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28 Jul, 2008 07:45

Luxury apartment market continues boom as wealthy invest in bricks and mortar

Right now, Russia’s most expensive flat costs 22mln dollars. But that will soon be eclipsed by Moscow's latest luxury development. Exerts say, demand for luxury apartments far exceeds supply. And there are enough buyers ready to pay more than a hundred th

Homes in one building under construction in the heart of Moscow will beat the current record.

Apartments there will cost around 40 million dollars. They will have swimming pools, indoor gardens and 8 floors with elevators to move family members up and down.

Experts say, developers of elite real estate enjoy margins of up to 80% by capitalizing on a tycoon’s mentality, and Ekaterina Thain, Director of the Luxury Real Estate department at Knight Frank says this leads them to Moscow.

Russia is structured this way, so if you are successful you have to live in Moscow.

Experts say prices for luxury homes have grown 20% over the past year – faster than the mass-market – and predict further growth.

Developers say it's a safe decision to build unique houses with unique services. Mirax group has marketed homes with private zoos and aquariums. Konti offers private golf and yacht clubs. But it's not without risk.  Denis Sokolov, Head of Research at Cushman and Wakefield todays best home can be superseded tomorrow.

A Luxury apartment is the best apartment on the market – you can build an apartment that can be better than everything else – and what can happen to the current best apartment? It degenerates to the second level!

With new legislation due to limit infill construction, land for development in central Moscow is shrinking, giving another boost to demand.

Market players say, it will be hard for foreign investors to projects themselves as it is almost impossible for them to acquire the site and to get all the permissions. But in return for their expertise, it seems there's a secure return.