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Today's paper. Last Updated: 06/03/2012

Low-Cost Home Construction Boom Predicted

With the advent of new and less-expensive building materials, experts say that Muscovites will increasingly trade apartments in polluted central Moscow for space and privacy in the suburbs.


Already, numerous communities have mushroomed outside the city limits, and more will likely follow as each develops its own social infrastructure.


Most buyers want plots no further than 25 kilometers from Moscow, the most prestigious regions being Rublevoskoye and Uspenskoye west of the city center, according to Dmitry Borobyeva of the Krasny Vorota real-estate firm.


But while the cost of "getting away from it all" has excluded all but the most wealthy Russians from participating, realtors such as Philip Bogdanov of Noble Gibbons say the future of Russia's cottage towns does not lie with the country's big spenders.


"It will not be the elite that will influence the real estate market, but the so-called middle class" and the demand it will create, he said.


Lobnenskaya Construction Corp. has seen buyer interest diverted toward smaller homes of 150 to 160 square meters, instead of enormous structures of up to 600 square meters, according to an employee who asked not to be named.


In response to this evolving market, several firms have focused their efforts on using inexpensive building techniques. Until recently, most suburban homes were built of brick at a cost of $1,000 to $4,000 per square meter. Now, various prefabricated structures are finding their way into the Moscow market.


Effus Corp. offers a cottage built using a hollow plastic wall filled with concrete -- a technique developed in Canada, one employee said. The price, $600 to $800 per square meter, is comparatively less than the brick equivalent.


"The advantage of our cottages is that, along with low cost, they meet high quality standards and, if the foundation is already laid, construction takes only a few weeks," says Sergei Krylkov, Effus' marketing director. "Our homes are designed for people in the middle- and upper-middle classes." Krylkov said interest was high for such prefabs, citing a recent order by a Moscow firm for the construction of 50 homes.


Another building technique, the "sandwich," is an even less-expensive alternative to traditional brick cottages. The U.S. and Canadian technology uses a special type of cement-mix block with a decorative brick layer.


Builders say that special winterizing agents applied to the brick create a thermos-like effect, and the technique costs between $800 and $2,000 per square meter.


The cheapest style is the cement house, which runs about $400 to $600 per square meter. As with all houses, the size of the lot on which the cottage is built influences the price.


But despite the recent appearance of less-expensive suburban homes, financing them remains an insurmountable problem for most Russians. Only 5 percent of Moscow residents can afford such domiciles, according to Sergei Anikeyev of the Labor Ministry.


In addition, a mortgage system that could aid aspiring suburbanites lacks the conditions and terms needed for acceptance among even a small part of the buyers' market.


Alfa-Bank, for example, issues five-year loans on homes built by Alfa-Estate. Buyers must make a 15 percent to 30 percent down payment to qualify for the loans, for which annual interest rates range from 28 percent to 35 percent. Rates are based on dollar prices.


But regardless of the new trends in the cottage market, brick homes are still more popular for their durability, longevity and prestige.


"Although these dwellings are expensive, they can compete with the expensive apartments in the center," says Ilya Mashkov, an Alfa-Estate employee, whose firm sells brick cottages in the Mitino area for $1,700 per square meter.


? The Western Group Incorporated is now formally affiliated with Colliers International, which has 185 real-estate offices worldwide, Western Group managing director Page Aiken said. Other Colliers offices in Eastern Europe include Prague, Budapest and Warsaw, he said.


? The Norton Rose law firm recently added two attorneys to its Moscow real-estate operations, Moscow City Bar member Julia Sychev and Ben Morgan, a qualified lawyer in the United Kingdom, according to the firm's Peter Burrows.




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