PREMIUM-CLASS HOUSING MARKET

In the premium segment, the supply was at its highest back in 2016. In the following several years, it remained relatively low and began to increase only in 2018. In 2020, the supply decreased compared to 2019. 1H 2021 is expected to see a continued strong demand followed by a sales slowdown in 2H 2021.

Supply and demand in Moscow’s market of new premium-class housing, thousand sq m
Sources: newly built housing database, Rosreestr, Company’s proprietary databases

In 2020, the offer price added 12%. In Q1 2021, it increased by 14% thanks to a strong demand and new higher-price properties coming on sale.

Share of mortgage transactions in the sales of new premium-class housing, %
Sources: newly built housing database, Rosreestr, Company’s proprietary databases

In 2021, we expect the selling price to go up by 7–10%.

In 2018 to 2020, the share of mortgage transactions in the sales of premium-class properties increased by 10 pp. This was driven by key rate cuts, customer migration from the lower business class to the premium one, and the launch of a new low-price project.

Average selling price per sq m of new premium-class housing in Moscow, RUB thousand
Sources: newly built housing database, Rosreestr, Company’s proprietary databases

The share of fitted-out premium-class housing on sale is much higher than in the business-class segment. In 2020, it stood at 70% and 16% in these segments, respectively. The percentage is expected to avoid reduction going forward as fitted-out properties are more liquid in this market. In future projects, developers will focus on the fit-out quality and current interior design trends.

In terms of the demand structure, buyers of premium-class housing mostly prefer large-sized flats. In 2020, properties with an area of 100 sq m and more accounted for over a third of the demand, which is generally in line with the market’s supply structure. Mid-sized properties of 50–70 sq m prevail in the apartments segment, with this type of real estate purchased as a second or temporary housing. Buyers of 40–50 sq m properties mostly prefer flats, which are popular among those who seek to swap to more expensive housing and move from the business class to the premium one.

Moscow’s new premium-class housing market is strongly consolidated. In early 2021, the top 10 companies accounted for more than 90% of total sales, up from 63% in early 2016. This segment is dominated by developers with extensive experience and is hard to enter for new players.