 MOSCOW, once dreary and repressed, has become one of Europe’s most exhilarating, exotic and expensive cities. Money is pouring into property as a building boom gives the Russian capital its most radical makeover since Stalin.
In the last days of the communist regime, Moscow had no street lights and less than 1% of homes were privately owned. Under Yeltsin, millions of tenants acquired their homes and property ownership is now entrenched.
Property prices have tripled over the last two years, though, like London, location is everything. While the citywide average is about £250 ($521, e360) per sq ft, values in the best areas – Old Arbat or Patriarch’s Ponds, say – can reach £2,500 per sq ft (more than Roman Abramovich paid for his Eaton Square mansion in London).
House price inflation has slowed this year, but demand remains strong. Brits are helping the boom, as renting expats – many working for oil companies or international banks – start buying. Despite concerns about the long-term political outlook, leading estate agents, such as Knight Frank, Hamptons International and Savills, have all opened offices, as have Jones Lang LaSalle and other global property consultants.
Even western architects are looking east: Norman Foster is helping resurrect Zaryadye, a pre-revolutionary district on the banks of the Moskva. The giant Soviet-era Rossiya Hotel has been demolished to make way for a 13-acre mixed-use complex. It is one of a number of projects underway. Others include Number 5 Red Square, a former military storehouse near St Basil’s Cathedral and Lenin’s mausoleum. Built in 1891 as a select shopping mall, the building was occupied by the Russian ministry of defence until 2005, when it was acquired by Moscow-based International Industrial Bank. It is now being transformed into a palatial hotel and apartment scheme.
The ornate, classical-style facade of the outer structure is protected by Unesco, along with the rest of Red Square. But in the courtyard, a seven-storey modern structure is being built, with 166 apartments ranging from 1,614 sq ft to 2,691 sq ft. Completion is pencilled in for the end of 2008. No prices have been released, though according to Knight Frank, it will be Moscow’s most expensive address.
Elsewhere, Red October – a former chocolate factory on the waterfront next to a modern monument to Peter the Great – is poised to become Moscow’s first loft apartment scheme. The 12-acre site is owned by Guta Developments, which intends to incorporate historic buildings into the development: three monumental blocks and a 19th century yacht club survive. Apart from a museum dedicated to chocolate, the site will be entirely residential; pedestrian access will be via an extension of the Patriarch’s Bridge over the Moskva to the Vodootvodny Canal. The agent is Intermark Savills.
Also popular are flats in the elegant pre-revolutionary buildings of Ostozhenka, known as the Golden Mile, in south-west Moscow, and homes in the gated communities of Pokrovsky Hills, a north-western suburb – think Weybridge with Kalashnikovs. These communities have belt-and-braces security, boutiques, parks and even hospitals.
In the rental sector, upmarket apartments in central Moscow can cost up to £16,000 a month, while a flat in a new development in a prime area with secure underground car parking (a highly valued commodity in Moscow) is around £3,500 per month. In the less fashionable Mayakovskaya area, about a 20-minute walk from the Kremlin, a one-bedroom flat in a Stalin-era building, overlooking a small garden square, can be rented from around £800 per month.
Quality and price varies wildly in Moscow, but letting agents are more accommodating than in London. The tenant, rather than the landlord, pays them so they are keen to find something you want. The fee is usually one month’s rent. There’s no council tax equivalent to pay and utility charges are cheap.
As with any emerging market, it is worth paying particular attention to how things operate. The Russian mortgage market is in its infancy, for instance, and whether buying or renting, most transactions are done in cash. So it is crucial to use trusted advisers. Crime can be a problem: new-build frauds, where developers disappear with customers’ money, are not unknown. The rule of law is relatively primitive and it is difficult to go to court to enforce a contract. Establish what costs you are likely to incur beforehand – sellers are charged a brokerage fee to cover valuation, marketing, viewings, documentation and closing the deal, of between 2% and 4% of the property value. On resale, non-residents are liable for 30% tax on profits, though they can transfer funds into or out of Russia without restriction.
So there are risks to buying in Russia, and not just the political ambitions of President Putin. But that alone should not detract from the many attractions of Moscow, which, with its various highs and lows, is one of Europe’s most exciting cities to call home.
Source: http://www.thebusiness.co.uk/ |
