Overview of the commercial real estate market in Moscow in 2023

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Total stock of office spaces in Moscow:

• As of June 2, 2022, class B office properties in Moscow had the largest stock compared to other categories at approximately 15.3 million square meters.
• Class A offices followed closely, with around 14.2 million square meters of office spaces on the market.
• Class C offices had a much smaller stock of around 6.5 million square meters.

Office property market growth and composition in Moscow:

• Although growth of the office property market in Moscow slowed in 2021 due to the COVID-19 pandemic, the market is beginning to recover in 2022.
• The highest demand for office spaces in Moscow is in the Central Business District due to the presence of large corporations and banks.
• Office spaces located outside the CBD typically command lower rents and occupancy rates than in the city center.

European commercial real estate market:

• The website provides detailed information on the commercial real estate market in various European countries including office, industrial, and retail markets, with data broken down by city and market segment.
• The data includes real estate market sizes, listed market capitalization, investment volume, rental yields, take-up of space, availability and vacancy rates, among others.

Office real estate market in Europe:

• The website provides a detailed overview of the office market in major European cities including investment and development prospects, rental prices, yields, and take-up of space.
• London has the highest rental price for prime office space in Europe, followed by Paris, Frankfurt, and Amsterdam.
• Lisbon is the city with the highest prime office rental price growth rate, while Helsinki has the lowest.

Logistics and warehouse real estate market in Europe:

• The website also provides information on the logistics and warehouse real estate market in major European cities.
• Prime headline rental costs for warehouse space per square meter vary widely across different cities, with London being the most expensive and Lisbon being the least expensive.
• Net prime yields for large warehouses vary across different countries, with Spain reporting the highest yields and the Netherlands reporting the lowest.

Retail real estate market in Europe:

• The website provides data on the retail real estate market in Europe, including rental prices, prime yields, and investment volume.
• Paris has the highest prime rental cost for retail space in Europe, while Lisbon has the lowest.
• Moscow is reported to have a high investment volume in retail real estate in recent years.

Leading companies in European real estate:

• The website provides information on the leading real estate and investment companies in Europe,

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• The global real estate industry is facing transformational shifts in how buildings will be used, valued, and transacted in 2023 onwards.
• Deloitte surveyed 450 CFOs of major commercial real estate owners and investors to get their opinions about organizational growth and their plans for workforce, regulatory compliance, and technology.
• Concerns about the economy are top of mind for most global real estate leaders as they prepare for the remainder of 2022 and 2023. Revenue expectations for 2023 are mixed among those surveyed—40% say revenues should increase, 48% see revenues decreasing, and 12% expect no change.
• Last year’s results were much more optimistic: 80% expected revenues to increase in 2022. As a result, more respondents (33%) are planning to cut costs compared to last year, when only 6% planned to make cuts.
• Respondents point to sustained high inflation, workforce management, cyber risk, and climate-regulated regulatory action as issues that will have the most significant impact on revenues over the next 12 to 18 months. Unfortunately, most respondents do not think the industry is fully prepared to respond to some uncertainties. Top concerns varied significantly by geography.
• When it comes to real estate fundamentals—cost of capital, capital availability, property prices, vacancy levels, leasing activity, transaction activity, and rental rates—most respondents (66%) expect improving or stable conditions for next year. Respondents point to leasing activity, tightening vacancies, and rental growth as having the strongest potential for improvement.
• Overall, downtown offices and suburban offices are seen as the most attractive risk-adjusted opportunities among property types over the next 12 to 18 months.
• European respondents identify suburban offices as their top growth opportunity (35%), Asia-Pacific respondents highly favor digital economy properties (43%), and North American respondents choose logistics and warehousing spaces (43%) as their top bet.
• Real estate firms are still in the early stages of managing their ESG compliance requirements. Only 12% of respondents say they’re prepared to immediately implement changes to meet new regulatory requirements, and only 7% use ESG data and analytics in their investment strategy decision-making.
• Most plan to start incorporating ESG data over the next year to two years. Social and governance issues are also important.
• Respondents were closely following trends in tax regulation. With tax policies around the globe in flux, top concerns for the industry were increased tax rates, changes to transfer pricing/profit-sharing, and the automation of

