Russian rental market seeing downturn
Tenants are seeking lower prices or moving to cheaper places
While prices for new housing in Russian are increasing due to cheaper mortgage loans, rental market is suffering a decline. Lower incomes and remote working are pushing tenants to look for more affordable apartments.
Demand for rented accommodation in Russian cities has dwindled, as tenants struggle to pay their rent or move to cheaper places outside the city to work from home, reports Reuters. Prices on the residential rental market in cities of more than 1 million people decreased by up to 12% from March to May and slightly recovered in July, says Alexey Popov, head of research at CIAN real estate database. Normally, foreign students help to support the rental market, but they are largely absent due to the pandemic.
A study by NAFI Research Centre showed that among 10 million people who lived in rented accommodation in Russia only half planned to continue doing so in the following two years. The fact that employees of many companies still work remotely can lower demand for apartment rentals in large metropolises, considers Russia’s Central Bank.
Landlords and real estate agents are struggling to make their financial plans and do not know when to expect the market’s recovery. According to estate agent Tatiana Shotova from Moscow, many clients lost their tenants after the quarantine measures, as people returned home and never came back. “But those landlords who cut prices by 20-30% compared with early this year have found new tenants again,” says Shotova.
Elena, 56-year-old pensioner from Moscow, is currently trying to find new tenants for her one-bedroom apartment in the Moscow suburbs. The previous tenants asked her to reduce the rent from 18,000 to 10,000 rubles ($132) when they suffered a drop in income due to coronavirus restrictions. Later, they moved out and went back to their hometown outside Moscow. “We’ve lowered the price to 16,000 rubles, we’ve been publishing the ad for three months and still can’t let this flat,” says Elena adding that potential tenants say it is still too pricey even though that’s the average price.
The price fall was particularly bad in foreign currency terms, as the ruble has lost around 20% of its value against the dollar and the euro this year. Nina, 44-year old office manager, used to let her Moscow apartment for 55,000 rubles per month, which is now worth only about $727 compared to around $900 in early 2020.
According to Rosbank, lower income from real estate ownership was one of the factors standing behind the fall in Russians’ real disposable income in the second quarter, when it fell more than in any other quarter in the past 20 years.