About the Company / The real estate market overview
The Russian real estate market is clearly split into individual segments, each with their own different characteristics. The main segments are the commercial property segment and residential property segment, with the latter including urban and suburban housing. The commercial property market consists of office, retail, manufacturing and warehousing sectors. Each sector is further split into sub-parts; for instance, the office sector includes office premises of A, B and C classes. Retail properties contain retail stores, trade complexes, shopping centers and malls. The residential property market is divided into newly constructed buildings and a secondary market. In terms of prices the residential housing is divided into premium class, business class and economy class. The suburban residential property market is divided into the following sectors: apartments, summer residences, townhouses, cottages, as well as land plots.
In recent years, the Russian real estate market has begun to develop in a similar way to some of the more mature markets in Western Europe and North America. Most recently, it has reached the point where Western and Russian investors have started financing longer-term projects.
In 2006, the real estate market continued to grow significantly. Construction has continued to grow substantially, with the volume of construction increasing by 15.7% in 2006. Residential construction in particular showed considerable growth with a total of over 50 million square metres of residential space becoming available in Russia during the year, representing a 15% increase. Retail turnover increased by 13% due in part to growth in disposable incomes in Russia and to the continuing expansion of the consumer credit market.
The general level of economic growth and the development of the Russian economy is beneficial to the development of the real estate market. The growth of incomes together with the availability of mortgages stimulates the demand for residential property. The growth in retail trade and in the services sector leads to increased demand for shopping, office and warehouse buildings. Loans for property developers are also becoming more accessible. Improvements in Russia’s credit rating and the credit ratings of many Russian companies, including construction companies, has led to increased investments in the real estate market, and has led to some market participants seeking international experience and know-how.
