Housing bubble - Russian style

[c1ue]

I'm in Russia again, and as always keeping an eye on asset prices.

In St. Petersburg at least, there are now 3 classes of construction: luxe, business, and economy.

Luxe apartments are pricing from $6000 to $25000 per square meter (= 10 sq. feet).

While not as high as some of the anecdotal Moscow reports, on the other hand it is pretty darn high!

Nor is this a single construction company/site - there are at least a half dozen luxe developments ongoing.

[DemonD]

Re: Housing bubble - Russian style

clue, that sounds comparable to manhattan and london, and i've heard that moscow rivals those two cities in terms of how expensive it is to own a condo/flat/apartment. Doesn't sound too far out of line.

[c1ue]

Re: Housing bubble - Russian style

DD,

Actually these numbers eclipse anything I've seen in London or New York.

From Forbes:http://www.forbes.com/lifestyle/2004..._1112home.html

The most coveted neighborhood is the Upper East Side, particularly within the 10021 ZIP code. Here, prices can exceed $2,000 per square foot, says Barbara Stone, president of Regency Capital Realty. As a general rule of thumb, the nearer a property is to Central Park, the higher the price.

One of the articles I saw mentioned that 40% of the buyers were in the age category 30 to 39, with average income of $300K/year - and the title was: (loosely translated) will St. Petersburg exceed Moscow prices?

The most expensive real estate in Moscow, according to CNBC Business Europe June 2007 magazine, is actually going for up to 19,200 euro per square meter, with averages around 3,700 euro.

[Rajiv]

Re: Housing bubble - Russian style

Most Expensive Moscow space is 19,200 Euro equals $26,500 per sq meter. $2000 per square foot in Manhattan equals $21,500 per square meter. The most expensive Manhattan space could be a little bit higher than this.

[zoog]

Re: Housing bubble - Russian style

Lots of numbers being thrown around here. Seems to me that DemonD and Rajiv are right, the prices are roughly comparable to central London and New York. I think the real key is: how do these prices in St Petersburg relate to local median income, vs London and New York?

[Tet]

Re: Housing bubble - Russian style

Lots of numbers being thrown around here. Seems to me that DemonD and Rajiv are right, the prices are roughly comparable to central London and New York. I think the real key is: how do these prices in St Petersburg relate to local median income, vs London and New York?

In many cases the rents flow to the city, who owns the land not some slumlord. Moscow has a very sizeable rental income.

[medved]

Re: Housing bubble - Russian style

Lots of numbers being thrown around here. Seems to me that DemonD and Rajiv are right, the prices are roughly comparable to central London and New York. I think the real key is: how do these prices in St Petersburg relate to local median income, vs London and New York?

The income does not have to be local. A few weeks ago I met, at least, four apartment owners in Petersburg. Two of them work abroad and one has a daughter in London. Only one works in St. Petersburg. He is a SW engineer, and I would guess, his income is way above median.

m.

[zoog]

Re: Housing bubble - Russian style

The income does not have to be local.

That's true. The same could be said for Hollywood celebs with Manhattan apartments.

I guess the point I was trying to make is that if a house/condo costs X-amount in city A and roughly the same in city B, that in itself does not tell you how affordable, or how bubbly, one of those cities is unless you compare the median incomes of those cities, or more broadly, the cost-of-living index.

[DemonD]

Re: Housing bubble - Russian style

Most Expensive Moscow space is 19,200 Euro equals $26,500 per sq meter. $2000 per square foot in Manhattan equals $21,500 per square meter. The most expensive Manhattan space could be a little bit higher than this.

Yeah clue that's what I was saying. I'm not sure on the exact math but you have to be careful when you are comparing "per square foot" to "per square meter."

[c1ue]

Re: Housing bubble - Russian style

New York City median income: about $38K in 1999 according to Wiki

http://en.wikipedia.org/wiki/New_York_City

Probably in the high $40K now.

The previously mentioned magazine: CNBC Europe Business report - says that average monthly wages are now 285 Euro in 12/2006 in one article and 600 to 800 Euro in another. Either way less than half in dollar terms.

As for whether I am comparing apples and oranges:

It is always possible when using unvetted data.

The 10021 zip code mentioned in the blurb is one of 34 Manhattan zips - and presumably the ritziest.

The Moscow numbers are presumably similarly focused, but Moscow is well above at least New York city in the cost of living indices:

With New York as the base city scoring 100 points, Moscow scores 134.4 and is over two-and-a-half times costlier than Asuncion, which has an index of 50.

From: http://www.finfacts.ie/costofliving.htm

Of course the actual numbers in this listing seem to be for average prices; it is very possible that for the high end extremes the costs are similar all around the world.

FYI: 10.76 square feet in 1 square meter