Apartment Price Index Falls in St. Petersburg
“Although some experts had predicted a rise in prices to pre-crisis levels, nothing has happened yet.”
Published: August 7, 2013 (Issue # 1772)
While the first half of 2013 has seen an overall increase in the indexes for residential real estate in Russia, the country’s two biggest cities, Moscow and St. Petersburg, have experienced a price drop in the sector. The main cause of the decline has been attributed to an increase in the number of inexpensive new apartments coming onto the market as well as lower selling prices for older apartments.
“Although some experts had predicted a rise in prices to pre-crisis levels, nothing has happened yet. We saw a lot of budget-priced apartments introduced onto the market at prices lower than we have ever seen before, so of course this has significantly influenced the overall real estate market,” Igor Petrov, CEO of Matrix Real Estate, told The St. Petersburg Times.
“It’s not surprising that there is now a reduction in average sale prices, and now with the increase in competition on the market, developers of large apartment complexes and residential projects should think more carefully about their pricing structure,” he said.
According to data from Matrix, most in demand are studios from 24 to 28 square meters priced at around 1.9 million rubles ($57,913); one-bedroom apartments from 33 to 40 square meters, priced from 2.2 to 3 million rubles ($67,058-$91,443); and small two-bedroom apartments from 52 to 60 square meters priced from 3.1 to 3.8 million rubles ($94,491-$115,827). Three- and four-bedroom apartments are less in demand and therefore difficult to sell.
By the end of the second quarter of 2013, 18,500 apartments had been sold in the St. Petersburg and Leningrad Oblast regions on the primary real estate market. This was a 16.1 percent increase compared to sales figures for the first quarter in 2013, according to data provided by the St. Petersburg Real Estate Consulting Center. However, the growth in sales for the same period in 2012 was markedly higher, sitting at 28.2 percent.
“A reduction in sales was noticed in spring due to the financial collapse in Cyprus, where wealthy Russians hold 40 percent of all bank deposits. We do not expect any significant decrease in demand because of the predicted autumn crisis. Almost the same situation was seen last year when the expectation of a crisis had an impact on comfort and economy class properties,” said Pavel Pikalev, head of Penny Lane Realty in St. Petersburg.
“While the price per square meter has not changed, additional discounts offered by developers affect the final price of the property,” said Polina Yakovleva, head of new developments at NAI Becar.
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