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International consultancy Knight Frank analyzed how prices were determined in Moscow and London's elite real estate markets in the first eleven months of 2007.
Over this period (January-November, 2007), prices for elite real estate in Moscow grew by 8.9% more than prices in Central London.
In 2007, elite real estate prices on Moscow’s primary market grew by 40.9%. Q1 2007 demonstrated the greatest quarterly growth (15.44%), while September saw the sharpest monthly growth (8.5%). Prices on the secondary market grew much more slowly (9.1% annually).
Central London real estate prices grew by 32% in 2007, which is an excellent result for such a stable market. Knight Frank specialists have repeatedly pointed out the similarity of price formation dynamics in London and Moscow: high demand with lack of high-quality offers in the segment, shortage of space for new construction in traditionally elite districts, etc.
Prices for residential real estate increased in nearly all high-end Moscow districts. The most dramatic price growth was observed in the Yakimanka district, where average prices were significantly influenced by the construction of an elite residential complex, Impersky Dom. In January 2007, 1 sq.m. in the district cost $12,060; by November its price had risen to $22,460.
The growth of maximum prices is another elite segment market trend. In Q1 2007, the maximum price for real estate was $36,400/sq.m., while by the end of the year some offers reached or even exceeded $45,000/sq.m.
According to Knight Frank’s forecasts, in 2008, Moscow’s price growth rate will range between 18-25%. In Central London, prices for elite real estate are expected to grow by around 29%. It is worth mentioning that sales of elite housing on the British market are expected to decrease in 2008. Specialists at Knight Frank’s London office think average annual sales volumes will drop by 5%.
"Despite the fact that many analysts expected the market to stagnate after 2006, elite real estate prices were fairly high in 2007. This proves once again that the elite real estate market grows independently of other trends, for example, those of the mass market,” says Ekaterina Thain, a partner at Knight Frank and Director of the Department for Prime Residential Property.
It is correct to compare Moscow to London, as projects launched on the Moscow market in 2007 met the highest global standards – Imperia Tower in international business center Moscow-City, Impersky Dom (Yakimanka district) and many others. Moscow real estate’s rapidly increasing prices are the result of a developing market, while the same trend in London primarily stems from the city being a world-renowned financial and cultural center. "Owning real estate in London is a unique indicator of success,” says Ekaterina Thain.
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