A view of an apartment house, Krylatskie Hills, Moscow
Photo: Ilya Pitalev
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Not Local Demand
In Russia, the housing prices hiked 7.2 percent on quarter from April to June, according to Federal Construction Agency (Rosstroy). The growth is even more illustrative in view of the increase in building volume.
In line with the trend, Moscow prices surged 7.6 percent in May and stepped up 5.8 percent in June. The city's bureaucrats see no reason for such acceleration and some of them suggest freezing the prices. The lack of transparency and the lack of openness of the market are often named as the cause of the growth. But there could be some global factors as well.
In effect, the housing prices are skyrocketing nearly worldwide. In developed states, for instance, the market cost of residential real estate soared nearly 75 percent from 2000, The Economist reported.
The distinctive features of this housing boom are the enormousness of its scale, internationalization and transformation of the real estate into an investment lever. In China, foreign investors funneled $3.4 billion into the residential real estate in 2005, i.e. 15 percent of the overall investments on the market.
Purchasing for investment purposes has accounted for 30 percent to 40 percent of all deals with the Moscow flats clinched in the recent years, signaling the prices are probably going up not only on the solvent demand of the locals. As foreigners have hardly strengthened on the Moscow market, the flats could be acquired by investors from oil and gas provinces or CIS.
www.kommersant.com
All the Article in Russian as of July 26, 2006
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