Moving to the suburbs

Moscow Oblast is more than just dacha space: It is a growing upscale-housing market

In the past, as far as real estate was concerned, Moscow Oblast was mostly just a place where Muscovites had their dachas. It couldn’t really compete with Moscow city for buyers in the housing market.

But things are changing. As the middle class gets pushed out by the city’s high real-estate prices, more and more people are looking to the oblast for affordable housing with relatively the same level of quality. Realtors say that oblast housing prices are about half those in the city and that it is possible to buy an apartment in a modern, comfortable building for just $650-$700 per sq. meter in the oblast.

Sergei Yeliseyev, marketing department director for Inkom-Nedvizhimost, said that Moscow city prices began leaping ahead of the oblast level about three years ago. Prices have stabilized somewhat, but they are still rising at an average rate of more than 1-2 percent a month.

According to the Russian Realtors’ Guild, only 30 percent of property buyers in the oblast are people from the oblast itself. More than half come from other regions. The remainder are other people from the capital seeking to improve living conditions at a relatively low cost.

Developers are also beginning to show more interest in the oblast. Apart from a few districts such as Molzhaninovo on the outskirts of the city, Moscow has little free land left for mass housing development. It is also a lot easier from an administrative point of view to get land in the oblast: The smaller the plot of land involved, the easier it is to get authorization from the district authorities. The district land committee can approve up to 10 hectares of land, while the oblast government has to give permission for development of large areas.

Another advantage of Moscow Oblast is that developers are not limited by the restrictions of district urban development plans as in Moscow. Many of Moscow’s satellite cities either do not have such plans, or those they do have are now hopelessly outdated. This means that developers are free to build as much as they like at whatever height they want.

"Once the plot of land has been bought, it’s up to the owner whether he wants to build a one-family house or a whole apartment block there," a Moscow government official said.

The big housing-construction groups in Moscow, such as DSK-1, are now developing the oblast market, building new housing in Khimky, Korolyov, Odintsovo and even Podolsk.

A few people looking for a good neighborhood but unable or not wanting to buy a house are starting to look at apartments in exclusive dacha areas, such as Zhukovka or Barvikha. Experts say this segment’s potential remains untapped and is only now starting to gain attention.

Apartments in the Zhukovka-1 complex – five- to seven-story brick buildings with mansards – will meet the demands of upscale housing, developers say. The complex offers a fitness center with a swimming pool and tennis courts, shops, a restaurant and a kindergarten.

Townhouse settlements are a growing segment in the oblast. They combine the advantages of individual houses with the comforts of upscale apartments. Townhouses built by the MIEL-Nedvizhimost agency at Barvikha-2 enjoy stable demand, realtors say.

The townhouses have an area of 176-300 sq. meters. Each has a living room with a fireplace, kitchen and dining area and three to six bedrooms. According to Fili, a department of MIEL-Nedvizhimost, the townhouses sell for $1,500 per sq. meter. Buying property of a similar level within Moscow would cost at least twice as much.

Prices for Moscow Oblast real estate depend more on the prestige of a particular district than on proximity to the Moscow Ring Road, realtors say. The average cost per sq. meter to the west of Moscow is around $600, while in the more-polluted east and southeast it can be as low as $350-$380 per sq. meter.

Satellite towns such as Krasnogorsk, Mytishchy and Troitsk that are unpolluted and offer good-quality nonstandard housing projects have become increasingly popular. So far, however, they offer only scattered stand-alone houses rather than developed districts with the necessary range of infrastructure features.

But these towns could follow the example of the new Kurkino housing district northwest of Moscow. Built in a protected natural enclave, the new district is the pride and joy of the city’s Department of Construction Investment Programs. Of the 790 hectares in the project, 273 have been kept as they were and sport hillsides, birch and oak groves and clean springs. Moscow realtors have been so taken with apartments in Kurkino that they have been buying them up for themselves instead of selling them to clients. Many buyers are attracted by the good transport links, clean environment and quality housing available at a starting price of $800 per sq. meter.

Construction is mostly concentrated within a radius of 20 kilometers from the Ring Road, but it is moving at a fast pace. Last year, 3.2 million sq. meters of housing came onto the Moscow Oblast market, 15 percent more than in 2001 and almost as much as in Moscow itself. Prices rose last year by 5-18 percent.

Konstantin Aprelyev, vice president of the Russian Realtors’ Guild, said that Moscow Oblast will have excellent economic prospects over the next 10-15 years. "Over this period, the region will only become more attractive for investors," he said.

Still, analysts have conflicting opinions on development prospects for Moscow Oblast. The good news is that the oblast offers much more available land than Moscow does, which means that prices will remain affordable for the middle class for some time to come.

According to realtors, the list of desirable districts is headed by Odintsovo, Krasnogorsk, Mytishchy, Troitsk and Reutovo, all of which lie within 20 kilometers of the Ring Road.

Odintsovo was the first Moscow Oblast district to begin construction of high-quality buildings featuring modern apartments with high ceilings and developed infrastructure. Krasnogorsk, in the northwest, is seeking to follow this example. New buildings in these areas tend to have fewer levels than in Moscow, with five to seven stories for brick buildings and 12-14 for panel buildings. Comforts are similar to counterparts in the capital, and there is no shortage of parking space.

Mytishchy is also becoming popular. The area is a developed district with apartments in new buildings selling for $800-$820 per sq. meter. Yelena Tushina, sales director for development company Stroitex, said that decorative elements such as panorama windows and large hallways and kitchens are popular.

Troitsk, built as a scientific town south of Moscow along the Kaluga road, is also gaining interest. It has picturesque landscapes along the Desna River and numerous holiday homes, but apartments in the area sell for only $450-$470 per sq. meter.

The main advantage of Reutovo, which borders the Moscow district of Novokosino, is its convenient transport links. At an average of $570-$590 per sq. meter, apartments cost less than in other top districts in the oblast, but apartments in more upscale buildings can cost $650 per sq. meter.

The towns further away from Moscow are less polluted than the others. The oblast construction boom is beginning to reach deeper into the region. Quality apartments 40-50 kilometers from Moscow sell for $450-$480 per sq. meter, but the lack of good transport links reduces the appeal for people with commutes to the city.

Is it worth buying an apartment in Moscow Oblast? People living on the city outskirts often complain that it takes them more than an hour to get to work. Even in the prestigious western districts, road quality varies wildly. Moscow Oblast has few good medical centers, beauty salons and schools. On the other hand, it offers much fresher air and a cleaner environment.

"I realized that Moscow Oblast is the place to live," said Yevgeny Ivanov, chairman of the board of Rosbank. "I never finish work before 8 p.m., but when I get home and get out of the car, I realize I’ve got the energy to do plenty more, and in the morning I always wake up feeling rested and refreshed."