Andrey Gordeev / Vedomosti

Today, developers are forced to allocate the first floors of residential buildings for commercial premises for businesses – there should be no housing on the first floors at the request of the authorities. However, businesses are not interested in all such areas and not in every district. And developers do not always care about the liquidity of these properties, since they receive their main profit from the sale of apartments. Who ultimately buys real estate on the first floors of new buildings in Moscow and how profitable is it?

When a store is cheaper than an apartment

Last year, commercial space on the ground floors of new buildings in the capital fell in price faster than apartments. On average, they were sold at a price of 196,200 per 1 sq. m, which is 9% lower than in 2016 (215,300 rubles per 1 sq. m), calculated the managing partner of the company "Metrium Group" Maria Litinetskaya. According to her calculations, the most expensive street retail was in the center of Moscow (637,000 rubles per 1 sq. m), and the cheapest - in the southeast of the capital (127,000 rubles per 1 sq. m). It is interesting that within the boundaries of these districts, the prices for non-residential premises were on average 10-15% lower than for housing.

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According to Roman Sychev, CEO of Tekta Group (Mayakovsky Residential Complex), as a rule, commercial areas are cheaper than housing in areas of spot development with a small number of residents, where there is already good infrastructure. Prices for commercial "square meters" in such residential complexes can be 10-20% lower than the cost of housing. In large projects on a large territory, where there is poor infrastructure, there is no (or little) existing residential development, and the population density is planned to be high, non-residential properties can cost 20-50% more than apartments.

Many developers also hold promotions, when the buyer of an apartment in a new building can also purchase commercial space with a significant discount, the size of which reaches 50%. For example, in the Mitino O2 project, a 35 sq. m apartment and a 75 sq. m business space, if purchased simultaneously, will cost the future investor 5.9 million rubles. This is the average cost of a comfort-class one-room apartment in Moscow.

A third of illiquid assets

The reason for the decrease in the average price of "ground floor square meters" in Moscow in 2017 is their lower liquidity compared to apartments. According to analysts from the company "Inkom-Real Estate", at least 30% of commercial space in new buildings in Moscow remains vacant for 3-5 years after the construction of the new building. Similar calculations are made by the chairman of the board of directors of the company RRG Denis Kolokolnikov: "In general, the first five years [after the delivery of the building] commercial space is not used to its full capacity - the vacancy rate is 20-30%.

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Experience shows that not all projects with infrastructure facilities on the ground floors are successful, according to market participants interviewed by Vedomosti. "It is much easier and more convenient for developers to place apartments on the ground floors of residential buildings, rather than commercial areas that require additional technical improvements. For example, we are talking about special ventilation circuits, special fire extinguishing systems, and finally, higher ceilings than in apartments," says Alexander Zubets, General Director of the Novye Vatutinki residential complex. He notes that the ground floors of buildings are not always suitable for placing chain stores in them due to difficulties with access for unloading equipment. "The developer must also provide for certain entrances, parking for large-sized vehicles, which is not always an easy task," says Zubets.

It's not all that bad

With proper design and a good location, it is possible to “populate” commercial areas even at the construction stage, Litinetskaya believes. Thus, by the time the Level Kutuzovsky residential complex was completed (December 2017), all commercial areas in it had been sold – four premises (from 74 to 156 sq. m), said Level Group CEO Kirill Ignakhin, noting that the average sale price was 210,000 rubles per 1 sq. m.

But even in the same well-thought-out project by the developer, the prices for non-residential properties can differ significantly. “A property on the first line with heavy pedestrian traffic will cost 40-50% more,” says Litinetskaya. Location plays a decisive role in liquidity, so buyers are willing to pay extra for the location. “For example, in our building, out of five premises on the first line (with shop windows facing the main road), four have been purchased, and out of six properties with access to the courtyard, one has been sold so far,” says Zubets. At the same time, he notes that the cost of premises on the first line is 124,000 rubles per 1 sq. m, and “with access to the courtyard” - from 102,000 rubles per 1 sq. m.

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However, overpaying for location is by no means a guarantee of “eternal liquidity.” Competition quickly changes the balance of power. According to Litinetskaya, there are frequent cases when a popular property that has found a buyer/tenant in a month (for example, a pharmacy chain) suddenly becomes unclaimed because two more pharmacies have opened nearby and forced the first one out of the location.

