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27 Декабря 2010, 13:57
Land of Plenty
There’s never been such a wide availability of land for sale in Moscow and in suburban markets. The availability of a well-located land plot prior to the fall of 2008 was considered essential for tackling any development project. As of October 2008, transactions on the land market practically vanished. A slight revival began in the spring of 2009. And what’s the situation on the market today?
With most retail chains having discontinued their business expansion activities and the decline in business among developers, the requirement for land plots decreased as well. Land owners have become conciliating as to the value of their properties. And according to many market players, the number of buyers interested in land for speculative reasons has increased and the land remains potentially attractive as an investment.
Following the years of rapid growth, the price for land in the capital and vicinities has begun to stabilize. Market players note that the stabilization started even before the crisis: in certain areas, the market was overheated and the demand went down. With so many suspended projects, the number of available land plots has grown substantially: companies are clearing their unmarketable assets, are selling plots that they aren’t prepared to use on their own, or are forced to do so in order to honor the debt loads that hang over their heads.
As noted by experts from Blackwood, the growing number of offers does not necessarily induce a growth in the number of transactions. The reasons are as follows:
• the market is in a state of expectation;
• a land purchase during a crisis can turn out unprofitable;
• one of the major categories of buyers are land speculators, who have slackened their activities since the payback period on investment has greatly increased. The land remains a good investment target, but the increase in value required by speculative investors will most often take several years. Among the bidding opportunities, we should note the appearance on the land markets of Moscow and surrounding areas, of a great choice of marketable plots which was hard to imagine before the crisis. Experts at RDI Group believe that this is a good time for entering the market with a strategic goal: when will such an opportunity come again? The cost of such plots will at least triple over the next 2 to 3 years. The major part of the increased market offer is made up of land of no interest for the end-user. According to Colliers International, property owners are initially offering land with the least marketability and a low growth potential - for instance land that is dedicated for farming. And the potential buyers have adopted a wait and see attitude with an expectancy for better land at lower prices.
According to data from LCMC, the greatest drop in the demand impacted land plots without any communications, farmland, purchased with an intention of subsequent changes in its zoning, and large plots for industrial manufacturing. In comparison with mid 2008, the land prices, according to Knight Frank, have dropped 30-35%, on average. Deals were essentially closed in the 2-3,000 sq m segment.
Trends • An increase in the number of marketable land plots in Moscow and suburbs due to an urgent need by their owners to honor their accumulated debt loads.
• An increase in the number of potential buyers interested to invest in the land market.
• A more flexible approach by property owners during negotiations on sale of their land properties.
Forecast The development of the land market greatly depends on the financial situation of its participants, whose future is presently rather vague. Will the number of companies forced to clear their land plots, will the number of investors willing and capable of purchasing such plots decrease, will there be developers interested in launching new projects that will require land plots – the answers to these questions will determine the dynamics and pricing on the land markets. Experts believe that the situation with regard to the development of the land markets will become clearer in the spring of 2010.
Following the years of rapid growth, the price for land in the capital and vicinities has begun to stabilize. Market players note that the stabilization started even before the crisis: in certain areas, the market was overheated and the demand went down. With so many suspended projects, the number of available land plots has grown substantially: companies are clearing their unmarketable assets, are selling plots that they aren’t prepared to use on their own, or are forced to do so in order to honor the debt loads that hang over their heads.
As noted by experts from Blackwood, the growing number of offers does not necessarily induce a growth in the number of transactions. The reasons are as follows:
• the market is in a state of expectation;
• a land purchase during a crisis can turn out unprofitable;
• one of the major categories of buyers are land speculators, who have slackened their activities since the payback period on investment has greatly increased. The land remains a good investment target, but the increase in value required by speculative investors will most often take several years. Among the bidding opportunities, we should note the appearance on the land markets of Moscow and surrounding areas, of a great choice of marketable plots which was hard to imagine before the crisis. Experts at RDI Group believe that this is a good time for entering the market with a strategic goal: when will such an opportunity come again? The cost of such plots will at least triple over the next 2 to 3 years. The major part of the increased market offer is made up of land of no interest for the end-user. According to Colliers International, property owners are initially offering land with the least marketability and a low growth potential - for instance land that is dedicated for farming. And the potential buyers have adopted a wait and see attitude with an expectancy for better land at lower prices.
According to data from LCMC, the greatest drop in the demand impacted land plots without any communications, farmland, purchased with an intention of subsequent changes in its zoning, and large plots for industrial manufacturing. In comparison with mid 2008, the land prices, according to Knight Frank, have dropped 30-35%, on average. Deals were essentially closed in the 2-3,000 sq m segment.
Trends • An increase in the number of marketable land plots in Moscow and suburbs due to an urgent need by their owners to honor their accumulated debt loads.
• An increase in the number of potential buyers interested to invest in the land market.
• A more flexible approach by property owners during negotiations on sale of their land properties.
Forecast The development of the land market greatly depends on the financial situation of its participants, whose future is presently rather vague. Will the number of companies forced to clear their land plots, will the number of investors willing and capable of purchasing such plots decrease, will there be developers interested in launching new projects that will require land plots – the answers to these questions will determine the dynamics and pricing on the land markets. Experts believe that the situation with regard to the development of the land markets will become clearer in the spring of 2010.
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