The international real estate investment forum PROEState 2016 is over in Moscow. In her address at the forum Natalia Tischendorf had something to say about investments and profitability of redevelopment projects in the central business district of Moscow.
CEO AVICA Natalia Tischendorf took part in the round table “Investments in Post-Industrial Cities”, which was held with the backing of MIPIM. Experts discussed the mechanisms of attracting investments into urban development and the balance of interests between private equity and municipalities, as well as the profitability of integrated development and redevelopment projects.
According to Ms. Tischendorf, one of the key trends that influenced the development of commercial real estate in central Moscow was banning new builds in the heart of the capital city. Developers crossed over to redevelopment projects, focusing on most rewarding segments: offices and apartments. The market of old administration buildings and Class C business centers redeveloped into Class B+ offices inside the Garden Ring Road is currently estimated at 600,000 sq. m, of which about 300,000 sq. m were commissioned during 10 recent years.
The economic crisis, falling demand for office real estate and increase of the payback period to 10 and more years compared to 6-7 years prior to the crisis – led to apartments in prestigious locations gaining the upper hand on the market. Most apartments inside the Garden Ring represent renovations of historic buildings, such as the projects St. Nickolas on Nikolskaya Street and Bunin on Plyushchikha by Vesper, Gelrikh’s House on Prechistenka as well as Theatre House by Hals-Development. In H1 2016 some 93 projects with apartments were on offer, while the total supply is estimated at 9,840 lots,” Natalia noted.
The promising outlook of the apartments market is corroborated by interest from AHML which bought wholesale lots in the Liner and Match Point projects, to create the rental housing stock in demand.
Restarted early this year was discussing the possibility of the apartment status alteration; a respective law is expected till the end of 2016. If apartments are aligned with housing this will give a mighty impulse to their development in the months to come. While restrictions still exist, developers and owners of apartments continue changing their designation on their own. Thus the apartments in Residence Monet have already been assigned the housing status; similar work is under way in relation to the Birch Alley residences as well as some projects of MR Group.
Participating in the discussion were representatives of PwC, Genplan Institute of Moscow, IREM Institute, Knight Frank and some other firms.