MOSCOW, 1 February. Moscow took the first place among world capitals in a study about the risks for the development of markets for luxury real estate in 2016. The capital’s residential property market threaten geopolitical risks, low oil prices and a toughening of state regulation. This follows from the Prime Cities report Forecast Report 2016 (“the Forecast of development of the luxury real estate markets of the world 2016”), prepared by the international company Knight Frank.
According to the study, in 2016 the least “risky” markets for investment in luxury residential property are Monaco and London, the greatest risks are found in Moscow and Miami. The study included 11 key world cities – London, new York, Miami, Paris, Monaco, Geneva, Hong Kong, Singapore, Shanghai, Sydney, Moscow.
Overall, the greatest threat to the development of the global luxury market in 2016 are the increase in key interest rates USA, international terrorism and the heightened tensions in the world political arena, says the report. And low rates of income of the population and the slowing national economy – risks that are to a lesser extent will have an impact on the market of elite real estate.
“We will discuss the most significant risks for the Moscow elite residential market are geopolitical and currency risks and risks associated with the oil prices. The combined effect of these factors is very powerful: on the one hand, the fall in oil prices puts pressure on the market, including through the weakening of the ruble, on the other hand, because of the sanctions there is no possibility of raising relatively cheap Finance,” commented the data of the analytical Department Director Knight Frank Russia & CIS, Olga Yasko. She explained that while sanctions imposed on Russia significantly reduce the importance of risks associated with the increase in the key rate by the fed and weakening emerging markets, as the volume of Western investments, and so fell significantly after entering the sanctions prohibitions and restrictions.
Also, according to Yasko, among the potential risks that should be considered is the risk of changes in government regulation of the real estate market. We will remind, the state Duma is considering amendments to the law on real estate investors, stricter control of developers. If developers lose the opportunity to raise money from investors during the construction phase, they will have to fully Finance the project at the expense of own and credit funds, or to attract financial partners. In high cost lending, this will lead to a substantial increase in prices that would adversely affect the demand, the expert believes.