Market participants interviewed by Vedomosti agree that the most popular properties among buyers now are those with an area of 50 to 200 square meters, which are well suited for grocery stores, small offices, cafes, and fitness studios. And it is faster and more convenient to sell “small-scale” premises.

Not all of them are ours

Before the 2014 crisis, 70% of all buyers of commercial space on the ground floors were people who bought apartments in the same residential complex, says Litinetskaya. Now the balance of power has changed. “The liquidity of commerce has decreased overall. Small businesses from many sub-sectors have been forced out by chain monopolists. And now only 30% of commercial space is purchased by buyers of apartments in the same residential complex,” says Litinetskaya. “It all depends on the class of housing, but there is always domestic demand – about 20-30%,” agrees Kolokolnikov.

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According to Zubets, domestic demand among buyers of apartments in the mass segment is minimal – the cost of commercial premises is too high for them. For example, commercial premises in the Novye Vatutinki district cost from 9.1 million rubles (for 86 sq. m) to 16.4 million rubles (for 124 sq. m). “Therefore, 95% of all transactions are made by people who do not live in the district. But at the same time, the demand for commercial premises is definitely local and is provided by those who know the district well and live nearby,” says Zubets.

"Small and medium-sized businesses, which are able to operate only on traffic generated by residents of nearby houses, are most often interested in small footage (up to 200 sq. m.). Network companies require more space and a more intense external flow," says Yegor Klimenko, CEO of Aktivo. He adds that now even large businesses developing federal retail chains have begun to actively demonstrate "ground-floor flexibility" - chains can take blocks of several premises and "settle" their express-format store there. This is what Auchan, Perekrestok, and Azbuka Vkusa do.

"Various chain brands account for about 30% of the demand for commercial premises on the ground floors. This category of buyers includes large and medium-sized companies from the service sector, retailers, catering establishments, and banks," says Roman Lyabikhov, CEO of Atlant Group.

Profitability level

Small “ground-floor forms” are also attractive to private investors who want to have passive income in the form of rental payments.

"In Moscow, the level of profitability from renting out commercial properties is on average 11-12% per annum," says Elena Mishina, head of the commercial real estate department. She notes that when investing in a property in a new building, the return will not be quick. "The moment of receiving profit is postponed for the period of approval, repair work, installation of equipment, waiting for the complex to be occupied by residents," says Mishina. According to her estimates, today the purchase of a commercial property in a new building in the capital will cost an investor in the range of 170,000-250,000 rubles per 1 sq. m.

But it is still difficult to find a profitable property in Moscow within the Moscow Ring Road, experts say, since most complexes are being built as part of the development of former industrial zones or are point developments. “New buildings now rarely have facades facing the first line of highways, which would give the developer the opportunity to better form street retail objects,” says Mishina.

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Who is the investor?

“These are predominantly men (65% of transactions) aged 40–45, who, as a rule, are hired employees in companies,” Zubets noted.

The average age of an investor in commercial properties in new buildings is indeed 45 years old, according to experts from Urban Group, who analyzed the profile of investors in commercial areas among their clients. It turned out that in 2017, the number of pensioner investors increased almost 5 times. They accounted for 23% of completed transactions, while in 2016 this figure was 5%.

"Our project does not support these statistics. Quite the opposite, there is a rejuvenation of buyers with the emergence of compact premises (25-30 sq. m), the budget of which is 3.6-4 million rubles. available to a larger number of clients. In 2017, for example, we more often met clients aged 30-35," says Zubets.

If we talk about the capital market as a whole, then pensioners are indeed found among investors, but this is rather a rarity, says Litinetskaya. In this case, according to her, of course, we are talking about wealthy people who want to have passive income and do not want to take risks. Their investments are conservative - they do not buy large objects, but prefer small premises for trade.

Which buildings does Moscow rent out for a ruble per square meter? 1 / 11

Over 5 years, investors have leased 20 historical properties under the “1 ruble per square meter” program. This is stated on the website of the Moscow Department of Competition Policy. Among them is a wooden house with a mezzanine – the estate of the hereditary nobleman Eduard von Behrens – built in the late 19th century by the architect Fidler at 7 Gusyatnikov Lane, building 1. After the revolution, the house was nationalized and given over to communal apartments. Area – 811.2 sq. m. / Evgeny Razumny / Vedomosti

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