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• In July 2022, the Ostozhenka district, Center of Moscow, and Arbat were the most expensive districts in Moscow in terms of residential housing prices, with an average price per square meter of 525,000 Russian rubles for the Ostozhenka district.
• The webpage provides premium statistics on the real estate market in Russia, including residential and commercial real estate.
• Russia’s home ownership rate between 2010 and 2020 was 78%.
• The average living space per capita in Russia between 2005 and 2021 was 39.5 square meters.
• The website provides quarterly residential property prices for Russia from Q1 2000 to Q1 2022, broken down by market.
• Between 2020 and 2022, the average primary housing prices in major cities in Russia varied significantly, with Moscow having the highest average price of approximately 8.8 million Russian rubles, followed by St. Petersburg at 7.6 million Russian rubles.
• In 2022, the city with the highest average selling price of housing in Russia was St. Petersburg, followed by Sochi and Moscow.
• Moscow, St. Petersburg, and Sochi were the most expensive cities for apartment rentals in 2022, with the average rental rate ranging between 65,000 and 115,000 Russian rubles per month.
• Moscow had the highest housing price per square meter in July 2022, followed by St. Petersburg and Sochi.
• The website also provides statistics on commercial real estate in Russia, including retail, office, and warehouse property.
• The total stock distribution of office space in Moscow in 2021 was approximately 23.2 million square meters, with 94% of the stock categorized as class A or B+.
• The office vacancy rate in Moscow has been decreasing since 2017, reaching 7.3% in 2021.
• Between 2016 and 2021, take-up of office real estate in Moscow increased steadily from 1.4 million square meters to 2.3 million square meters.
• Coworking space rent in Moscow varied significantly across different districts in 2022, ranging from 791 to 2,756 Russian rubles per square meter per month.
• In 2022, the prime office rental prices in Moscow varied depending on the location, with the highest rental rates found in the Central Administrative District.
• There were approximately 304 shopping centers in Moscow as of Q1

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• Inflation in Europe is a concern for the real estate sector due to supply chain issues that led to increased prices for inputs like lumber, as well as increases in energy prices making transportation more expensive.
• The pressure on commercial real estate values is a big fear for the industry, with a fall in direct property values regarded as inevitable and the pricing between prime and secondary real estate expected to widen.
• The shift in loan-to-value percentages will impact deals that need cheap money to be financially attractive.
• The prospects for real estate have not completely fallen off a cliff, because the asset class is long regarded as a hedge against inflation. This has attracted some investors despite the uncertain climate.
• The coming year could be a great buying opportunity for core investors that are still under-allocated to the sector.
• The high price of existing prime assets in recent years led some investors to pursue “develop-to-core” strategies.
• International political instability is a significant concern for the real estate sector, with European and national political turbulence raising worries. Only around half of this year’s survey respondents expect to be net buyers of European real estate next year, down from 59% the previous year.
• The interviews and roundtables conducted for the report reflect differing views across asset classes, specialisms, and geographies.
• There is a flip side to distress in a downturn, according to the CFO of a Nordic real estate company - “It is in troubled times that the best deals are made, and I believe that the coming time will open up opportunities for those who have access to capital.”
• For 93% of the industry leaders surveyed, running an environmentally and socially sustainable business is the most important factor for successful organizational transformation in real estate over the next 20 years.
• ESG is important because regulators, investors, and employees are all making demands for better performance. A clear ESG roadmap can help calculate risk more effectively, potentially improving financing and insurance terms.
• Nearly 90% of the respondents highlight the importance of creating social impact alongside financial return over the next 20 years.
• 60% of the respondents identify the importance of increasing diversity within their organizations. Diversity, equality, and inclusion initiatives have the potential to build creativity and resilience in organizations that have sometimes been monocultural.

