Elite-class real estate has established itself as a separate segment of Moscow’s real estate market. It is one of the most attractive segments of the market, and it exhibits high levels of business activity.

As things stand today, the situation in Moscow’s elite real estate segment is mostly stable and reflects the situation on the market as a whole. The rate of elite real estate construction equaled approximately 3.5 million sq. meters of floor space in 2001, and this year it is expected to reach 4 million sq. meters.

Some experts, including Sergei Kochetkov, editor of the Nedvizhimost Stolitsy Internet magazine say the figures are slightly exaggerated, because they include both Moscow and the Moscow Oblast. According to several estimates, the proportion of "non-standard" residential estates (built according to individual projects) is between 35 percent and 40 percent of the total, and the proportion of "really elite" homes is not higher than 3 percent – or about 10 percent, if you include the business segment.

During 2001, Moscow’s real estate prices rose by approximately 23 percent. The highest increases were seen in the cheap apartments’ segment of the secondary market, but were also quite noticeable in the elite segment. At the same time, many experts pointed out a considerable slowdown of price increases in the segment of high-comfort Soviet-era apartments (the so-called Stalin buildings), where prices rose by only 10 percent in 2001. Sometimes this segment is even called "overheated." Prices will probably continue to climb at a slow rate, by 1 percent a month, and will reach pre-crisis levels by this fall.

At this moment, there is no clear classification of elite residential estates. Specialized editions often divide them into categories and subcategories, with the basic criterion price per sq. meter of floor space. In general, "elite dwellings" start from $1,200 per sq. meter. Other criteria include location within the city’s historical center, small number of apartments in a building and various comforts, like foreign-made elevators, three-line plumbing (for cold, hot and purified water), local heating facility, garage, swimming pool, modern telecom line, etc.

But technical merits alone do not make a dwelling really elite. What really matters is original design of the building as a whole. One example is the Agalarov-House, which is unanimously recognized as the best of its kind. In this sub-segment, prices start from $2,000 per sq. meter.

Another sub-segment can be termed "business-class." Although these dwellings may not be inferior to the top class in terms of conveniences, prices in this sub-segment are lower. "Business-class" dwellings are mostly residential buildings with many apartments located in the traditionally "middle-class" districts, such as the Southwest, Strogino and others. In terms of engineering, the main difference between these buildings and those of the top-class segment is the use of brick-filled block-concrete frames and the presence of infrastructures (such as stores, services and kindergartens).

One step further down the category list is the so-called "economy class" which is the same as the "business-class," but without infrastructures, and bringing up the rear on the list are apartments in the "non-typical" block-concrete buildings. A typical example of the latter sub-category is the well-known district of Kurkino where one sq. meter costs nearly the same as in a typical block-concrete building.

The price of an average apartment in a non-typical block-concrete building is much higher than that of an apartment in a typical block-concrete building, simply because the former has a considerably larger floor space.

"Approaches to dwelling classification are very subjective," said Milana Zotova, press-secretary for the Donstroi construction company. "In a simplified way, the elite segment can be described as follows: super-elite dwellings; business-class dwellings [what Donstroi specializes in]; and economy-class dwellings, which are all those in block-concrete buildings. But each project may be different from the other."

In the opinion of Alexei Rekut, head of marketing at the Kvartal company, the market of elite real estate is extremely heterogeneous.

"Unlike with cars, there cannot be two apartments that are exactly the same. Therefore, two apartments in one building can be radically different in price. Taking this into account, it is difficult to speak about the stabilization of price increases or a glut on the market in general or in its individual segments in particular," Rekut said.

"On the elite real estate market, there is a clearly visible distinction between really elite dwellings, which are characterized by small numbers of apartments in a building, its location and original interior design solutions on the one hand, and the business-class sub-segment, on the other hand, which stands closer to mass consumption class," said Oleg Bogatov, marketing director at Dekra company.

In addition buying an apartment to live there, apartments bought while they are still being built can be seen as investments, and quite often the annual income of a person involved in this sort of speculation may reach 40 percent of the apartment’s price when it is being built.

"I would call people who buy apartments in the early stages of construction just normal investors," Rekut said. "This is almost the same thing as buying stocks. This practice is quite widespread on the market for business-class dwellings, but I have not heard of such deals on the market for really elite estates," he added.