Crimean Property Prices Climb Up Even as Investor Sentiment in Russian Property Market Dips
A recently released report states that the investment sentiment in the commercial property market has picked up worldwide, during Q1 2014. While most European countries reported a rebounded investment sentiment, the Russian property market faced a depressed investor sentiment. Meanwhile, property prices in Crimea have shown a dramatic increase following Russia’s annexation.
Spanish, Portuguese and Irish real-estate markets bounce back while Russia makes sluggish recovery
While many European commercial property markets gained momentum in their recovery, some markets were still in the doldrums. Real estate markets in Netherlands and France reported stalled progress despite coming out of recession in the latter half of 2013. The downbeat trend in the Russian real-estate sector was prevalent in both investment and occupier markets. Analysts suggest that the looming recession, economic slowdown and political tension are to be blamed for the Russian real-estate market slump.
Meanwhile, Spanish, Portuguese and Irish property markets reported considerable improvements. Survey findings reveal that the transaction expectations in these markets are far higher than any other European property market. The optimistic outlook is expected to translate into an increase in investment transactions in the near future. The occupier market is anticipated to pick up pace as well, aided by the falling unemployment rates. Rental markets in Portugal and Spain may show price rises in a year’s time, although they are expected to remain stable in the coming term.
Crimean residential property market looks up
Following Russia’s annexation, Crimean residential properties have shown steep price hikes. General Director, Ruslan Burdeiny, of Monolit, a construction company, says that recreational facilities and apartments are facing a huge demand in the Crimean property market and their values are even beating the peaks reached in 2005 and 2007.
The prices have gone up by about 50-60 percent in the past two months, he adds. Construction giant Konsol-Stroi claims that the prices in the Crimean property market have shot up by nearly 20-50 percent in under two months. Director of Konsol-Stroi, Galina Kovalenko, says that the average prices have gone up from $ 1,000 to $ 1,500 per square meter.
Real-estate experts predict that the Crimean real-estate will see further increases in property prices in the near future. It is anticipated that the markets will even outperform the Black Sea coastal region in the Krasodar area. The appreciated values in Crimean real estate are however not expected to remain steady in the long term. Burdeiny says that Russians drove many purchases in the Crimean market, pointing out that Crimean properties are priced at considerably lower rates when compared to Russia.
However, he says that appreciated values on Crimea can primarily be attributed to increasing construction material cost, aside from the fact that many developers have moved to Russia with hopes of finding higher wages. Dmitri Medvedev, the Prime Minister had announced plans in March that aimed at utilizing funds from the Federal Housing Assistance to cut down constructional costs in Crimea.