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• In 2004, Norman Miller gave a series of lectures on Russia’s commercial real estate market and the changes that have occurred since 1998.
• Moscow’s commercial real estate market is coexisting with corruption, entrepreneurship, and capitalism.
• U.S. companies such as Hines and Enka have successfully entered the market but local partners are necessary for entry.
• Design review, permits, and land-use regulation are inconsistent, bureaucratic, and require “gifts” for quicker action.
• The market is difficult to enter without local partners.
• Capitalization rates for class A office space run about 13 to 15 percent and class B space, 16 to 18 percent.
• Environmental concerns are nonexistent in urban areas, and no Phase 1 inspections are required on urban development.
• Few new developments occur due to the city share tax known as dolya goroda, which can be as high as 50 percent of the value of the new construction.
• Debt financing remains expensive and external financing from outside Russia remains difficult due to high-interest rates ranging from 12 to 18 percent.
• Rehabbing factories into offices or retail space and rehabbing old residential space are the preferred paths for new development.
• There are severe supply constraints on new developments, including the city share tax known as dolya goroda, which can be as high as 50 percent of the value of the new construction.
• One requirement of purchasing factories is finding new jobs for the bought-out workers where every spec investment development company have a staff of employment agents who place as many of the workers as possible.
• Most of these factories would not survive in a globally competitive world. Such factories are located near enough to the central city that they make ideal class A or B office space.
• Incomes are growing by nearly 15 percent per year in nominal terms although inflation continues to run close to 10 percent.
• Demand for retail, office, and quality housing space continues to exceed supply yet there are pockets where overdevelopment is possible in the coming years.
• Moscow City, a new large-scale mixed-use development, will result in over a million square feet of class A office space coming on the market each year for several years.
• Moscow is at the peak of the spread between cost and value due to low-cost long-term leases, but in a few years, the city will need to lower the share tax to allow new development.
• Access remains a critical factor in this city, and the typical office project provides about one car space per 1

• Premium Statistic Europe: commercial real estate market size 2019-2022, by country (entire Europe)
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• Premium Statistic Housing price in the most expensive districts of Moscow 2022 (Moscow only)
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• Premium Statistic Total office stock distribution in Moscow 2021, by class (Moscow only)
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• Premium Statistic Coworking space rent in Moscow 2022, by district (Moscow only)
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• Premium Stat

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• Deloitte surveyed 450 chief financial officers of major commercial real estate owners and investors to get their opinions about organizational growth and their plans for workforce, regulatory compliance, and technology.
• Revenue expectations for 2023 are mixed among those surveyed—40% say revenues should increase, 48% see revenues decreasing, and 12% expect no change. Last year’s results were much more optimistic: 80% expected revenues to increase in 2022.
• Respondents point to sustained high inflation, workforce management, cyber risk, and climate-regulated regulatory action as issues that will have the most impact on revenues over the next 12 to 18 months.
• Most respondents believe ESG is important but only 7% use ESG data and analytics in their investment strategy decision-making. Most plan to start incorporating ESG data over the next year to two years. Social and governance issues are also important.
• Overall, downtown offices and suburban offices are seen as the most attractive risk-adjusted opportunities among property types over the next 12 to 18 months.
• European respondents identify suburban offices as their top growth opportunity (35%), Asia-Pacific respondents highly favor digital economy properties (43%), and North American respondents choose logistics and warehousing spaces (43%) as their top bet.
• More than 40% of respondents plan to bolster diversity, equity, and inclusion (DE&I) initiatives, add additional health and wellness benefits, and offer regular remote-working options. But only about a third (or fewer) say their firms are prioritizing measures such as workplace redesigns, implementing flexible schedules, and offering more career growth and skill development opportunities.
• Many anticipate some level of technology cost-cutting at their companies, and fewer than half expect to see any increase at all, especially in Europe.
• Emerging technologies, such as smart contracts, tokenization, and the metaverse—currently being explored by 80% of respondent firms—could be leveraged to further complement and enhance existing services.
• Real estate firms should make informed, innovative plans to meet the evolving needs of investors, tenants, and regulators.
• The industry faces transformational shifts in how buildings will be used, valued, and transacted in 2023 and beyond.
• Respondents were also closely following trends in tax regulation, with top concerns for the industry were increased tax rates, changes to transfer pricing/profit-sharing, and the automation of enforcements.
• Real estate companies will need to learn about potential regulatory

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The current state of the commercial real estate market in Moscow