Russia's property market forecast 2021 - Part 1


It is always very difficult to make predictions of any kind in a country like the Russian Federation, but on the basis of our daily on-the-ground experience we can share the following considerations.

In the course of 2021 it seems likely that a certain gap will remain (and perhaps even further increase) between the large number of offers on the market and a more timid and limited demand, which more plainly will show in certain segments.


The increasing affordability of mortgage loans should help keep demand lively in the segment of new construction homes, especially when the talk is about cheap apartments in the suburbs of large cities, which some buyers usually consider also for investment purposes.

Despite the crisis, average prices on the resale market in Moscow's traditionally "sought-after" districts (e.g. most of the city centre and the South-west) have risen over the last two years, although the average exposure period for finding buyers has definitely increased there as well. In this case, prices could remain more or less at the same level due to the fact that in the centre new developments mainly relate to conversion projects of historic buildings into luxury condominiums with prices that are accessible only to a very limited number of "lucky few".

In St. Petersburg, on the other hand, average prices for flats in good condition in the central districts remain comparatively very appealing and keep attracting interest mainly among domestic buyers from other cities and investors from abroad. Suffice it to say that even today in the Tsentral'ny and Admiralteysky districts it is still possible to find apartments at prices ranging between 130,000 and 170,000 RUB/m2 (equal to about 1500-1900 EUR/m2 as per the current exchange rate) in historic blocks of flats where, however, the condition of the common areas often leaves much to be desired.

As far as residential rentals are concerned, the following key-factors have been observed over the last few years: (a) a sharp decline in the number of foreigners moving to Russia for professional tasks in management roles; (b) many foreigners, by virtue of the worsening economic outlook in the country  have left the country (and, as a consequence, made vacant a large number of high-end properties); (c) the constantly decreasing purchasing power of the population and households; (d) a widespread perception of the risk of job loss and the decline in profits from business activities.

All these elements have contributed to a strong reduction in the 'popularity' of expensive or premium rental solutions, which were previously largely the preserve of expatriates and foreign executives. Demand for these types of options has dropped significantly and - at least in the first half of 2021 - we would not expect this trend to change. This may lead more and more landlords to review their price expectations downwards in order to try to rent their flats within a reasonable timeframe.

In addition to that, some landlords who have resigned themselves to prolonged tenancy vacancy periods may decide to put their flats up for sale, especially once they realize that rental yields have fallen, in the hope for an immediate monetization.


In recent years, this segment has perhaps suffered the most from the country's economic downturn and financial crisis. As if that were not enough, in recent months, it has been the one that has felt the impact of the pandemic's effects most strongly.

In fact, while in the previous five years many companies went bankrupt, abandoned the Russian market or at least tried to optimise operating costs by moving to smaller spaces and cutting down on staff, as of this year the impossibility of making full use of rented spaces has made local companies discover "smart working" and convinced many of them that this working system could be maintained even after the restrictive measures linked to COVID have been lifted.

If we add to this the fact that in many sectors the projections for the coming months do not give rise to any particular optimism, it is to be expected that in this segment demand will continue to be exponentially lower than supply, many spaces will remain vacant and the administrations of some office complexes may opt for a conversion of large vacant areas (for which it might be particularly difficult finding tenants in the current situation) into co-working spaces, as is already happening in part.


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