Budget apartments have disappeared in Moscow: they have actually left the mass segment

Fresh winds

According to the general director of the Bon Ton Academy of Sciences, Valeria Tsvetkova, the total supply of apartments in the primary market of old Moscow decreased by 10% over the year and amounted to 364 thousand square meters. m and 7.4 thousand lots (-9.9% per year). The bulk of supply falls on business class – 50.9% (+3.3% over the year). In second place is the comfort class with a share of 27.6% (+2.4% per year). In third place is the premium class with a supply share of 20.5% (-3.8% per year). The share of the standard class was only 1% (-1.9% per year). Half of the entire exposition falls on three districts: Central Administrative District – 19%, Western Administrative District – 15.2% and North-Eastern Administrative District – 14.9%.

“Recently, the demand for apartments with finished finishing has increased. In conditions of limited time and resources, buyers prefer apartments that do not require additional investments in repairs,” Rigina Gordeeva, director of the Etazhi Prime company in Moscow, told MK. In her opinion, the second obvious trend is the growing interest in complexes with developed infrastructure. Buyers are more attentive to the availability of shops, fitness centers, educational and medical institutions within walking distance, which makes life more comfortable and self-sufficient.

The third trend is the increased demand for apartments in green areas. The desire for a healthy lifestyle and the desire to be closer to nature leads to increased interest in properties located in environmentally friendly areas with developed park infrastructure.

Demand for apartments has dropped significantly. In the opinion of the leading specialist in new buildings of the Miel network, Marina Shadrunova, this is due to the fact that the preferential mortgage at 8% does not apply to this format. Most buyers in the Moscow region consider purchasing apartments with caution.

If two or three years ago almost a third of Moscow’s new buildings could be apartments, now this figure has dropped sharply. As Valery Kochetkov, director of the “New Buildings” department of INCOM Real Estate, explained to MK, until recently, equity participation agreements for non-residential premises (apartments) were not subject to value added tax (VAT), which made it possible to sell premises at 15–20% cheaper than residential apartments of similar area and price category. This stimulated increased demand for apartments. Most buyers did not pay attention to the insolation of the premises and the external infrastructure of the complex, because… The price of the lot remained an important criterion.

“The VAT refund reduced the price difference between apartments and apartments to 7%, which cooled interest in apartments among both buyers and developers. And now we see that the share of apartments in transactions is no more than 4%. This type of real estate cannot be purchased with the help of preferential mortgages and family mortgages, and maternal capital cannot be used,” the analyst noted.

In the capital, apartments have actually left the mass segment, said Est-a-Tet development director Roman Rodiontsev. According to him, today this format is widely represented only in high-budget segments, such as “premium” and “elite”, as well as in the segment of micro-apartments located in reconstructed buildings on the floors of office centers and sold under a purchase and sale agreement. “Such transactions are not even registered in Rosreestr, but with notaries. These transactions are legal, but they are, so to speak, on the edge of the legal field,” the expert added.

Five categories

According to analysts, Moscow apartments continue to attract a diverse audience of buyers. Among the key categories of buyers, Rigina Gordeeva singled out young professionals who especially value the combination of convenience, style and functionality. They choose apartments for their modern design, location in business districts and proximity to business centers. Also, apartments are in the sphere of interests of private investors, since in conditions of instability of financial markets they remain a reliable asset. Investors see apartments as an opportunity to generate passive rental income and capital growth potential.

“This format also attracts people leading an active lifestyle. For those who value convenience and time, apartments with a full range of services (fitness centers, spas, concierge service) are an ideal choice, allowing you to focus on your hobbies,” said Gordeeva. Another large group of buyers consists of entrepreneurs and freelancers. They appreciate the opportunity to create a workspace right in their home. Apartments often offer convenient layouts and infrastructure for running a business, including coworking spaces and meeting rooms. “More often, businessmen choose housing in apartment complexes, which also provide a whole range of services (laundry, cleaning, etc.),” added Shadrunova.

As Kochetkov noted, “apartments” are often chosen by young people who are focused on non-standard design and living in an interesting location. They often live “in two cities” and visit Moscow on short visits. Therefore, they do not need playgrounds, clinics, kindergartens and schools near their homes.

And the last, fifth category is buyers who prefer luxury housing. Premium apartments with exclusive finishes, high-quality materials and unique designs attract citizens seeking luxury and high status.

Paused

The other day, Deputy Chairman of the State Duma Committee on Construction and Housing and Public Utilities Svetlana Razvorotneva said that the bill on apartments, designed to equate them to residential premises in apartment buildings, is unlikely to be considered in the near future. Let us recall that the corresponding initiative was submitted to the State Duma back in 2018.

As Rigina Gordeeva believes, the unregulated status of apartments creates uncertainty regarding property rights, living conditions and access to utilities and social services. This can deter potential buyers, especially those who value legal clarity and guarantees.

Since the issue with the status of apartments has not yet been resolved, and tax rates are high, such objects can become a certain headache for the owner, argues Rodiontsev. Apartments for personal living are purchased only in the elite segment, and in the mass segment this product is becoming obsolete. Firstly, because after changes in the legal framework, new projects practically do not enter the market. Secondly, consumer demand for apartments in the mass segment is now very low, because they are not covered by either state support, preferential mortgage programs, or developers independently create specialized programs at their own expense. “Therefore, there is no particular potential in the apartments in the near future,” concluded Rodiontsev.

For these reasons, in his opinion, in the future apartments will remain only in the premium segment, and apartments will completely leave the mass and business segments. At the same time, prices for premium apartments will keep pace with the apartment market and its prices, because premium apartments are a completely different product and the requirements for it are in no way inferior to the requirements for apartments.