 
The market is still developing. Recently this phrase has become one of the most widely employed when describing the state of the elite sector of the realty market. Many people view it as just a cliche that gets bandied about excessively and no more. And yet this really is the case and so it is entirely appropriate, I think, to start the first review of 2007 with this claim. Of course, it would be inaccurate to look at the past year through rose-tinted spectacles, since it had its difficult aspects and there were scattered unpleasant moments. But all the same, these were outweighed by the positive aspects.
The market is still developing. Recently this phrase has become one of the most widely employed when describing the state of the elite sector of the realty market. Many people view it as just a cliche that gets bandied about excessively and no more. And yet this really is the case and so it is entirely appropriate, I think, to start the first review of 2007 with this claim. Of course, it would be inaccurate to look at the past year through rose-tinted spectacles, since it had its difficult aspects and there were scattered unpleasant moments. But all the same, these were outweighed by the positive aspects. The following fact strikes me as symptomatic of the situation: in 2006 the tendency towards a fundamental change in demand finally took shape, buyers’ demands of properties for sale on the suburban market increased and clients of elite realty agencies became more exacting. But this doesn’t create any extra problems — given the large volume of supply, virtually any taste can be catered for, and all the more so given that in 2006 there was growth in the amount of good quality supply on the market, primarily thanks to the appearance of new developments. All this has naturally led to a noticeable rise in competition in the elite suburban sector. The wide range of offers forces potential buyers (with the help of professional realtors, of course) to analyze the situation, weigh up the various options and come to the right choice. While on the subject, incidentally, it would be impossible not to touch on the noticeable architectural variety of new developments. Of course, the elite market was always lucky in having far more unconventional properties than other sectors, but nonetheless in the last year this tendency has grown thanks to the appearance of houses in a contemporary style in addition to the already popular Classical style. Entire settlements designed in a unified style have started to appear, although of course, that doesn’t mean in the slightest that all the houses in them are identical. Experience shows that from year to year projects like this are growing in popularity and in 2006 became market leaders. All that notwithstanding, the most prestigious properties on the Rublyovskoye Shosse in the top price range are one-off projects, but then on the other hand, we shouldn’t forget here about the unique history and status of this most desirable of areas in the Moscow region, which often make the Rublyovskoye Shosse an exception to the general rules. There are whole developments in a uniform style in the Novorizhskoye Shosse area, however, and these days it is they that drive price rises in this part of the Moscow region, increasing the attractiveness of realty there to investors. We can vouch for the fact that by 2006 the price of land in the Novorizhskoye Shosse area had got close to levels in the Rublyovskoye Shosse area, since apart from the architectural factor mentioned above, this area is developing in line with the laws governing large projects, which because of their popularity push up prices. It is here that the share accounted for by super-expensive projects like Agalarov Estate is growing and The Benelux Residences and Pavlovo are hot on its heels. These projects are marked out by having an extensive internal infrastructure, as opposed to, say, the Rublyovskoye Shosse, where the infrastructure elements have been moved outside the bounds of the settlement — a case in point is Zhukovka. Naturally, the good transport access of the Novorizhskoye Shosse shouldn’t be forgotten either. It is already one of the best main roads leading out of Moscow and once work finishes on the Krasnopresnensky Prospekt link from the interchange with the Moscow Ring Road (or MKAD) to the city center, it will be even more convenient to use. The fast developing Kaluzhskoye Shosse and the neighboring and closely linked Kievskoye Shosse, where there has been a substantial growth in the number of cottage settlements built to plan founded on a marketing concept, thanks in part to the good transport access, should also be mentioned. And all the same, the most prestigious place in the Moscow region last year was, as always, the Rublyovskoye Shosse. It’s easy to explain — the elite market isn’t prone to sharp changes. Major changes need time to happen; for a development or — let’s go one better — an entire area to acquire the elite tag, purely material advantages such as good quality properties, good transport access and a well-developed infrastructure are not enough. These are only prerequisites which, with time, help it to acquire prestige and a name for itself, like a good wine. So when it comes to elite areas of the Moscow region in 2006, once again, the victor’s laurels go to the Rublyovo-Uspenskoye Shosse. Today it is the unchallenged leader on the Russian deluxe class realty market. Just as before, it is a symbol of all that is elite and exclusive. An interesting and at the same time easily explicable feature of the suburban elite market is the unflagging growth in prices, which remains unchanged even though the level of supply has risen. Last year was no exception in this respect — prices rose by 30 to 45 percent, and this against a backdrop of supply and number of transactions which has risen by 100 to 150 percent over last year’s levels. Moreover this is most clearly visible in the case of the most attractive offers for investors — sites in forested areas, of which there are very few. As of this moment there are less and less individual plots for sale and those that are available are usually offered as investments. As for land where plots are available for individual owners to buy and build on, the situation can only be described as a chronic shortfall. Last year was also marked by an increase in the number of houses on the market for $10 million and upwards. It would be no exaggeration to say that properties in this category now form what is a fully-fledged segment in its own right, although the actual number of them is limited and even given the fact that by no means all the agencies interested in working with them actually have access to them. Most offers in this range are ‘closed’ sales; that is, they are never publicly advertised for sale, or it is only fairly recently — and only thanks to personal contacts with a broker and from the end of 2006 — that they have appeared on the restricted access Internet club catalogue Private Palace. The suburban rental market showed stable growth in demand and prices last year. Generally speaking it grew by 15 to 30 percent, depending on the area. One new tendency in this area is the appearance of rental offers in permanently inhabited settlements. If cottage settlements built for rental were formerly a class of their own, these days projects like Knyazhye Ozero, Nikolskaya Sloboda and Snovidovo provide a new, high-quality type of offer on the rental market. More proof that the elite suburban market is taking its next great step forwards is provided by the official launch of very large, wholesale developments of entire sites — so-called mega-projects, such as Ruzskaya Shveitsariysa (Ruza Switzerland on the Ruza reservoir) and A101 on the Kaluzhskoye Shosse, as well as Agalarov Estate mentioned above. And so it looks as though we have managed to prove that last year was a good one for the elite suburban realty market. Possibly the one cloud in an otherwise clear sky is that executing transactions has become more difficult. Despite the undoubted growth of the market, it has not, unfortunately, become any easier to work on it. The urban market Here too the positive aspects on the whole outweighed the negative ones. But the urban elite market all the same is unfortunately not keeping pace with demand, and so unlike the suburban sector, the number of offers is still insufficient. The entry to it of any new property is still hailed as a major event. That is exactly how the start of sales of the Fusion Park project in late 2006 can be described, and its popularity — over 80 percent of the apartments were sold in just several months between autumn and the end of the year — has got a lot of people talking about large apartment blocks as a whole new sector of the elite urban market. In my view this happened because of the dramatic rise in prices — by up to 90 percent over the course of last year — which has erased the dividing line between the business and elite sectors. Housing complexes have indeed become a new sector as premium class properties. Club house developments are not widely advertised and apartments in them are usually sold on the basis of personal contacts between the developer and potential clients and thus they are less noticeable on the market, although by no means any less popular as a result. The cost of apartments in buildings such as these reaches $35,000 to $40,000 per square meter. But offers to suit people who prefer even more secluded surroundings — mansions and penthouses — are even more of a rarity. It can be stated that this format is the most prestigious on the elite market at the moment. To back up this claim, it is enough to say that there are no more than 50 mansions actually potentially saleable as residences in the whole of Moscow. As for proper penthouses, there are even less of them, and that means that each one of these properties is exclusive in the full sense of the word and unlike any other. The arrival of lofts on the Moscow market is eagerly awaited. Plans for skyscrapers with apartments on the top floors in the Moskva-City development which have either come on the market or have been announced are a key event in this respect. As for the general situation on the market in 2006, the skyrocketing of prices over the summer was an anomaly and for most of the year there has been the traditional smooth upwards rise. As for market leaders enjoying the biggest demand — and thus commanding the highest prices — here, just as on the suburban market, the situation has not changed substantially, and in terms of the cost of one square meter Ulitsa Ostozhenka remains the most prestigious area of Moscow. But Ulitsa Plyushchikha also deserves a mention here as one of the most promising areas of Moscow. Last year saw prices between $15,000 and $40,000 per square meter in both areas. And so to sum up — 2006 will be remembered not only for the stable demand on both the suburban and urban markets, and also not just for a growth in prices, but also for the emergence of a sector of ultra-expensive housing, which demonstrated record growth rates by setting new standards for exclusive projects. This is linked to the large projects mentioned above and also to one-off projects — both those outside the city and club houses and mansions within Moscow itself. Yevgeny Ivanov, Managing Director, Usadba real estate company The Moscow Times Real Estate
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