Key Highlights
- Despite currency depreciation, COVID pandemic and other economic woes, demand high for real estate in both mass and premium segments of housing market
- Demand up +7% for mass apartments and +14^ of premium apartments from January to September 2020
- Demand for suburbs nearly doubled
Real estate has been a shining light in the Russian economy since the fall of the Soviet Union 30 years ago. That light has been continuing to shine during this year’s COVID pandemic, several ruble devaluations and other economic crises. Nikolay Pashkov, general manager of Knight Frank saint Petersburg, told The New York Times, “Any crisis encourages Russians to buy real estate…despite the current situation, the demand for real estate, both in the mass market and in the premium segment, (has been) high.”
Home sale prices have followed this high demand. Moody’s Analytics indicated that the price index for both new and existing homes has gone up through Q3. Demand in Q3 2020 exceeded that of demand volume during Q3 2019 by some +7% for mass apartments and by some +14% for premium apartments. Pashkov also indicated that this year “…promises to be higher than 2019 in terms of sales.”
Mass or non-luxury, “regular segment” transactions have been spurred by 6.5% and less interest loans, a record low in Russia. Many of the new mass-market projects are mixed-use developments with multiple apartment buildings along with ground-floor shops, cafes and school located in former agricultural and/or industrial areas far away from the city center.
Just as in the states, the COVID pandemic has fueled the demand for more space and sales in the suburbs had “nearly doubled,” according to Aleksander Ginovket, director of St. Petersburg-based Nevsky Prostor Real Estate, “The population came to the conclusion that residing in the country is good for health in all respects.”
And also, just as in the states, different locations are priced differently. Moscow prices are 50 – 100% higher than those in St. Petersburg. According to Ginovket, “The purchase of real estate in St. Petersburg is considered investment-profitable. St. Petersburg is one of the top 10 cities in the world with the highest growth in real estate prices.”
Foreign buyers in Russia tend to be businesspeople and of those, approximately one third buy in St. Petersburg due to the city’s employment opportunities in education, science, industry, and the arts. In addition to buyers coming from Russia’s neighboring countries such as Belarus, the Ukraine, Finland, Estonia, India and Britain, additional buyers come from the United Arab Emirates, France, Italy, Switzerland, China, Iran, South Korea and Vietnam,
Foreign buyers face no restrictions on apartment or houses except on properties located on state borders or in agricultural or seaport areas.
Thanks to The International New York Times.
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