Moscow apartments

Buying property in Moscow

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If you’re looking to invest in real estate in Moscow, then our useful guide to buying Moscow apartments, Moscow houses and other property in Moscow, can help you through the process.

The Moscow real estate market has a relatively short history. In the Soviet era, all properties were state owned and people only had the right to “use” them with apartments allocated based on one’s place of work, thus options for moving were limited. However, in 1990, after the fall of the Soviet government, the Moscow real estate market emerged and Muscovites were able to privatise and subsequently sell and buy properties for the first time. Today, Moscow real estate is booming, although the market has slowed in the past two years, but still offers many exciting opportunities and high returns for lifestyle and investment.

This guide to buying property in Moscow includes:

Is now a good time to buy property in Moscow?

The economic and political climate in Russia over the past few years with economic trade embargos after their intervention in Crimea and Ukraine, the crash of the Russian currency, high inflation rates and high interest rates have all put the country into a recession. Inevitably this affected houses prices across the country, including property prices in Moscow.

On the surface, without inflation adjustments, Moscow property market still appears to be growing, but in a report by Global Property Guide from 2015, the figures issued by the Federal State Statistics - Rosstat, actually showed a decline when taking inflation into account.

While this may sound bad for sellers who had previously enjoyed high demand, high property prices and plenty of buyers, the market has slowed down. However, for buyers, in particular foreign investors, now could be the perfect time to buy property in Moscow. Prices are relatively low, but with forecasts for oil prices to rise in 2017 and the economy beginning to recover, these could provide good returns on investment.

Moscow houses

Property Prices in Moscow

Moscow is a densely populated capital with over 12 million residents. The city is circular surrounded by four rings spanning from the Kremlin in the centre to the Moscow Ring Road or MKAD that defines the city’s limit, with the exception of a few annexed territories.

Inside the rings, the city is divided into ten administrative divisions called okrugs, which in turn are subdivided into 123 districts.  

Property prices for buying in Moscow are usually listed with a price per square metre in Roubles, and sometimes with a total property price. Recent figures from Numbeo put average prices for buying an apartment in Moscow at around 308,500 Roubles per square metre in the city centre and 147,000 Rubbles outside of the city centre. 

If you’re buying property in Moscow, like most cities, location, size and type of property will dictate the price and what you can afford. City centre apartments in Moscow come at a premium price. Although, there are a number of areas outside of the city centre that also demand a high price in wealthy and desirable districts near the Garden Ring. These areas offer leafy suburbs, more open spaces, bigger properties all with good transport links.

Also, some of the modern developments with high-specs geared towards the luxury market and foreign investors will also be more expensive. For example, within the Central Administrative Okrug in areas like Presnensky District, also known as Presnya, as well as Sokol, luxury apartments can go for millions of Roubles.

Where to buy in Moscow?

Moscow is constantly plagued by traffic jams, so driving in Moscow can be a frustrating and long process, so when considering where to buy in Moscow, factoring in public transport links and commute times to work, school or socialising is vital.

The Moscow Metro, is one of the longest in the world with nearly 340 km of underground line that services 203 stations as of 2016, so finding an area that has good links shouldn't be difficult.

For many expats, buying a Moscow apartment in a central location within or a close proximity to the Central Administrative Okrug is preferable providing a minimal commute, all amenities and should you need to rent your apartment in Moscow, finding a tenant in these highly sought after areas shouldn’t be too much of a problem.

Houses for sale Moscow

Central Moscow property

Surrounding the Kremlin are a number of districts within the Central Administrative Okrug. Just like the rental market, areas around Tverskaya Street will always be a good investment and have the vibrant city right on their doorstep, but prices per square metre will be some of the highest in Moscow. Similarly, the areas of Arbat, Kropotkinskaya, Smolenskaya and Patriarchy Ponds slightly further west, along with Chistye Prudy to the east will still deliver a central location and a good return.

Moscow outer districts

Buying property in Moscow outside of the central districts provides you with more options in terms of budget and types of property. Popular areas with an affluent clientele tend to be located in the west, south-west and north-west of the city in areas such as the Sokol district, Shchukina, Voykovskaya and Filakovsky, which all have plenty of green spaces and a choice of different types properties.

Another area favoured by those who want a close proximity to the centre, but more fresh air and quiet residential areas are located around the Sadovoye Koltso or Garden Ring Road and the Boulevard Ring Road, which are both former boundaries of the city. Tagansky district on the eastern side of the Garden Ring is an up-and-coming area which was traditionally working class, but business investment in the area has seen a number of modern residential developments being built.

