Commercial real estate looks to the upside after torrid 2009
Less than two years ago, Moscow was home to a commercial construction boom – with new projects popping up across the city. Today, that landscape has changed – with half-finished buildings topped with idle cranes a common site.
Developers, property owners, and renters have all felt the pinch of the financial crisis according Ernst & Young Senior Manager, Aleksandr Kopylov.
“Over the past year, we've seen a decline in prices that is quite significant. It's a complete change of expectations in real estate to the investor.”
Research suggests there is as much as 8.5 million square meters of A and B+ class office space. Up to 54% of that, with rental prices on average at $650 and $450 dollars, respectively, per square meter a year, is unoccupied.
Even though exiting supply currently outnumbers demand, that hasn't stopped the opening of a new A-class complex in the heart of Moscow. It's offering over 70,000 square meters of office space. Now 90% of that is being leased – but through contracts signed two years ago.
The decline seen since that time, though, is one David O'Hara, Commercial Real Estate Managing Director at Blackwood says could be quick to change.
“The optimism reflects the potential of the real estate market and the business environment in general. If you look at where we today and where things will be in a year or two years, things reacted very strongly and very quickly both in real estate and the business environment.”
With the commercial real estate market very-much dependent on the state of the economy, businessmen and investors alike are watching and waiting for a speedy recovery.