The Moscow real estate market is one of the most expensive emerging markets in the world but now there are signs that prices are dropping,' said Nuri Katz, the president and chief executive of Century 21 Russia.
The figures speak for themselves, showing a roller coast ride for real estate. In 2001 housing prices throughout Moscow began increasing on average, 33% each year, peaking at $7,580 per square meter in August 2008.
Price increases were even more stunning in the high-end property market with some areas seeing increases of 90% in 2006. Prices for some properties rose to about $23,000 per square meter.
But the global economic crisis has hit Russia hard. Falling oil prices, combined with a bottoming out of Russia's stock market, have again sent real estate values on a downward trend, Katz said.
Today, prices citywide average $4,900 per square meter. 'They are still on their way down,' he added. In the upper reaches of the market asking prices are now about $17,000 per square meter but actual transaction prices are closer to $10,000 to $14,000 per square meter.
According to Alexander Shatalov, a partner and chief executive of IntermarkSavills Russia, a real estate firm in Moscow, recent reports predict the downward trend will last six to nine more months and that property values will slowly rebound from there.
Foreign property investors are a small fraction of the real estate market, according to Ekaterina Thain, the director of the residential department of Knight Frank Russia. Thain said that most non-Russians who buy real estate in Moscow are Europeans or Americans who have either jobs or families in the city.
There are no restrictions for foreigners purchasing property in Moscow but citizens of most countries need a visa to enter Russia. Property purchase agreements must be registered with the Federal Service for State Registration, Land Register and Mapping. Mortgages are uncommon and interest rates tend to be high; the majority of foreign buyers pay in cash, Thain explained.
