OVERVIEW Q1 2011 ELITE RESIDENTIAL REAL ESTATE MARKET Moscow Knight Frank EXECUTIVE SUMMARY • High activity was observed on Moscow’s elite residential real estate market in Q1 2011. Average prices on the primary market grew 10.7%, surpassing «pre-crisis» indicators. In March 2011 a record number of deals was recorded for 2010-2011. • For the first time, the average price of supply on the primary market surpassed the average price per square meter on the secondary market. Such a growth in prices was facilitated by increased attention from buyers to the market for elite new builds: The quantity of deals with new builds in Q1 2011 surpassed the quantity of deals on the secondary market twofold. • A price correction continues on the secondary market. A significant increase in the volume of supply was observed. The secondary market practically stopped being filled by apartments less than $2 mln: In Q1 2011 the share of such apartments in new supply equalled only 6%, and this considering a share in total supply of 11%. Basic supply on the secondary market now starts at $2 mln and higher. • A small growth was observed in he rental market during March, after a fall that has been continuing since October 2010.
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Q1 2011 ELITE RESIDENTIAL REAL ESTATE MARKET · 2014-07-13 · REAL ESTATE MARKET Moscow Knight Frank EXECUTIVE SUMMARY • High activity was observed on Moscow’s elite residential
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OVERVIEW
Q1 2011ELITE RESIDENTIAL REAL ESTATE MARKET Moscow
Almost 80% of deals in Q1 on the primary market were closed with budgets up to $5 mln, with the most popular apartments remaining those with prices from $1 to 3 mln, as usual.
Distribution of deals on the primary market based on budget limitations
less than $1 mln
from $1 to 3 mln
from $3 to 5 mln
Source: Knight Frank Research, 2011
4% 11%
58%
19%
4%4%
from $5 to 7 mln
from $7 to 9 mln
more than $9 mln
The average price of supply on the primary market sharply increased, having surpassed the average price of supply on the secondary market for the first time. This was facilitated by both a traditional removal of cheap supply and an increase in prices from many developers $/sq m
25 000
24 500
24 000
23 500
23 000
22 500
22 000
21 500
21 000
20 500
20 000
19 500
19 000
15000
20000
25000
Primary market Secondary market
Source: Knight Frank Research, 2011
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Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2010 2011
Elena Yourgeneva DirectorofResidential
«Right now on the market a distinct increased demand from buyers of elite residences is being observed as sales in new projects are going actively and much of the best supply is already leaving the market. To those who are planning to acquire apartments in the near future, we recommend not prolonging this questions, as selection with each day decreases and prices increase.
The growth in average prices during Q1 has already surpassed the growth for all of 2010. We anticipate prices to grow on average 15% during H1 and to 25% for the year. With regards to the most new projects that have recently entered the market, prices are growing significantly at higher rates and supply is contracting perennially due to the large attention of buyers on such projects.»
Average prices, $/sq m Change in average prices, %
March 2011 Q1 2011 For March 2011 For Q1 2011 For 12 months
23,084 22,403 2,5 10,7 18,9
Source:KnightFrankResearch,2011
The largest growth in average prices for Q1 2011 was recorded in «Impersky Dom», a residential complex, at 27.5%, with «Legenda Tsvetnogo» not far behind at 25.4%
Source: Knight Frank Research, 2011
Italyanskiy kvartal, Fadeeva st., 4
Chetyre Solnca,Tatarskaya Bolshaya
st., 13
Sadovye kvartaly,Efremova st., 12
Afanasyevsky, Afanasyevsky Bolshoy
lane, 24
Legenda Tsvetnogo, Tverskoy blv., 2
Imperskiy dom,
Yakimanskiy lane, 6
0 10 20 30
27,5%
25,4%
16,2%
10,4%
10%
9,5%
%
Total area of sold apartments Average price on the primary market
Source: Knight Frank Research, 2011
In contrast to the splash of sales at the end of the summer and beginning of autumn in 2009, caused by a lowering in prices practically to their minimum, as well as by sever al sales events conducted by developers, a growth in sales during Q1 2011 occurred on a background of a growth in prices
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12
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8
6
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24 000
23 000
22 000
21 000
20 000
19 000
18 000
17 000III II III IV
2009
III II III IV
2010
I
2011
$/sq m ‘000 sq m,
Olga Bogoroditskaya Director,KeyClientManagement
«Today we observe a situation that is characteristic for “pre-crisis” markets. In many new projects that are already in the beginning phases, 25-50% of apartments are sold. During the crisis, buyers preferred to buy residences in complexes with a high level of completion, but now we see a restoration of trust towards developers and a larger quality of deals in new projects»
Q1 2011 ELITE RESIDENTIAL REAL ESTATE MARKET Moscow
*Five complexes with the largest quantities of sales
for the quarter comprise the TSP (Top-Selling
Projects). The index is calculated quarterly.
