Renting out secondary luxury housing is more profitable than in new buildings On the secondary market For 20 years, in the market of new buildings — 25 years. Experts point out that it is worth renting out luxury real estate only if there are no other options for its use
The average payback period for an elite-class apartment in Moscow is 25 years. In the secondary market of luxury real estate, the average period is fixed at around 20 years, according to a study by the Nika Estate luxury real estate agency (available in the editorial office).
“It is worth renting out luxury real estate only if there are no other options for its use,” the company concludes. According to Nika Estate, the normal rental rate for high-budget housing in Moscow can be called the amount of 500 thousand rubles per month, although in some areas, for example, in Presnya, rates reach 1.5 million rubles per month.
“These figures create the illusion that the delivery of elite class facilities may well be a profitable business. However, in reality, the earned funds represent a small income in comparison with the purchase budget and taking into account the cost of maintaining an expensive apartment,” the review notes.
The profitability of investments in secondary housing in the company is estimated in the range from 3.9% (Basmanny district) to 6% (Zamoskvorechye, Presnensky and Khoroshevsky districts). Depending on the location, in the secondary market, the minimum payback period for luxury real estate from renting is fixed at 17 years, and the maximum is 22 years.
The minimum payback period for luxury properties in new buildings is 20 years, and the maximum is 32 years. The highest profitability from renting out high—budget primary housing was recorded in the Meshchansky district – 5.8% per annum. Presnensky district is in second place with an indicator of 5%, Khoroshevsky district is in third position (4.7%). The top five also included the districts of Arbat (4.6%) and Zamoskvorechye (4.3%).
Photo: Nika Estate
“As a rule, investment transactions in the high segment take place in the primary market. An object purchased at the construction stage in a prestigious location will increase in price. The secondary market is considered either for purchase for the purpose of living, or as a way to preserve funds. Owners resort to the rental business when they do not use real estate, but still want to get some income, which, although it will not return the funds spent on the purchase in the coming years, will at least not be superfluous in the budget,” says Viktor Sadygov, owner of Nika Estate.
According to the Intermark Rental real estate agency, rental rates for luxury apartments and apartments in Moscow have increased by 35% over the year. According to the results of the first half of 2024, the average budget of the proposal reached 457 thousand rubles per month. This is almost 120 thousand rubles more than in the same period last year. At that time, the average budget of the proposal was estimated at 337.5 thousand rubles per month.
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