openPR Logo
Press release

Residential Investment Rating Downgrade for Moscow, Russia

06-01-2007 03:23 PM CET | Business, Economy, Finances, Banking & Insurance

Press release from: Global Property Guide

Residential Investment Rating Downgrade for Moscow, Russia

Effective immediately, the Global Property Guide (globalpropertyguide.com) is downgrading its Residential Investment Rating on Moscow residential real estate.

Residential Investment Rating DOWNGRADE
WHERE: Moscow, Russia
FROM: 2 stars (negative)
TO: 1 star (avoid strongly)

Rationale:
Moscow property prices are now among the highest in Europe, at from US$10,700 to US$20,500 per square metre in the key areas of central Moscow where the elite and foreigners live, such as Patriarch’s Ponds, Arbat, Tverskaya, Zamoskvorechye, Chistye Prudy, Ostozhenka, and Kropotkinskaya. Demand for residential property is still strong, being fuelled inter alia by the oil and gas boom.

Buying prices for large used apartments (250 sq. m.) in key central areas of Moscow average US$20,506 per square metre (sq. m), while the average for all sizes is US$16,446 per sq. m. High quality new apartments can, of course, fetch considerably more (see Global Property Guide Russia yields).

Rent rises have not kept pace with the rapid price appreciation during the past year. Moscow’s key central areas now have moderate gross rental returns (yields), with an average of 5.18%, down significantly from last returns in the same period last year, which ranged between 7% to 9.5%.

With prices rising and rental returns falling, the Global Property Guide considers that Moscow is now an unattractive investment destination for investors in residential property.

Prices seem obviously unsustainable, given construction costs, labour costs, and local purchasing power. There are many other negatives.
• Yields at around 5% - 6% are no longer exceptional
• The costs of buying and selling a property (round trip transaction costs) are no less than 25% - a very high level.
• Gross rental income is taxed in the hands of foreigners at 30%.
• There is a pro-tenant environment.
• There are serious security issues, and also property rights issues.
• The political environment is deteriorating.

In the last few years, there has been a rush of foreign investors to Moscow. Some have made very good money. But in our judgment the risks now outweigh the benefits, in view of the substantial taxes and costs incurred by foreign investors, the investment risks, and the deteriorating political environment.

In St. Petersburg the situation is very different. Apartment prices in St. Petersburg have also risen, and city-centre apartments in key areas now sell at an average of US$3,490 per sq. m. But St. Petersburg rentals have more than kept pace. Gross rental returns (yields) in St. Petersburg have therefore risen this year, in sharp contrast to Moscow, to an average of 9.6%, from an average of 7.1% last year.

---

The Global Property Guide advises international investors on residential real estate purchases in 125 countries, from the perspective of valuation, taxation, property rights issues, landlord and tenant law, and inheritance law and taxation.


Requests for interviews or comments to publisher@globalpropertyguide.com or 63-917 321 7073. If sent before 3.00 p.m. Moscow time, a response will come the same day.

Publisher and Editor:
Matthew Montagu-Pollock
Phone: (+632) 867 4220
Cell: (+63) 917 321 7073
Email: matthew@globalpropertyguide.com


Global Property Guide
5F Electra House Building
115-117 Esteban Street
Legaspi Village, Makati City
Philippines 1229
info@globalpropertyguide.com
www.globalpropertyguide.com

This release was published on openPR.

Permanent link to this press release:

Copy
Please set a link in the press area of your homepage to this press release on openPR. openPR disclaims liability for any content contained in this release.

