In the primary market of luxury real estate in Moscow, supply is increasing while demand is decreasing.

According to experts from the Kalinka ecosystem, demand for luxury real estate in Moscow may decrease by up to 60% compared to the record level in 2021.

The experts from the Kalinka ecosystem have summarized the preliminary results of 2022 on the primary market of luxury residential real estate in Moscow. In December 2022, the number of properties for sale reached 2,593 units, 10% higher than the third quarter and 25% higher than the previous year due to the introduction of new large-scale projects to the market. The total supply volume amounted to 364,000 square meters, showing a 6% increase for the quarter and a 17% increase compared to the previous year.

The increase in supply is attributed to the release of a significant number of properties in new premium complexes such as Luzhniki Collection and "Dom na Maloy Gruzinskoy", and the Onest residential complex, against the backdrop of a general decrease in demand in the market. As a result, the share of premium-class supply increased to 66%, while the share of deluxe-class supply decreased by 3 percentage points to 34%.

In December 2022, there are still 97 deluxe and premium-class complexes available for sale on the primary market of luxury residential real estate in Moscow. Overall, 18 new elite projects entered the market since the beginning of the year, exceeding the total figure for 2021 (13 projects) by 38%. The total supply volume in the new projects exceeds 222,000 square meters, which is 5% lower than the 2021 figure (despite a smaller number of complexes being introduced to the market, the figure was achieved due to the large-scale Ostrov project with its premium section, as additional buildings in the project entered the market in three stages throughout the year). 2022 was characterized by the entry of new players, who had previously implemented real estate projects in other segments, into the elite market. In the premium class, the sales of new large-scale projects Opus, "Dom na Maloy Gruzinskoy", the first phase of the Luzhniki Collection, and Onest started in 2022. In the deluxe class, the market was supplemented with offerings from major projects such as Vesper Tverskaya (second building with apartments), "Kosmo 4/22", Quartier D'or, "Ilinka 3/8", and "Savvinskaya 27". By the end of the year, the release of 1-2 deluxe-class projects in the closed sales stage is expected.

In 2023, the dynamics of new projects entering the market will depend on the overall state of the market and its indicators. Taking into account the rescheduled projects that were previously planned for 2022, the start of sales is expected for approximately 6 deluxe-class complexes and 3-4 premium-class complexes.

In December, the indicator of the weighted average specific cost demonstrated a 4% decline for the quarter against the background of a large number of lots in new complexes at the initial stages of construction - up to 1,369 thousand rubles per square meter. Over the year, the price increased by 16%. The increase in the weighted average cost overall in the luxury market in 2022 was also associated with the growth in the share of deluxe class offerings. In the premium class, the decline for the quarter was just under 2% - down to 952 thousand rubles per square meter (+5% for the year), in the deluxe class, the price slightly adjusted to 2,192 thousand rubles per square meter (+12% for the year). The highest price level in 2022 was observed in March when, against the volatility of the exchange rate with a sufficiently high share of offerings in foreign currency, weighted average prices reached peak values. Nevertheless, most developers adhering to currency pricing fixed prices in rubles, thereby adjusting the price level in the segment relative to the peak values of March. In the 4th quarter, against the lack of demand in a fairly large number of projects with less liquid and residual supply, developers resorted to some cost reductions through the introduction of promotional offers.

Overall, the elite market in Moscow continues to experience a further decline in demand in the 4th quarter, which is largely due to the low sales figures in the premium class, where some developers also offer promotions and discounts on certain pools of lots.

"Since the beginning of the year, against the backdrop of political and economic instability, demand in the luxury market has predictably shown a significant decrease compared to previous years," said Ekaterina Rumyantseva, founder and CEO of the Kalinka ecosystem. "As a result, the total number of transactions in the elite real estate market may show a significant decrease - up to 60% compared to last year (about 1,000 lots in 2022). However, due to the price growth in projects this year, the indicator of the weighted average specific cost per square meter of acquired lot has significantly increased - on average up to 1.1 million rubles, which is 35% higher than the 2021 figure."