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Moscow
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Out-of-town Property Newsletter. July 2011 |
 | 8 august 2011 Category: Forecasts |
 | newsletter_countryhouse_july_2011_eng.pdf (filesize 909.22 KB) |
Planned extension of Moscow city limits
Source: Knight Frank Research 2011, based on open sources
New sub-market on land to be joined to Moscow
It is expected that areas between Kievskoye and Varshavskoye highways will be subsumed into the city of Moscow, as will the Rublyovo-Arkhangelskoye and Skolkovo projects (respectively, a new out-of town business zone and a new high-tech zone). The new territories will be used for residential and commercial real estate development, transfer of government institutions and creation of a financial centre.
Some functioning cottage settlements and others now under construction will be included in the city of Moscow as a result of the redrawing of city limits, and this is likely to cause revision of prices for lots of the settlements, which will confer the right to dwell in the capital and will acquire more prestigious status. For indicative purposes: lots at cottage settlements inside city limits are now up to 30% more expensive than similar lots located up to 5 km outside the Moscow ring road (MKAD). So it is highly probable that lot prices will rise if a settlement becomes part of Moscow. Appropriate infrastructure, road and real estate development could create a new market for prime and business-class cottages and town houses along Kievskoye, Kaluzhskoye, and Varshavskoye highways.
It is not yet clear how land will be acquired for development, how the transport system will be upgraded and which developers will be involved. But development of country property in various categories looks highly promising at the new territories.
 | Andrey Solovyev, Head of Country Houses Department, Knight Frank:“This decision has been in the making for a long time and the process of Moscow’s expansion is not yet over. We expect full integration of Moscow and the surrounding Moscow Region into a single administrative unit in the next 10-20 years.” |
Impact on existing sub-markets
Expansion of Moscow will not have significant short-term impact on the existing market for luxury country property to the west of the capital.
No large-scale migration to the new territories seems likely from the Rublyovo-Uspenskoye and Novorizhskoye markets, where cottages are usually bought as permanent residences and where the principal motive for purchase is prestige and proximity to Moscow. Short-term impact is unlikely because, firstly, the Rublyovo-Uspenskoye ¬¬and Novorizhskoye areas are already adjacent to the planned new locations of state and government institutions, and because, secondly, they are well established areas, offering the benefits of developed infrastructure, prestige, and social homogeneity. Creation of alternatives to these areas would take decades.
Minskoye highway has promise, being located alongside the territories to be subsumed into Moscow and not far from Rublevo-Uspenskoye highway. Proximity to “new Moscow” will raise the status of Minskoye highway, as it will be close to Moscow infrastructure facilities, and it is likely that the prime segment will expand from the Rublevo-Uspenskoye area towards the new territories, boosting prices along Minskoye highway. Much the same considerations apply to Simferopolskoye highway, which adjoins the new territories: country real estate developments along Simferopolskoye will offer the benefits of nearby Moscow infrastructure.
Impact of Moscow expansion on the more distant sub-market (over 20 km from MKAD), including such areas as Dmitrovskoye highway, will be minimal. The main criteria for purchases in this sub-market are not proximity to Moscow, but other specific internal and external infrastructure. For example, Dmitrovskoye highway is unique because of its water spaces, golf clubs, ski-slopes and other unique life-style facilities. Markets in the new territories will not complete with this sub-market until they can offer similar attractions.
The market for economy and business-class developments around the new territories also looks highly promising. The zones where these markets are concentrated will extend further into Moscow Region, and properties now classed as “distant country houses” (more than 50 km from MKAD) will be promoted to near- and mid-distance country houses, with consequent impact on status and prices.
