Vladislav Lutskov

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Russian Real Estate Market Overview
THE FINE ART OF REAL ESTATE
Vladislav Lutskov General Director MIEL Analytic
Consulting Centre (MIEL ACC) September 2008 Moscow
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Table of contents

• 1. Real Estate as Investment instrument
• Posture in commercial and residential real estate
  markets
• Office Premises
• Retail Premises
• Exhibition Premises
• Residential Estate - Supply Demand
• Mortgage Lending

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Investment Instruments
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Commercial Real Estate Office Premises

• Offices will be actively developed in Moscow
  and other cities of Russia (population gt 1
  million) during the next 4 years.

Offices construction and supply in Moscow,
ths.sq.m.
Average rental rates (offices), Moscow, 2003-2008
MIEL ACC forecasts NON-REALIZED DEMAND ca. 2,2
mln sq. M OF OFFICE PREMISES in Moscow by 2013
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Commercial Real Estate Retail Premises

• Retail premises market development stages
• 2006-2010 Market saturates in major cities
• (population gt 1 million)
• 2007-2017 Developers migrate to smaller towns
• (population gt 300 ths.)
• Perspective Retail business formats change
• for new perspective directions

Trade Centers construction and supply in Moscow
as of 1H 2008, ths.sq.m
MIEL ACC forecasts NON-REALIZED DEMAND ca. 1,4
mln sq. m OF RETAIL REAL ESTATE in Moscow by 2013
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Commercial Real Estate Exhibition Premises

• Moscow
• There are ca. 414,8 ths.sq.m of closed
  display premises
• in Moscow today
• Moscow exhibition centres that meet morden
  standards Crocus Expo, Expocentre, All-Russia
  exhibition centre, Sokolniki

Russia
Exhibition Premises of Russia, ths. sq.m
St.Petersburg
Rostov-on-Don
Krasnoyarsk
Nizny Novgorod
Yekaterinburg
Krasnodar

• Exhibition premises development prospects in
  Moscow increase at 19,8 within next 5 years

MIEL ACC forecasts NON-REALIZED DEMAND ca. 680
ths. sq. m OF EXHIBITION PREMISES in Moscow by
2013
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Residential Estate SupplyDemand
Residential area per person, sq.m.

• Housing stock of RF equals about 3 billion sq.m,
  including 3.2 of ramshackle housing and those
  under the threat of collapse

• 495 000 migrant families have arrived
• in Moscow during 10 last years
• 50 000 apartments are to be built per year in
  Moscow
• to supply migration demand specifically, while
• 35 000 apartments are offered for sale only
• 81 000 000 Russian residents are willing
• to improve the conditions of living

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Residential Estate Supply
Average price of supply in Moscow regions
Average price on residential market cost of
construction
Source MIEL ACC
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Residential Estate Demand
Demand for better living conditions
New residential estate construction, ths.sq.m
Demand saturation
High / average
Low
MIEL ACC forecasts NON-REALIZED DEMAND ca. 60 mln
sq. m of RESIDENTIAL REAL ESTATE in Moscow by 2010
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Mortgage Lending Trends in Russia

• Mortgage volume growth in 2007 111
• Issued mortgage loans as for the 1H2008 14,5
  bln
• Mortgage transactions share growth among
  purchase and sale transactions (Moscow region)
  2006 from 10 to 15
• 2007 from 15 to 20
• 2008 expected growth to 25

Mortgage lending in regions of Russia
Moscow and Moscow region
Tumen region
Saint-Peterburg
Novosibirsk region
Sverdlovsk region
Source Central Bank of Russian Federation,
Eurotrustbank
Share of mortgages in Russia USA, GDP
Mortgage loans
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