The Moscow real estate market is under pressure from buyer demand from across the country
Apartment valuation is carried out in accordance with the general rules of property valuation, the description of which is beyond the scope of this article. For those wishing to familiarize themselves with various modern methods of calculating the market value of real estate, we recommend visiting the website of the appraisal company 'Start-Alliance', which provides independent real estate valuation services in Moscow. Here we wanted to dwell in more detail on the features that an appraiser must take into account when valuing Moscow apartments.
The main feature of Moscow as a real estate market is that the Moscow market is under pressure from buyer demand from across the country, who seek to move to the capital for permanent residence. This is due to the historical features of the centralized development of our country and leads to a shortage of housing supply and, consequently, rising prices. Note that in this situation, the main motivation of the buyer underlying the purchase of an apartment in Moscow is residence, i.e., satisfaction of one's own need for housing. Investment purchases are also present in the market, but they are not a determining factor in price formation in the market.
For an appraiser, a correct understanding of this situation is very important, because rental prices for apartments in such conditions do not reflect their true market value, and valuing an apartment in Moscow using the income approach will most likely lead to an understatement of the market value. Knowing this feature, experienced Moscow appraisers usually refuse to use the income approach when valuing apartments, since the use of income methods is more likely to distort the valuation result than to refine it.
Another feature of Moscow apartments is the situation with land. According to the letter of the law, the owner of an apartment has the right to a part of the land plot where the apartment building is located. However, in practice such rights are formalized extremely rarely. As a rule, owners of apartments in residential buildings have a certificate of registration of ownership of the apartment, but the right to a part of the land plot is not formalized for them in any way. The situation is further complicated by the fact that in Moscow most of the land belongs to the city and is leased to building owners. That is, it turns out that the housing that is owned stands on leased land.
Under such conditions, the appraiser faces difficulties when trying to value an apartment using the cost approach – after all, the cost approach implies, among other things, the calculation of the value of the land plot. As a result, in most cases the appraiser is forced to refuse to use cost methods when valuing an apartment due to the impossibility of obtaining reliable data on the land plot under the residential building and the apartment owner's share of rights to that land plot.
When valuing apartments in Moscow, appraisers are forced to take all these factors into account. As a result, practicing Moscow appraisers value housing only from the standpoint of the market approach, using the method of direct comparisons. This method of valuation in a developed market, such as the Moscow real estate market, gives extremely accurate and objective results.
More details on modern methods of determining the market value of housing can be found on the website of the Corporation 'OTSENKA', which provides independent apartment valuation services in Moscow.
PR