By now the credit crunch has definitely produced an impact on the real estate market of Russia. Together with the Russian business community developers, construction and management companies suffer from the shortage of liquidity and look for new opportunities. In the traditional Christmas summits in three Russian cities the Guild of Property Managers and Developers put an emphasis on the adequate analysis of the situation and invited reputable market experts to share their opinion about the crisis and market dynamics. The Moscow Summit dealt with the Russian real estate market in general.

Vladimir Pinaev, Managing Director of Jones Lang LaSalle, is of the opinion that the market of commercial estate is stratified into two unequal groups: there are few high-quality and high-liquidity assets, the prices on which are not likely to go down. Prices on the rest will probably go down.

Andrey Zakrevskiy, Vice-President of the Knight Frank consultancy: “the crisis is mostly in people’s heads”. It will come into reality after shareholders get annual reports.

The strongest impact has been produced on the development projects: bank credits are very difficult to get, investment funds have taken a ‘wait-and-see’ position. The projects having a more than 50% readiness are continued, the rest are frozen. The pressing necessity to refinance short-term debts forced many developers to offer completed projects (some with the pool of tenants) for sale. In accordance with Denis Kolokolnikov, General Director of the Russian Research Group, in Moscow the offer of offices for sale has grown by 50%, and offices for rent – by 90%.0 It is expected that in 2009 the rent rates and office property prices in Moscow will go down by 20-30%.0

The storage premises, in accordance with Ruben Alchudzian, Praedium Managing Director, will have a smaller depreciation: not more than by 15-1.410765or class В and only 3-5-0.244831or А class. In three first quarters of 2008 the deals on storage facilities totaled 600 thousand m2. In 2008 Moscow put into operation 453 thousand m2. It is 501351f preannounced and twice less than in 2007. Mr. Alchudzian forecasts a short-term reduction in launching new storage & logistic projects, and a revival of this segment as early as in March 2009.

Mark Afraimovich, the ROSS Group Managing Partner, says that though the retail market is quite volatile, major retail networks are planning to develop in 2009. No rent rate reduction is observed, the deals are concluded. Both national and international retailers open new shopping centers in Russian regions.

In this situation the banks are more inclined to grant credits for the economy-class housing projects. “Our first priority is credits for the affordable housing. In this we expect the governmental support, currently we are in talks with authorities. We would expect governmental guarantees for a not less than 305f the project cost” says Pavel Kosov, VTB Vice-President. Next point on the VTB priority list is the development of commercial property of B and C classes. Lower on the VTB list are townhouse projects, logistic facilities and hotels.

 

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