Rent vs ownership, real estate in Moscow
NB: I know many fedizens are deeply against capitalism in all its forms. If you personally dislike private property, please, ignore this post. It's purpose is information, not confrontation.
NB2: This is not an ad but my own experience :p I thought it might be interesting to compare estate markets in different countries.
Amidst someone's political games and infostorms, life goes on. In all its glorious manifestations.
All countries are similar in general concepts, all are different in small details. A couple of days ago I asked a real estate agent: "You make deals only with citizens, why don't you start a business selling real estate to foreigners?"
And the answer was: "Foreigners don't buy. They rent"
I've always wondered what were the main factors that moulded today's European real estate market
? I'm not aware of any per-country statistics but from my own experience a lot of (many? most?) European citizens rent lodgings. Quite a lot of Russian people live in rent apartments too. The reason is usually people moving to new cities (job, family, etc) and having no immediate opportunity to buy a flat. However, most Russian people, once settled, start making plans to have their own flat. Some families save for years or get a loan, and eventually move out of rent apartments. Young people and couples often rent a room or flat, once they decide to live independetly from parents. Yet the end goal is always one's own home. Many Europeans, on the other hand, rent for the most part of their lives. Is it because taxes on property are too high? Or because modern society is mobile and likes flexibility, easy change of locations? Or perhaps because the property market itself favours rent and not ownership? Hopefully, you'll unravel this mystery in comments. Meanwhile, let me tell you about Russian real estate market.
The Englishmen say: "My home is my castle"
. Call me conservative, but I quite share the sentiment. However far and wide one journeys, there's nothing like coming home, your own personal castle, where everything is familiar, where one can rest and recharge batteries. I think Russians tend to be more conservative when it comes to ownership. Some people still believe private property is a solid reliable investment, though younger generations are probably a bit more into "quick money" and trendy things like crypto currencies.
Moscow, as a metropolis, is one of the most popular destinations, it attracts capital and provides more job opportunities, it harbours more than 13 million people
(I'd say, around 16, if we count all those "off-the-books"). Unlike in many European countries, any foreigner may buy private property without restrictions. There is no special procedure of verification (no bank will ask you to prove the source of your income). A foreigner may open a safety deposit box in a bank, find a suitable flat, then buy it - the process is exactly the same as it is for all Russian citizens. The only difference for non-citizens is the tax when they decide to sell the property - I think it's around 30% (needs checking).
The majority of Russians live in flats, not houses - if we're speaking of decent comfortable houses. Living in a condominium is usually cheaper than taking care of one's own house and land. Today's property market in #Moscow
, and #Russia
in general, is in mild stagnation. Yes, the economic crisis, unlike Santa Claus, is real. There're more people ready to sell property than people with money to buy it. "Cheaper by the dozen"
is the first rule of the local estate market: one-room flats have historically cost more (per sq. meter), so if you can afford buying a double-(triple, etc) flat, go for it. I will provide one-room flat prices, because these have also always been in demand - more people have smaller sums of money, on average. The second local rule, which is actually global I guess, Buy liquid property"
. When one buys a car, they think what it would take to sell it later. Same goes for flats: buying cheaper property in poor condition or in old buildings one risks capital lock-up. For this reason I'll only provide prices for flats in modern blocks, ones that can be quickly sold later.
One-room flat prices in Moscow, in areas with fine infrustructure, close to a metro station and transport, start from 7 mln rubles, with today's exchange rate it is ~91.500
dollars. Business class starts from 8 mln rubles. "Starts from" means a decent (35-39 sq.metres) flat. Of course, there're one-room flats that are cheaper (worse location, old, problems with documents, smaller, etc), but we're after liquid property. Double-room flats start from 8.5 mln. Current tendency to build more and gain more prompts property developers to build smaller flats (23-30 sq.metres). While economic crisis may justify this to some extent, this isn't the best investment. Russian mentality is slow to find charm in small territories where one can hardly cram in a bed and a wardrobe. One-room flat prices in towns around Moscow start from 3.5mln roubles (~46.000
dollars). "Around" means half-hour/hour road from the capital (by bus, train, or car). Currently prices seem to be sagging a bit, so for 4.5mln roubles one can find a decent double-room flat (50-60 sq.metres).
There's a new kid on the block called "apartments" - flats for sale that are non-residential facilities where one can live. You can not register in apartment, monthly utility payments will be 10-30% higher (because legally this is non-residential property). Real estate agents claim that these inconveniences are covered by the initial flat prices that are lower than they should be for such category of flats, and so it is a good investment. Mostly these are business class flats in central locations, the idea is that people will buy them specifically for rent. Apartments will most likely be more transparent and thus taxable (every government's dream). Personally, I would never buy an apartment-status flat for myself. But then, I would also never take a bank loan, so don't trust my word entirely.Renting
a one-room flat in Moscow will cost you 27-35 thousand a month (or more, if you prefer to live in the very centre), that's ~450 euros
. Local market quite differs from European. Here if you can afford to pay a little more than average, you are not the one to convince to choose you, rather the landlords will think they're lucky to have you. You don't need to verify your income or provide bank account details. You will of course have to verify your identity (passport), pay with no delay, and most likely sign a contract. Renting market is not (so far) totally taxable. Everything's moving in that direction, but slowly. Most flats come with furniture. Since Russian people on average do not move from rent flat to rent flat endlessly, most don't have loads of furniture, so it actually makes sense to provide furniture. Another difference is there usually are no strict limitations about making the flat you rent comfy. That is, you should but don't have to ask whether you can nail a picture to a wall or buy an air conditioner (especially if you intend to then leave it). One of my friends was low on budget and could afford only a very cheap, small flat in very old, moldy condition. She suggested to make repairs at her own expense for the agreement to live there for at least a year for the same low pricing, the landlady agreed eagerly - later on this flat will be more attractive for rent. Usually everyone wants people to rent for longer periods (half-year / year). However, this is not a strict condition, one must inform the owner > month before they plan to move out, which they can actually do whenever they like. If they forget to inform the owner causing him expenses while looking for a new tenant, they will pay the forfeit (usually one month rent worth).
All the numbers provided are relevant as of today (August 2018), and may completely change in the future.
Hmm, a long post it was! Hope it was informative.