You can edit or delete your press release Residential Investment Rating Downgrade for Moscow, Russia here

News-ID: 21527 • Views: 972

More Releases from Global Property Guide

Most expensive real estate markets in 2009
No surprise - Monte Carlo is No 1 in the Global Property Guide’s list of World’s Most Expensive Residential Real Estate Markets 2009, more than twice as expensive, at US$45,000 per square metre, as the runner up. [globalpropertyguide.com] Battling for the number 2 position are prime central Moscow and London. Prime central Moscow’s US$20,853 per square metre price tag slightly outpaces core Prime London’s US$20,756 per square metre, though it
World property market slide worsens
As financial markets tumble, the world’s housing markets have continued to slide during the year to end-Q2 2008. Inflation-adjusted house prices fell in 21 out of the 33 countries for which there is up-to-date published data. The Baltics, the US, the UK and Ireland led the global decline during the year to end-Q2 2008, the latest date for which comprehensive global statistics are available. The biggest house price declines
The end of the global house price boom
Weighed down by the credit crunch and high inflation, the global house price boom has ended, according to the latest Global Property Guide survey of house price indicators. Only 13 countries in which dwelling price indices are regularly published saw prices rise during the year to end Q1 2008, while 21 countries saw dwelling prices fall in real terms, i.e., after adjusting for inflation. In most countries
Gloomy days ahead for Asia’s housing markets
Asian property markets, though still relatively unaffected by the credit crunch, will soon be affected by inflation and higher interest rates, warns the Global Property Guide, because of rising food, fuel and other commodity prices. “Higher food, fuel and other commodity prices affect the housing market negatively in several ways,” says Prince Christian Cruz, senior economist at the Global Property Guide. “At the micro level, households may postpone their decision to

All 5 Releases


More Releases for Moscow

A Hotels Moscow
All those planning for a celebration of their vacations in a distinctive and diverse way, ought to reserve their trip to Moscow, the capital metropolis of Russia. Moscow is among the lively and attractive metropolises of Russia. The metropolis has achieved worldwide approval for modern to chronological buildings, parks, museums, shopping centers, educational institutions and most of all comfort hotels that draw the interest of tourists from worldwide. At the
Sheppard Moscow Business Transformation in the USA
On their new website – www.sheppardmoscow.com – leading Organizational Development, Leadership and Business Transformation Consultants, Sheppard Moscow, has announced the opening of an office in the USA. Located in Chicago, Sheppard Moscow’s American base complements the organization’s existing UK, Ireland and Singapore offices, extending Sheppard Moscow’s global business reach. As the latest step in the business transformation specialist’s global business strategy, the move will allow Sheppard Moscow to provide even more
Strategic developments strengthen Russell Bedford Moscow firm
RMikhailov & Partners, the Moscow member of the Russell Bedford accounting and audit network, has broadened its service offering by acquiring ARNI, a specialist auditor of banks and investment businesses, also based in Moscow. ARNI was established in 1992 and has developed a strong reputation for audits of banks, financial and investment houses, insurance companies, governmental organisations and industrial groups. The firm will continue to operate under its
Calendar Russia 2010 – Moscow and Golden Ring
Under the title „Russia 2010 – Moscow and Golden Ring“has just published the calendar of the German globetrotter Jan Balster. The calendar: The region of the power. The mighty churches of the "Golden Ring" always interest the traveler. The old Russian architecture reflects the changeable past of Russia again. There is not only the capital of Moscow, There is a many cities at the river Wolga. The observer succumbs to the
Fashion Dining in Moscow
Miami, FL July 2, 2007 – A new scene for trendy dining in Moscow is now ready at the Golden Apple, an Avantgarde Superior Boutique Hotel. After its two-month renovation, the Apple Bar & Restaurant is the best kept dining secret in the centre of Moscow. The Restaurant offers a wide assortment of simple and tasty European dishes with an emphasis on fresh and high quality products. All served
Banking Business Technologies conference in Moscow
Zurich / Moscow, April 17, 2007 -- IRIS integrated risk management co-sponsors the V Conference “Banking Business Technologies” which will be held in Moscow in the Moscow Mayoralty on April 24-25. The conference is organized by the Association of Russian Banks and will be attended by representatives of the banking industry of Russia and other CIS countries. This year’s conference will be dedicated exclusively to risk management, inquiring into the