(MOSCOW, RUSSIA) -- Despite the global financial crisis and a sharp drop of the Russian GDP, Moscow is still in the top five of the world's most expensive cities in terms of average prices for luxury properties, according to a recent report carried out by the analysts of the Russian consulting agency Chesterton.
According to the report, Monaco for many years remains the most expensive luxury real estate market in the world (with an average price start from $35,000 per sq. m.), while London holds the second place with an average price of more than $25,000 per square meter.
Prices for Moscow luxury real estate which start from $18,500 per sq.m. are currently comparable with price for elite housing observed in New York and some Asian megacities, which would cost around $20,000 to $25,000 per sq. meter.
In addition, Moscow is an absolute world leader in terms of growth rates for luxury properties observed over the last five years. Since 2005 prices for premium apartments in Moscow downtown have increased by more than 250%, while in London, Paris and Monaco, the total growth for the whole period did not exceed 25-30% (in nominal dollar prices).
Today, Moscow's housing market continues to be one of the most unbalanced in the world with the cost of housing sometimes reaching over $20 million for luxury apartments in the downtown. High prices now affect housing located on the outskirts of the city. Today, the minimal cost a new home in Moscow is estimated at $5,000 per sq.m. (with the average Russian salary $550 per month), which is too expensive even for foreigners.
Russian experts believe that rising prices mean that fewer and fewer Moscow residents will be able to afford new housing, particularly young families. The property boom has brought with it unrealistically high prices, which are well out of reach of citizens and families who cannot fall back on the luxury of a high income. Instead, the flats and apartments are being snapped up by wealthy Russians and some foreigners, predominantly as an investment opportunity.
Experts have also noted that if the rapid pace of the property boom continues, supply will fall well short of demand and the housing shortage which has existed in Moscow since Soviet times will only worsen.