Land and homes around Moscow

Traditionally, the closer one’s home has been to the center of Moscow, the better. Today, however, the suburbs are appearing more and more attractive

Today, more people want to live close to nature, and this tendency is creating greater demand for suburban property.

The modern suburban-property market took shape in 1992, after the presidential decree "On the Sale of Land Plots" came into effect. Then there was the boom of 1993-1996, replaced by a falling-off in the late ‘90s. Developing businesses and the stabilization of the economy, however, preserved a deferred demand from the business community.

In the opinion of Vladislav Lutskov, an analyst from Best Real Estate, demand for suburban real estate has doubled yearly for the past few years. "New players are becoming increasingly active on the market, and, now, investment activity in the construction of suburban homes equals that for commercial real estate. Profitability for more-successful projects is reaching 140-150 percent. As a result, the number of land deals has increased, and the solid rise in land prices opens up investment opportunities. Several commercial banks are increasing their presence on the market: Delta Bank has offered clients mortgage lending on suburban real-estate purchases," he said.

Planned communities are even more interesting for buyers. A homeowner in such a community receives not only a well-designed home, but first-rate service, modern infrastructure, good neighbors, peace and security.

Houses in such communities are sold at the construction stage and remain undecorated, allowing new homeowners to create interiors according to their own tastes. Alexander Rykov, marketing director for the suburban real-estate department of Penny Lane Realty, said that, in the first quarter of 2003, offers for suburban homes significantly surpassed last year’s. "Many new communities have been brought onto the market," he said, "and a secondary market has formed for suburban homes. In addition, 70 percent of suburban homes on the primary market are sold undecorated. A fully decorated home is 30-50 percent more expensive."

The pace of price growth for suburban housing is 5-20 percent annually depending on the direction from Moscow the property is located in. The main factor determining overall costs is the price of land.

At the current time, the price of land along Rublyevo-Uspenskoye Shosse has already surpassed $40,000 for 100 sq. meters. Rykov is confident that prices will continue to grow. "The price of land determines the price of houses," he said, "and the construction and materials costs remain at the same level. At the same time, there is a certain dynamic at work in land prices. For instance, open land is not increasing in price, but good spots in the forest with water sources are becoming more expensive. In different areas, this growth reaches 20, 50 or 60 percent a year. In high-demand areas, land can double in price in a year."

Nor do other specialists predict that prices will stabilize soon. "The primary battle at the moment is for acquiring land," said Marina Skubitskaya, press secretary for Miel Real Estate. "Besides Rublyevskoye Shosse, the leaders in demand are Novorizhskoye Shosse and Kaluzkhkoye Shosse."

Prices for suburban homes in these areas are truly going up. One of the most lucrative is in the direction of Pyatnitskoye. Realtors also note high demand for homes along Minskoye Shosse and Skolkovskoye Shosse and interest in any place located within one-and-a-half kilometers from large water reservoirs, such as in Pirogovskoye and Klyazminskoye.

Rykov, however, believes that Rublyevskoye Shosse will remain the market leader in prices. "The thing is," he said, "there is a certain quality level of construction on Rublyevskoye, as well as of clientele. The highway itself is good, and trucks do not use it – as they do Novorizkskoye, for instance. Here, there is a diversified infrastructure: Stores, restaurants and fitness centers, which raise the price of houses in the area."

Market professionals are confident that prices will continue to grow, because there are not enough land plots to go around and the demand in elite areas is not dropping. Suburban houses are not being bought with buyers’ last savings, and, the more expensive they are, the pickier clients become.

According to Lutskov, a solid solvent demand is occurring on the suburban-home market, and this demand is quite large, taking into account the limited offers in different areas.

"The main factor affecting the cost of suburban housing will be the price of land, which rose 10-30 percent in the first four months of this year," he said.

"Considering the limited offers on land fit for home and community-building, growth will be sustained. The pace of growth will be on a par with last year’s – an average of 50 percent – but for more attractive and lucrative offers, the price may double."