Russia’s property market will suffer until mid-2011 as demand stays weak and landlords are forced to offer lower rents to avoid defaulting on their loans, the Moscow head of broker CB Richard Ellis said. ‘We expect to stay at the bottom for another 12 to 18 months,’ Darrell Stanaford told Reuters, adding that although demand was starting to pick up it remained some way below levels seen before the 2008/09 financial crisis.
CBRE estimates Moscow office space has grown to 12 million square feet from two million over the past decade, with a vacancy rate of nearly 20 per cent after demand slumped and access to financing froze in 2008.
‘The level of activity is increasing now but the amount of demand is not going to grow (significantly) this year,’ Mr Stanaford said. ‘Most landlords are servicing debt, and their ability to service that debt is continuing to get worse … Some therefore have to sell or to get tenants at any price. That puts downward pressure on rents.’
Source: Business Times, 24 Nov 2009