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Moscow's elite housing market feverish, says IntermarkSavills

Galina Tkach, Director of Leasing Department, IntermarkSavills, says "The market is feverish again. Against a background of currency fluctuations owners are strongly trying to introduce contract clauses providing for a currency corridor and adjustment of rental rate, making efforts to replace rouble rates with dollar ones and therefore artificially increasing cost of apartments by 15%. In reality this does not work, only protracts negotiations and results in the increase of rental terms.

80% of tenants are represented by corporate clients; their budgets are formed in roubles and revised no more than once per 2 years. Generally, such rental contracts do not provide for a change of rental rate, she added.

According to the latest research into the Moscow elite housing market by InternarkSavills:

• The main factors affecting the residential market during October, 2011 were: economic unrest in global markets, the prospective of a double dip recession and the expansive growth in the dollar exchange rate in September.

• Sharp fall of rouble adjusted average dollar supply budgets of in the elite rental market and by the end of October the average budget and average specific rate of supply was USD 7,123 per apartment per month and USD 651 per sq.m per year, which is 2% lower than the figures recorded in the previous month (in September, 2011 – USD 7,256 and USD 667 respectively).

• The gradual growth in free supply volumes that started in early 2011 stopped during October, 2011 and total volume of free supply in the rental segment reduced by 2.5% compared to the data as of the end of the last month.

• Tenant activity remains at the high levels characteristic for the autumn season of business activity and corresponds to the figures recorded in the last month.

• By the end of October the average budget for an apartment requested by a potential tenant amounted to USD 4,758, which is 4% higher that the figures recorded in September (September, 2011 – USD 4,543).