Over supply, but no reductions
Despite newspaper reports that the Moscow domestic real estate market is in trouble, market players and observers say that while there is considerable over-supply, particularly in the smaller apartment sector, prices are staying firm as owners prefer to wait out the situation rather than accept lower rents.
One landlord in the Park Kultury area progressively cut the rent asked for a two room apartment from $1,600 to $1,050 a month and then decided to renovate it and use it for visiting business colleagues.
Given the continued lack of supply on the residential sales market, and subsequent rapid increases in prices, Intermark’s David Gilmartin, expects rental prices to continue to grow at a steady rate through the end of 2006. For the year as a whole, he told Passport, prices on the rental market will increase by an average of 25-30%.
“During 2007, we expect the first half of the year to continue growing at the same rate as 2006, with growth slowing in the second half of the year as the sales market stabilizes,” he said.
“Landlords are making more money from capital appreciation than they are from rental income,” said another Moscow realtor.
Nataliya, who offers her services as a ‘locator’ of apartments says no one wants to cut their rental rates and owners are “sitting it out.”