Large-scale development districts near the Moscow ring road: foggy prospects and risks for the market of the Moscow region

MOSCOW, July 14. /Offset. TASS Yuliya Akinshina, Julia Ermilova, Ekaterina Masanina/. Moscow authorities decided to put a few tens of thousands of acres of land adjacent to the ring road, and plan to build about 10 million square meters of housing. This is almost three times the average annual volume of commissioning of housing in the capital.

To experts interviewed by TASS said, how will it change the balance of power in the real estate market of Moscow region and establish whether mass building in Moscow suburban housing market.

Plans for large-scale development in the area of the ring road both inside and outside the ring road earlier on Friday, the newspaper reported RBC. The head of Department of development of new territories Vladimir Zhidkin TASS confirmed the presence of the city authorities of such plans. According to him, in these territories you can build a house in 12, 17 and 25 floors. In addition to residential property, the planned construction of commercial as well as parks, Bicycle paths and sports facilities.

Planning documentation for this project can be developed by the end of this year, said Zhidkin. Responsible for the development of the project until the last moment means the Department of development of new territories, reported TASS the press service of the Moscow architecture Committee.

To set deadlines

The project has not yet been discussed at a public hearing. “From the architectural Committee can say that the project at public hearings, we could not stand. While on schedule we have a review of this project is not” – said TASS representative of the press service.

It is already possible to say that the project will take at least 10 years, said Zhidkin, but the real estate market experts not so optimistic. “Given the current market situation, developers will be able to build up such areas for about 25 years,” – said the Director of marketing and market research FGC “Leader” Xenia Tsaplina.

The expert notes that due to the very long planning all the predictions on the structure of supply and demand can be estimated. It is difficult to calculate and required attachments. The volume of investments in the project, according to rough estimates of experts, can reach 200-300 billion rubles. Further calculation, according to them, depends on the specific implementation scheme of the project, for example, it is not clear what proportion of the project will occupy commercial property.

“It is therefore difficult to assess the volume of investment in the project, as the cost of construction of various real estate segments still different,” says managing partner of Colliers International Nikolay Kazansky. He predicts that the accent will be placed on residential property, since the rapid demand in the segment of commercial and, in particular, office properties are observed.

Evaluation of attractiveness of

“The project will be attractive to investors if the demand will remain stable, and the price dynamics will correspond to the financial model of the project”, – said the commercial Director of the “Ingrad” Eugene Sandler.

Very much will depend on the specific location of development sites, emphasizes the managing partner of “Metrium Groups” Maria Litinetskaya. For example, sometimes remote areas are more promising than those that are in the “middle belt,” she explained.

“There are projects in Solntsevo district, Mitino, Northern, Nekrasovka, where consumer activity is very high. It is the most liquid residential complexes with a reasonable price, transport accessibility, infrastructure, ecology, and, importantly, the Moscow residence permit. However, there are dozens of other projects in the middle belt that are not so popular and have low profitability”, – said Litinetskaya.

In addition, the situation determines the transport infrastructure. It is important to design new development so as not to stop the traffic of Moscow, reminds the Director of sales Ledger “Grenelle” Ruslan Arslanov. The city authorities have assured that in the event of a large-scale new housing in areas adjacent to MKAD territories road capacity will increase.

“Any decision on construction will be tailored to enhance accessibility. Depending on how the city was built. I have a clear understanding and confidence that any decision on how to evacuate people, how to provide them with a transplant, how to ensure they work, all this will look together with the approval for a building permit. The transport component will not be forgotten for sure”, – told reporters the head of the Moscow Center of traffic organization (COD) Vadim Yuriev, adding that extensive development may lead to the introduction of reserved lanes on the mainline and increase there traffic frequency.

According to him, it is premature to talk about exactly what changes will be needed to enhance accessibility. Speech can go as about the construction of new public transport and on the “development of dedicated lanes and increase the frequency of the movement”.

The future market of the Moscow region

Such a large estate near the Moscow ring road creates risks for suburban real estate market, experts say. For example, clients may lose developers, leading construction in the Moscow suburbs – in 5-10 km from the ring road, said Arslanov from the group “Grenelle”. “Now MKAD move those who do not have enough money to buy an apartment in Moscow, but with these volumes and reduce consumer demand, apartments in the suburbs and the new volumes will be equal in price”, – he explained.

Moscow oblast is in a very competitive fight with the capital projects, agrees Sandler of “Ingrad”. “The stage of excavation” capital projects are often comparable in price with a suburban, but have a number of advantages: a Moscow residence permit, subway, developed infrastructure, he said.

While plans for large-scale construction of the ring road is difficult consistent with other mega-projects: renovation, development of industrial zones, development of New Moscow, adds Litinetskaya.

“Many developers are already actively involved in these projects and plan to join renovation, which will build 30 million square meters of housing. In the end, it is possible that such a large number of new sites will lead to dispersion of forces and resources of the entire building complex, and therefore, the implementation of all these schemes can drag on for decades,” she says.

However, working in the Moscow market, developers need new liquidity venues and project development areas off the ring road, if not solve this problem, it will help to lower the voltage.

Experts agree that the announcement of plans of development of territories in Moscow is ambiguous on the background just started a restoration programme. Within the last year in Moscow will be erected at 2-2. 5 million square meters of housing in addition to the current 3-3. 5 million sq. m. Such a strategy threatens the long price depression throughout the market which is already overstocked supply and lack of effective demand.