Page 65 - RUSRptAug18

Residential demand surprised on the upside, supported by recovery in real incomes (up 7.6% in the second quarter of 2018) and declining mortgage rates (down 170bp y/y to 9.6%), as well as seeing greater preference for large developers after the default of Urban Group in the Moscow Region.
Analysts anticipate continuation of robust trends in the second half of 2018 and highlight a preference for the industry leaders, which currently represent the most appealing offer and are best prepared for upcoming regulatory changes.
LSR picks up with a pace. On the surface, LSR released the most aggressive volumes advance, 24% Q/q and 69% y/y for the second quarter of 2018 , primarily reflecting the favourable comparison base as the market offer was artificially slowed to reflect changing customer preferences in 2017. Key support came from the mass-market segment in St Petersburg, which sold double the volumes y/y, 108,000sqm. In the first half of 2018, sales launches accelerated to 261,000sqm, accounting for 30% the scheduled for 2018 volumes. Consolidated sales in the first half of 2018 for LSR grew 40% y/y, to 358,000sqm, and accounted for 43% of the aggressive management target of 840,000sqm for 2018, which now represents a base case with upside risks to our model.
Strong quarter for industry leaders . The reported sectoral trading updates positively surprised us, as PIK and Etalon added 5-6% y/y in volumes from a robust base, while LSR got closer to its true sales potential.
The 100 most expensive apartments in Moscow are collectively worth RUB46.9bn or $741mn , according to a study by real estate agent Savilis, with an average square meter price of $32,300, the company reports on July 5. The real estate market has been hit by sanctions and economic crises in recent years and is still struggling to recover, with the average prices down by 7% in the past few months. The most expensive apartment in Russian capital is a 600sqm penthouse that costs about $26mn and under construction as part of a project in the Patriarch's Ponds district, long Moscow’s most prestigious address. The cheapest top 100 offer is also located in Patriarch's Ponds and is a 1-bedroom apartment of 50 square meters worth $1.5mn. From the top 100 53% of the apartments are from the primary market and 47% are on the secondary housing market. Most of the properties are located in Ostozhenka district (37), followed by Patriarch's Ponds (29), and Tverskaya Street district (13).
The number of transactions for new housing on the Moscow real estate market jumped by 42% y/y over the first six months of this year . The number of deals on the secondary market was also up by a quarter over the same period, according to the Moscow registrar. The sale of new buildings under equity agreements over the first six months totalled 33,888 contracts against 23,862 contracts in the same period a year earlier. According to the agency, for six months in Moscow, 68,212 transactions were closed for real estate purchase and sale agreements on the secondary market, up from 54 661 deals a year earlier. Mortgage loans also put in record growth, over the six months with a total of 37,869 mortgage agreements registered, a 74% increase y/y and more than the 21,713 contracts signed in all of 2017.
65 RUSSIA Country Report August 2018 www.intellinews.com