For those moving to Moscow with families, the Kuntsevo/Krylatskoye district west of the centre near the MKAD is ideal with good access to the International School of Moscow and it is considered the most ecological area in the city. Leninsky prospect to the south is also a popular residential area for expats as there are a number of excellent International and national schools.

To bag a bargain, property in Moscow on the lower end of the price scale can be found to the east and south in the more industrialised districts. However, these areas will still provide good transport connections to the city and could mean you can afford more space yet still feel like you’re in the heart of the city. Seek local knowledge of a reputable real estate agent in Moscow will help you to find a decent area.

Real estate agents in Moscow

When it comes to buying property in Moscow, a great deal of information on properties for sale is listed in public sources or available online and in different publications.

However, selecting the property and organising a viewing, as well as determining which options are more or less attractive requires experience, which is why, particularly as a foreign investor, it’s advisable to use a reputable real estate agent in Moscow. They will be able to provide the most complete and current information on all properties on the market, including the ones that are not publicly listed and provide invaluable local knowledge. In addition, they can assist with carrying out due diligence on a property and structuring a safe transaction.

You should always use a real estate broker or a lawyer with real estate experience to represent your interests during your transaction.

How to buy a property in Moscow

Once you’ve fathomed out which areas tick all your boxes and found a property, it’s time to start thinking about the practicalities of buying in Moscow.

Checking a property’s history

The real estate laws are continuously changing to ensure careful research is carried out on the property history because, in some instances, your ownership rights may be challenged by previous owners or people formally registered in the apartment. Usually such risks can be eliminated if determined before the real estate transaction.

Costs of buying Russian property

It is the norm in Moscow for a buyer to cover all closing expenses, including notary fees , state registration fees and bank expenses. Also, if using a real estate agent to find your property and/or negotiate your deal, you will be charged a brokerage fee. This includes property search, property and seller background check, review of the ownership documents history and the “rights of use” check, arranging the deal closing, and the supervision of the final property transfer to the new buyer. The brokerage fee is usually calculated as a percentage of the sale price ranging from 6 percent for cheaper properties to 3 percent for more expensive properties.

The seller's brokerage fee covers property evaluation and appraisal, property marketing and arranging property viewings, negotiating with potential clients, preparing the complete set of necessary documents for the transaction, arranging the deal closing, and supervising the final property transfer.

Bank fees

The majority of real estate transactions are made in cash and sale-purchase transactions always take place in a bank with the bank’s safety deposit boxes acting as an escrow account to guarantee buyers and sellers the payment is made upon the final ownership transfer. Full funds are deposited and only released to the seller when the complete package of registered documents under the buyer’s name is presented.

Real estate Moscow

Depositary Agreements

Most real estate deals in Moscow extend over a period of five weeks to several months, requiring collection of various documents from state institutions and the buyer may need to secure finances or the seller may need to find an alternative residence. For this reason, a preliminary or depository agreement is made between the buyer and the seller detailing the terms and conditions of the future sale and what necessary from both parties.

Upon signing the preliminary agreement, which can be an advance payment (Avans) or property deposit (Zadatok), buyers pay a deposit to take the property off the market while the required documents are assembled and the close of sale is made. The deposit amount isn’t a set percentage, but usually a round figure agreed by both parties. Always ensure you use an experienced and reliable agent or an experienced real estate lawyer to draft a depositary or preliminary agreement and perform the due diligence on the property.

Notarisation

Notarisation of a sale-purchase isn’t required by law, but it is advised as it is the equivalent of buying title insurance. Notary fees vary depending on the sale price of the property, ranging from 0.7 percent for more expensive properties to 1.5 percent for less expensive ones.

The closing procedure

Once due diligence and paperwork is complete, the closing procedure begins, where funds are deposited in the bank and both parties sign the sale-purchase agreement. The sale agreement is then submitted for state registration (propiska).

On the property transfer date, the parties need to sign an Acceptance Act, usually at the bank, notary or real estate office. This certifies that the property is transferred to the buyer in the agreed condition.

Registration of the sale-purchase agreement with the Federal Registration Service for Moscow makes the transfer of property rights official. This usually takes 30 calendar days to complete, but this can be expedited if you’re using a mortgage to finance the property.

 

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Updated 2017

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