, yet the elite segment is likely to remain the most stable. The level of price correction in this segment will be lower than the average level. Still, the prices of the most expensive and exclusive apartments will remain high.

Graph. Comparative dynamics of decrease and recover of prices for new apartments after the crisis in 1998

 Source: Source: Blackwood research

If we compare the results of the opinion poll carried out in December 2008 with the demand research conducted earlier by Blackwood Company, we see that the characteristics remain the same. Yet, some changes do take place. Now buyers are more interested in architectural planning, their requirements regarding engineering equipment, utilities, services and infrastructure have become tougher. Also, buyers have strict requirements regarding parking spaces in underground garages, which is a deficit product in the center of Moscow .

The survey contains full information about the stages of market development, classification of elite buildings (including international approach), dynamics of delivery of new elite properties, volume and structure indexes in the primary and secondary markets, price analysis of supply starting from 1998, impact of the crisis of 1998, and current buyer requirements. We focus on the analysis of the current crisis and its impact over the residential market in

Moscow as well as on the appraisal of its development prospects.

In our survey, you may find complete information about elite residential buildings in

Moscow as well as see various graphic materials, such as maps, graphs, spreadsheets and charts provided with detailed analytical comments.

On the whole, the survey gives you an opportunity to obtain a deep understanding of the elite residential market in

Moscow, from its fundamentals to future prospects

This survey targets both professional market players (developers, analysts, real estate agents, consultants) and potential buyers of elite residential property whose objective is to get the whole picture of the elite residential property market. This survey may also be interesting for the companies contemplating elite development projects.

Antonio Selman was born in 1976 in Amsterdam, the Netherlands. He graduated from St. Louis University in Missouri in 2000 with BBA and Bsc degrees. Soon, he got a MBA degree from the same university.

In 1998, Mr. Selman started his career at CBRE’s Latin American investment desk (Miami, USA) and worked as a Senior Consultant till 2000. Then he joined Fortress Company (the Netherlands) as an acquisition manager for the Netherlands and Germany for 4 years. In 2003 he headed Cushman & Wakefield’s Dutch Client Solutions department before joining C&W’s Moscow office.   

Mr. Selman has represented some of the world’s largest investors, developers, landlords and tenants in markets from Miami to Mexico, Latin America, the Netherlands, Germany and Russia. Anthony brings knowledge of other rapidly growing markets and combines this with extensive experience in senior positions at large investment companies. Among his clients are Tishman Speyer, ING Real Estate, Fortress, ABN AMRO, Procter & Gamble Russia, Ford Motor Company.

Antonio speaks fluently 5 languages. Now he’s studying Russian.  As Director of Investments and Capital Markets Antonio will be responsible for growing Blackwood’s Investment group as it continues to provide both Russian and International investors, institutional and private, with access to the Russian markets. One of his targets is raising funds for the most successful developer projects by establish investment real estate funds. 

John Dellargy was born in 1978 году in Dublin (Ireland). In 2002 he received his Bachelor’s Degree in Business Studies and Russian from Trinity College, Dublin. He also spent a year studying in the St. Petersburg State University (2001-2002).

John has been working in commercial real estate in Moscow for 6 years. In 2002 he joined Atis Real Weatheralls Company as the Projects Director. In 2004 he moved to Jones Lang LaSalle where he worked as an office consultant till 2005. In 2005-2008 John represented and transacted business on behalf of some of the top owners, developers and occupiers of international, Class A office property in Cushman & Wakefield Stiles & Riabokobylko.

Among his clients are AIG/Lincoln, COALCO, Horus Capital, Hines, London and Regional Properties Russia, National Reserve Corporation, Oracle, McKinsey, UBS, Wrigley, etc.

John Delargy is Head of the Office Agency Department in Blackwood, which focuses on advising and transacting business on behalf of numerous public and private companies. John’s extensive business development and account management experience has helped both multinational and Russian clients shape and implement real estate strategy throughout Russia.

Outside of work, John is on the Board of Directors of Big Brothers Big Sisters of Russia, an International NGO. John is also the Vice-President of Rotaract Moscow International (daughter club of Rotary Moscow), and the Chairman of their International Relations Committee. He sits on the Association of European Businesses' Real Estate Committee and is a ‘Young Leader’ of the Moscow chapter of the Urban Land Institute.  

Expat managers bring a wealth of commercial real estate experience to Blackwood. Basing on its 17-year experience on Russian real estate market, knowledge of Russian laws and Western management principles the company successfully implements major commercial real estate projects in Moscow and other cities of Russia. Besides, the company has recently moved to Alexander House, a new A class business center located on Bolshaya Yakimanka. 

With over 10 years of commercial real estate experience, Mark Forward brings a highly disciplined and professional International approach to client service. As Director of Commercial Real Estate, Mark’s responsibilities include the development of best practices to support Blackwood’s ongoing commitment to excellence, as well as servicing some of the firm’s most important clients.

Mr. Forward has represented some of the World’s largest Tenants, Developers and Landlords in such markets as New York, Los Angeles, Toronto, Prague, Warsaw, Budapest and most recently, Moscow. He has developed new analytical approaches to the task of strategic facility planning, comparing real estate alternatives and structuring creative transactions. These approaches have made Mark an influential leader in his field globally. His creative and integrated approach characterizes the value-added component provided for all Blackwood clients in addition to setting new industry standards.

Before entering the field of real estate, Mr. Forward spent a decade as Vice-President of an International distribution company with multiple locations throughout the USA where he gained extensive experience in needs satisfaction, marketing and business management.

EXPERIENCE

CRESA Partners, Toronto                  1997-2006

Colliers International, Prague             2006-2007

Blackwood, Moscow                           2007 to Present

SELECTED CLIENT LIST

Citibank, Phillip Morris, Oracle Corporation, Mary Kay Corp, York College, Deloitte, Arjowiggins, Autodesk, CBV Collections, Hugo Boss, Canadian Bearings.

The supply volume increase and the geography expansion for de luxe office premises in Moscow do not reduce the Russian market key players’ interest to objects, located in the historical centre of Moscow. A significant proof of this fact is the keen interest, expressed by well-known companies to the office and trade complex in Turgenevskaya square.

The complex in Turgenevskaya square is an embodiment of the best qualities of a high class office residence: a convenient location, a prestigious district, an infrastructure, necessary for conducting business efficiently, an individual style of the object.

The architectural elements, typical of the surrounding buildings that date back to the end of the 19 century, are successfully combined with modern project and engineering solutions: open floor planning, panoramic windows of the upper floors, the centralized automated control and maintenance system of the building.

Located on a 0.25 ha land plot, the Complex with the area over 15.5 thousand sq.m. includes the following functional areas: an underground parking lot for 57 cars, built-in shopping premises and catering facilities. The office premises with the total area of 8,792.4 sq.m. are located on the 2-6 floors of the Complex.

As Konstantin Kovalev, Managing Partner at Blackwood, says, “the fast and high quality sale of the office premises within the framework of this project was facilitated by the company’s integral approach to the project: in this project Blackwood company provided not only the brokerage services, but also a full range of consulting services, including concept development, interior zoning, developing architectural and planning solutions”.