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Market of Real Estate and residential properties in Moscow will crash |
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Sunday, 02 November 2008 |
Market of residential properties in Moscow will be thrown down any time and space prices in the city center likely will ruin said the Russian billionaire and banker Pyotr Aven, cited by Reuters.
Prices of residential properties in Russia reported large increases each year from 2000 onwards, after record oil prices and growth in domestic demand led to the longest economic boom in decades since. Prices in downtown Moscow are comparable to those of Wall Street and in London City.
However, the global financial crisis put an end to international funding for Russian entrepreneurs and undermined trust in Russian assets. This gave rise to many investors to predict that the 10-year-old economic boom the country is drawing to a close.
"A total of 40 to 50 percent of residential properties in Moscow are bought for the purpose of resale at a later date, not a living," said Aven, who in May was rated as the 29 th richest Russian by Forbes with the state worth 5.5 billion dollars.
According to him, prices in central areas of Moscow can be reduced several times.
Many banks are awaiting construction, which is a key component of Russian economic growth to slow next year to its lowest level in 1998 when the economy is fell for a moratorium on Russian debt and devaluation of the ruble.
As capital markets in Russia are not yet fully developed the property in Moscow (before the crisis) is seen as an ideal investment for some oil profits to the Russian capital turned into one of the most expensive on Earth, says the publication.
Earlier this year, Moscow was ranked as the most expensive city for migrants in the world to study the cost of life among 143 cities.
Real Estate Market in Moscow
Real estate market in Moscow attracted many investors who increased housing prices to levels much higher than what most Russians win for life.
The apartments in a new, but empty building in central Moscow recently sold 50 thousand dollars a square meters.
"The purchase of residential property is a psychological process," said Aven, who added that many Russians, suffering from scarcity during the Soviet Union, have seen the property as the best place to invest your money.
Aven, a former trade minister, who gained their wealth from banking business and trade in raw materials in 90-years, says liquid crisis in Russia could force many investors to invest their apartments and properties on the market , leading to a dramatic decline price.
Kremlin official sources agree that prices in downtown Moscow are super high, while in other regions of the country that is not so - terms that also shares Aven.
Aven is not the only billionaire who provides dark forecasts for Russian real estate market. Michael Prohorov, rated as the fifth richest man by the Russian state from 22.6 billion dollars in June has forecast that Russian real estate market awaits him hard landing.
Many Russian construction entrepreneurs raise capital by listing on the exchange or through bank loans in Russia and abroad in recent years, but banks are no longer willing to grant loans to entrepreneurs and expect a sharp drop in prices of properties.
CRAs predict wave of bankruptcies and forced sales of assets of the property market if companies fail to refinance its debt.
Russia promised to buy unfinished housing projects to help entrepreneurs and the largest construction company in the country PIK Group received "emergency orders" in Moscow worth 1 billion dollars, says the publication. |
Real Estates 
