Alexander Vorozhbitov
Alexander Vorozhbitov, General Director of the Metropolis company, commented for Vedomosti on the situation with service apartments in the markets of Moscow and St. Petersburg. Alexander noted that the concept of "service apartments" was initiated by real estate experts to analyze the market. Service apartments mean furnished premises in complexes with a developed internal infrastructure.
For example, these can be fitness centers, co-working spaces, restaurants, etc., as well as the presence of a single operator that can provide additional services in the form of a management company with security functions, cleaning, reception, lobby, etc. Such service apartments are convenient for renting out and can be attractive for private investment.
A significant difference in the market in terms of balance of service and ordinary apartments for living in Moscow and St. Petersburg is due to the different levels of provision of hotel rooms in the 3*-4* segment and tourist flows, as well as the fact that more capacities for business are concentrated in the capital, which shifts Moscow's demand towards apartments for living.
According to Knight Frank St. Petersburg, at the end of last year 15,600 units with a total area of 669,000 sq. m. were under construction in St. Petersburg. Over the past two years, this figure (in units) has increased 3 times, and compared to 2011, the growth was 700%.
Unlike Moscow, "service" apartments in St. Petersburg are experiencing a peak in demand, they account for about 65% of the supply.
In 2019, the authorities (federal and city) took a number of steps to equate apartments with housing: amendments were made to the land use and development rules, permits for 49 objects under construction were checked, and a package of amendments to 214-FL was submitted to the State Duma in order to oblige developers selling commercial premises under equity participation agreements, contribute funds to the Fund for the Protection of Shareholders' Rights. However, all of them relate to a greater extent to "pseudo-housing", but not to service apartments. Which, besides, do not have to be sold under equity participation agreements. By the way, this is why for developers working in this real estate segment little will change after July 1, 2019, unlike those involved in residential projects.
In 2019, another new format should appear in St. Petersburg - the so-called condo hotel. This is a fairly popular type of hotel in resort towns - in particular, Miami's room stock is almost half concentrated in them. In fact, this is an ordinary hotel, where the rooms are owned by private investors. The key difference from apartments: the owner himself cannot live in the rooms of the condo hotel. In all other respects, the functions are similar: the usual hotel service for guests and passive income for owners.
Read the full material on Vedomosti website.