5%
29%
28%
38%
from 180 to 220 m2
more than 300 m2
15000
20000
25000
Source: Knight Frank Research, 2011
The total area of apartments in complexes that have entered the market equalled about 35,000 sq m in Q1 2011, which is about 25% of the total supply in December 2010. The change in the volume of supply on the primary market of elite residential real estate in Moscow'000 sq m
Average prices, $/sq m Change in average prices, %
March 2011 Q1 2011 For March 2011 For Q1 2011 For 12 months
22,225 22,248 0,2 -2,61 -9,7
Source:KnightFrankResearch,2011
The Arbat area is occupying the leading position according to the number of deals on the secondary market as usual, which is facilitated by both a wide selection of secondary supply and a small assortment on the primary market. During Q1 2011, only one complex held sales on the primary market there
Source: Knight Frank Research, 2011
Arbat
Zamoskvorechye
Ostojenka
Tverskoy
Yakimanka
Chistye Prudy
Plushikha
Sretenka
Presnya
Khamovniki
Prechistenka
0 5 10 15 20 25
4%
4%
1%
1%
7%
7%
11%
7%
20%
13%
23%
%
Apartments with a value of $2-4 mln prevailed in the structure of new supply for Q1 2011. The entrance of supply with a value of less than $2 mln practically stopped%
New supply on the secondary market
Total supply on the secondary market
Source: Knight Frank Research, 2011
60
50
40
30
20
10
0more than $8 mln
$6-8 mln_
$4-6 mln_
$2-4 mln_
$1-2mln_
less than $1 mln
Distribution of sold apartments by price
less than $1 mln
from $1 to 3 mln
from $3 to 5 mln
3%
20%
44%
17%
14%
from $5 to 7 mln
from $7 to 9 mln
more than $9 mln
2%
Source: Knight Frank Research, 2011
Distribution of sold apartments by area
less than 100 m2
from 100 to 140 m2
from 140 to 180 m2
11%
13%
34%11%
31%
from 180 to 220 m2
more than 220 m2
Source: Knight Frank Research, 2011
Q1 2011 ELITE RESIDENTIAL REAL ESTATE MARKET Moscow
In Q1 2011, the geographic distribution of supply practically did not endure any changes compared to the analogous period of 2010.
The leading area is Tversky, which did not change and whose market share equals 21% as before. Supply in Sretenky and Khamovniky significantly grew. Supply decreased in Patriarshie Prudy and Arbat
Q1 2011
Q1 2010
Source: Knight Frank Research, 2011
Tverskoy
Arbat
Chistie Prudy
Presnenskiy
Zamoskvorechye
Sretenka
Khamovniki
Patriarshie Prudy
Ostojenka
Tagansky
%0 5 10 15 20 25
Source: Knight Frank Research, 2011
By the end of January, average rental rates for elite apartments ended their fall and in March 2011 a small growth was recorded$/month
7300
7100
6900
6700
6500
6300
6100
5900
5700
2009
III II III IV III II III IV
2010
III
2011
III IV
2008
The quantity of apartments up for rent decreased 6.2% according to totals from Q1 2011Apartments
Source: Knight Frank Research, 2011
3500
3000
2500
2000
1500
1000
500
0I II III IV I II III IV I
2009 2010 2011
The distribution of supply on the rental market for elite apartments at the end of Q1 2011 by area