| 30 August 2007 |
 
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According to the study, rent rates for elite properties in Moscow increased by 29%. In comparison, the corresponding figure for 2006 whole year period, when the increase was considered to be rapid, was 31%.
Research analyst at Knight Frank say that such an increase resulted from the overall increase in elite residential properties prices in 2006. The prices for most expensive segment of the market went up by 92%. The city lettings market reacted with a slight delay. The fastest price growing period took place in second and third quarters of 2007.
The most popular city districts among tenants are Tverskaya (19%), Arbat (16.3%), Presnya (13.6%), and Ostozhenka (11.7%). The study conducted by Knight Frank reveal that the average rent rate as of June 2007 was estimated to be $6,560, whereas the average rate for the entire 2007 half-year period was $5,870 a month.
The decision whether to buy or rent a property is largely influenced by the price. Due to a significant increase in the average prices in 2006, the demand on the Moscow lettings market in 2007 is increasing.
“The first half of 2007 marked not only increased prices for city lettings but also an increase in the demand for country houses and the overall extension of the short-term letting period. The most interesting trend on the market for this period has been the absence of seasonal factor.”, says Ekaterina Thain, Director of Residential Department and Partner at Knight Frank.
The most popular flats are the ones priced at $5,000 – 8,000 per month, 21% of all inquires coming from potential tenants fall into this segment. The second most popular segment, 18% of all inquiries, was for flats priced at $8,000 – 12,000. In the summer period the demand for the most expensive properties went up with some rent rates reaching $40,000 per month. It has to be mentioned that the study concerned only elite properties with rent rates not less than $3,000 per month.
At the same time, a new type of elite residential properties is being rapidly developed on the Moscow market. Apart-hotels, apartments and service apartments are being constructed as part of a larger multifunctional complexes that contain office and hotel premises.
Many large developers, such as MosCityGroup, IPG Evraziya, Capital Group, GK KRT, have announced their plans to start constructing properties of this type.
In most cases, such an apartment is not a place for permanent residence. It is used to suit temporary needs of being close to the office. The location as well as other services such as cleaning, security, building management, are the most attractive characteristics.
Knight Frank’s experts predict a further development of elite properties lettings market in the next few years. Despite the fact that building for sale rather than letting is more attractive from an investment prospective as it renders quicker results, slowly the residential market in Moscow is becoming more mature and long term investments are considered more and more often by Russian and foreign investors.
To construct and apart-hotel or a service apartment these days is an extremely good investment. The completion of the MMDTs Moscow City project that offers around 1.6 million sq m of office premises where around 160,000 people will be working is one of the most important developments on the Moscow market. It boosts up the demand for short-term and long-term residential property lettings. With the current rate of market development the construction of residential properties to let will boom in 2009 – 2010 period and most of these developments will hit the market in 2010 – 2011.
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