The term "apartments" in relation to foreign markets is typically used to denote large residential spaces. In Russian reality, apartments refer to commercial (non-residential) spaces intended for temporary stay rather than permanent residence. Due to the special legal status of apartments in Moscow, their cost is usually 15-20% lower than that of apartments with similar characteristics.
Abroad, there is no such connection. In London, the cost of apartments in skyscrapers is also often lower than in low-rise projects, but this is due to greater demand for standard housing. In New York, the situation is the opposite: apartments with beautiful views are in demand among buyers and cost more than standard housing.
"Skyscrapers are typically located in the very center of business life in any city. Apartments in them are bought, for example, by senior managers, company owners – those for whom it is important to be in the thick of things and who are not burdened by family.
Often such properties are purchased for investment purposes or for stopping during business trips to a particular city," says Olga Yasko, Director of the Research Department at Knight Frank Russia & CIS. According to the company, apartments in skyscrapers are purchased for such purposes in 45-70% of cases.
Skyscrapers are also appearing in the Moscow region – today no one is surprised by high-rises of 14 or even 25 stories here. And since new homes from developers are significantly cheaper than on the secondary market, it's no surprise that new buildings in the Moscow region are in high demand among Russians. After all, economy-class housing in Korolev or Klimovsk offers not only transport accessibility but also living in an ecologically clean area.
In Moscow and abroad, there is a fairly significant difference in the payment scheme for apartments. For example, in London or New York, the scheme is as follows: after document verification, the buyer transfers a "booking deposit" to the developer's account. Depending on the contract price, this can range from 2,000 to 20,000 pounds sterling. Within 15-30 days after exchanging contracts, the buyer pays 10% of the property's cost, from which the booking deposit is deducted.
"The next 10% of the cost is usually paid by the buyer 12-18 months after exchanging contracts, and the remaining amount only upon completion of the complex," says Elizaveta Nekrasova, CEO of Must Have elite real estate bureau.
In Moscow, as a rule, you need to pay the entire amount at once or arrange an installment plan from the developer – in most cases for a period of no more than a year. The cost of apartments depends on the prestige of the area, square footage, floor, view from the windows, and the reputation of the architect and designer.
In Russian projects, the cost starts from $13,000 per sq. m. That is the price for apartments in the "Vostok" high-rise in the "Federation Tower," construction of which is expected to be completed in 2015. In the tallest skyscraper in Europe, the "Mercury Tower," apartments are sold at $14,000 per sq. m.
Abroad, the selection of apartments in skyscrapers is much wider, and various additions, such as designer finishes, can make the purchase significantly more expensive. For example, Armani apartments in the Burj Khalifa in the UAE were sold at about $14,500 per sq. m, while regular apartments were $8,700-10,200 per sq. m.
The cost of apartments in New York is significantly higher. For example, in the under-construction One Riverside Park in New York, apartments are offered at up to $52,000 per sq. m. In the Carlton House skyscraper, a penthouse is listed at $80,000 per sq. m (total cost $56.5 million), and in the Crowning One Madison skyscraper at $78,600 per sq. m (total cost $50 million). According to Must Have, the most expensive projects cost $90,000 per sq. m and more.
"In New York, the most expensive apartments are offered in Manhattan, with beautiful views of Central Park, the Hudson, the Statue of Liberty, Fifth Avenue, and Madison Avenue capable of increasing the cost per square meter by 100-200% or more compared to apartments of similar size and quality but located in less prestigious locations and without views," says Ekaterina Nekrasova.
As a rule, expensive apartments in skyscrapers are aimed at foreign buyers. As Yulia Kozhevnikova, expert at the Tranio.Ru foreign real estate internet center, explained, in Dubai only about 20% of buyers are UAE citizens. In Manhattan, the share of foreign buyers is 15-20%, and they purchase apartments worth several tens of millions of dollars. In Hong Kong, luxury real estate is often bought by buyers from mainland China. They are mainly interested in premium-class apartments costing more than $1.5 million, the expert said.
However, demand for such properties is specific: as a rule, they are bought or rented by people working in the same tower. At the same time, due to inflated rent, many towers remain empty. There are many such examples in London.
Despite the questionable demand for skyscrapers, their number is constantly growing. According to a study by New London Architecture, at least 236 buildings over 20 stories are planned for construction in London, with 33 of them to be 40-49 stories and 22 towers 50 stories or more.
Developers of high-rises follow the rule: the taller the skyscraper, the more money can be made from it.
One of the most famous London skyscrapers, 'The Gherkin', went bankrupt 10 years after its opening. Although 99% of the building is leased, its owners – investment bank Mayfair and German real estate investment company IVG Immobilien – lost money due to the strengthening of the Swiss franc, which greatly increased the cost of the loan. Moreover, if the state of the economy deteriorates, it strongly affects the success of expensive skyscrapers.
The Shard tower also cannot be called a successful project. Although the observation deck, which is offered for rent at £30,000 per hour, is in high demand, the same cannot be said for the rest of the building: ten premium-class apartments worth between £30-50 million have not been sold since 2012. Office space also turned out to be unclaimed: according to the tower's owners, only two-thirds of its space is leased.