Foreign Clients Prefer Pre-revolutionary Buildings
By Ekaterina Batinkova, Director of the elite realty department of Est-a-Tet
The economic situation in Russia is stabilizing after the crisis. We have foreign clients coming back to the real estate and financial markets. Foreigners are acquiring more real estate. The question is: have foreign clients’ preferences changed?
It is still true to say that the number of foreign clients who are renting apartments is greater than those who own or who wish to buy them. This is due to the current economic situation in the real estate market, in Russia as well as in Europe. A lot of clients have reviewed their financial priorities in relation to acquiring real estate in Moscow and only a few can afford this option now. For most people, especially those who do not have families here, it is preferable to rent.
Many foreigners, like Muscovites, want to live in the central part of Moscow—that is, within the Sadovaye Koltsa, in areas like Tverskaya and Zamoskvaretskaya. It is highly preferred if the apartment is near to one’s place of work. This is a popular option for families who do not have children, but as soon as children appear, preferences change. As a rule, clients who have families with children have an attachment to a particular school or schools, and based on this, they start to pick out apartments nearby.
The Pakrovki Holm residential complex, for example, is situated near the Anglo-American School. Another school for foreign children has opened not so long ago at Krilatsky, and has started attracting potential clients, as has the English International School on Zelenny Prospekt. Such areas have good infrastructure and are quite popular despite the fact that they may be far from the client’s place of work.
Ostozhenka, Prechestinka and Patriarchy Prudy are popular simply because they are prestigious districts in Moscow amongst the ex-pat community. Moreover the foreign community tends to prefer classical architecture, especially pre-revolutionary buildings with underground parking. Foreign clients also value a good security system, a compound around the building, and other services like gyms, sports clubs etc which can also be found in new apartment blocks.
We have made note of the fact that most clients of our company ‘Est-a-Tet’, prefer new apartment blocks especially if they are fully occupied and renovation is completed. Foreign clients with families opt for three room apartments, rarely four room apartments. Clients who are not with their families opt for two room apartments or studio apartments. Modern and functional interior design is quite popular, although there are a number of clients who prefer classical style.
The budget for such apartments usually ranges from 90,000- 100,000 roubles per month though lately the market has seen an increase of more expensive apartments with prices ranging from $18,000-$20,000 and even $30,000 per month, which shows that real estate and financial markets are stabilizing.
The purchase price of apartments starts from $10,000 per sq. meter, and usually foreign clients try to look for deals up to $1,5 million. To buy an apartment on Ostozhenka for $40,000 per sq. meter for foreign clients is not economically profitable. This is one of the main differences between Muscovites and foreigners. Foreign clients are not usually interested in acquiring an apartment just for investment purposes, despite the fact that there are options in the growing market which provide an opportunity to realise quite good profits from the investment in the course of the year.
There are some advantages in acquiring real estate in Moscow: the tax rate is not as high as in Europe, and this is despite the fact that foreigners are assessed with higher taxes when it comes to selling or renting property, than Muscovites. Taxes on such real estate, as a rule, are much lower than on most foreign clients’ homes.