Russian real estate market during the crisis: what will happen to the segment?
The Russian real estate market is going through difficult times, which is caused by several factors. The main blow was the collapse of the ruble, which occurred due to the fall in oil prices. Then the coronavirus epidemic had its impact, which launched the mechanism of the global economic crisis, which will affect Russia as well.
As a result, the volume of investment in the real estate market has significantly decreased, and by the end of the year experts predict a decline by about twice. If before they hoped for an investment of 300 billion rubles, now expect about 150 billion. These figures bring the segment back to 2014.
In the first quarter of this year, the real estate market reached 36 billion rubles, which is no different from the previous three years. However, this period included previously concluded transactions, which by the beginning of 2020 were completed. Therefore, experts understand that the decline that occurred in the second quarter, and observed further – is a real picture of the Russian real estate market. High hopes are expected at the end of the year, when the consequences of the epidemic will not so actively affect the processes.
Many investors are now cautious about new projects. They understand the increased risks, and try not to take active actions until the segment has found stability. This approach does not only concern the local market – the macroeconomic situation is also not credible, there is a decrease in the efficiency of various business operations.
As a result of the COVID-19 pandemic, the vacancy of commercial real estate in Moscow has increased. In March, almost 50% of offices lost their tenants, and activity in the segment decreased significantly. The processes will gradually recover, but it will take some time.
In March this year there was an increase in demand on the residential real estate market. People, being afraid of further ruble fall, wanted to buy apartments and arrange mortgages faster. Economy class housing became particularly popular. Developers responded rather quickly to the situation and raised prices by 5% on average. However, a noticeable change in price may, on the contrary, scare away potential buyers, and the developer will lose even more.
It is not yet clear what will happen next, so developers are preparing for various options and considering a price increase per square meter by about 10%. Many are waiting for the economy to stabilize, and then it will be possible to act. Analysts do not make long-term forecasts, everything depends on the strengthening of the national currency. There is a chance that the central bank will raise the key rate, which means that loans will become less affordable and some consumers will refuse to buy apartments.