Moscow Real Estate – Investing For Huge Capital Growth Potential
Moscow real estate prices are seeing fantastic growth with many prime locations doubling in value last year and this growth shows no sign of easing.
Moscow real estate prices look set for strong and sustained growth for many years to come and here we will look at why.
Moscow Property Recent History
10 years ago, a quality flat could be purchased for around $8,000 since then, prices have increased by 100% or more and yet, the strong growth in Moscow real estate prices continues.
The Next Phase Of The Property Boom
The influx of foreign companies and the Russian elites, demand for better quality office and residential property has fueled the boom in real estate values.
Soaring real estate prices continue as the boom looks set to move to its next phase.
So why are prices rising?
Demand & Supply
Quite simply, Moscow simply doesn’t have enough secure, modern and spacious apartments that foreigners and many Russians want.
Foreign Investment
With the opening up of the Russian economy we have seen major investment in property, from a number of well known foreign institutions.
For example, a division of Germany’s Deutsche Bank is committed to an investment of $500 million for Russian real-estate investments alone.
The biggest foreign investment in Moscow real estate is the new Great Domodedovo, development near Moscow.
44,000-acres are being developed here for new residential and commercial building recreational facilities – the project is costing around $11 billion. The project is being funded by Limitless, a division of Dubai World, the investment company owned by the ruling family of Dubai.
The foreign investment in Moscow and other Russian cities is not just coming from overseas and major funds are being raised by Russian real estate developers.
For example, Russian real estate investment companies are estimated to have raised around $2.7 billion via stock offerings in 2006 alone and the amount for 2007 is expected to exceed this level.
Moscow’s real estates new found confidence will soon be seen in the Moscow City Towers. Designed by world famous English architect Sir Norman Foster a winner of the Pritzker Prize, the Towers are expected to be the highest building in Europe when completed. In its shadow will be a huge retail, hotel and leisure complex overlooking the Kremlin.
The Prospects For Further Growth
In the last year gains in Moscow real estate have seen commercial properties rise by over 30% and retail premises by nearly 60 – 100% – for prime location property.
This growth will continue as the economy grows and new property buyers enter the market.
Russia’s economy over the last ten years has seen considerable growth and has benefited particularly from the increased global demand for commodities.
Rising prices for oil and natural gas for example (of which Russia is a major producer) has under pinned economic expansion.
Booming commodity prices have now created considerable liquid cash that has been fed into the banking sector and the pockets of the rising middle class.
This rise in liquidity, has contributed to the huge increase in Moscow real estate investment and development.
Economic growth is ensuring that unemployment is falling, disposable incomes are rising and of course, this leads a demand for better quality housing.
Moscow real estate values look set to increase further for the following reasons:
Mortgages
Until recently, mortgages weren’t common in the Russian real estate market, but this is all changing and enabling a number of new property buyers (including first time buyers) to enter the market.
The banks have the liquidity to engage in increased mortgage lending and greater capital investments and are introducing new lending procedures that will bring home buying within reach of an ever increasing amount of Russians… the botany condo