Intermark Quarterly Report. Q1 2015

M

INTERMARKQUARTERLY

REPORT

Expat’s World in RussiaMoscow Housing Market

Immigration NewsOur News

Q1 2015

Moving Service

Your move is always unexpected, and typically you do not prepare for it in advance. This process is difficult and requires various types of packing and rather long preparations if you plan it independently. To simplify this task, our company is ready to offer you Moving Service and assume all the “difficulties of moving”.

Office Search Assistance

Looking not only for apartments but also for an office or retail space? We shall help you to find it too!

HR Online Portal

This HR portal was designed by our team especially for Human Resource and Mobility managers.Users will have all the information about assignees in just one click. While we work with assignees, HR specialist can always follow the process at its own convenience and peace.

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web site www.intermarkrelocation.ru along with materials spread by e-mail or distributed any other way are the intellectual property of Intermark Group, Inc. Such materials are

intended only for private or office usage. Intellectual property of Intermark Group is protected by the 4 Part of the Civil Code of the Russian Federation and by the standards of

international law. Reproduction or distribution of this materials is possible only on the assumption of the approval by the representative of Intermark Group, Inc.

I remember the day my husband came home and said he had been offered a move with his company to Moscow, Russia. Of course my first reaction was one of disbelief “Moscow ?” I replied, “but we don’t know anything about Moscow”.

6 years later and we are still here and now Moscow is our home. The most difficult thing about living here is finding the time to do all the things I want to do and all the things I need to do!

I work as part of a team of 7 expat mums and we support the work of the Intermark Relocation Consultants by advising clients visiting Moscow on their “Look See” visits what life is like here. We provide information on schools, medi-cal care, sports in Moscow, children’s activities and much more.

I love living in Moscow and revel in all the city has to offer. As well as working with Inter-mark I help out at the school my children attend on a voluntary basis along with many other mums and really enjoy the camarade-rie there. I am a member of the International Women’s Club of Moscow and organize a group

visiting artists in Moscow and I also attend Russian Literature classes. All of these activities take place in the mornings allowing me time at home in the afternoons and evenings with my children for dinner and homework.

There is such a wonderful variety of restaurants and bars in Moscow that socializing is always fun and weekends dining out with friends is always a lovely treat. We also attend many of the charity balls organized for the expat community and it so enjoyable dressing up and having entertaining evenings together.

Moscow is full of history and culture and visiting art galler-ies and exhibitions is one of my favorite pastimes when time permits. There are always Ballets and Operas to attend and it is not difficult to secure tickets and not too expensive either. Moscow is an intrigu-ing city to live in, it is gritty and beautiful at the same time,

historical and modern, and the people are interest-ing and curious too. The only thing I will not miss about my Moscow when I will finally have to leave is the very cold days!

1 www.intermarkrelocation.ru

Carole LawlorFriend of Intermark

«I arrived here in February 2009, with my husband and three young boys in tow and began our Russian adventure.»

Expat’s world in Russia

Moscow is full of his-tory and culture and

visiting art galleries and exhibitions is one of my favorite pastimes when

time permits.

«I love living in Moscow!»


The world of Intermark

Work permit?

Housing?

Schooling?

Relocation and Immigration services we provide in CIS countries are diverse, as we respond to each and every need the assignees may have when moving. Quality - wherever you are! We are highly committed to preserving the same high quality standard of services our clients and customers are so accustomed to in Russia.

We will be very glad to support you in these unique and promising countries and are looking forward to working in new palces! We are happy to answer any questions or provide you with any additional information.

Our team will cover it all!

Are

a

Moscow Housing Market (first half 2015)

Two-bedroom apartments (39% of the requests) have a maximum demand among tenants. However, the first quarter witnessed a growing interest in one-bedroom apartments and studio apartments: from 5% last year to 10% this year. One-bedroom apartments also underwent changes: proportion of such requests declined by 10% (from 27% in the first quarter of 2014 to 17% this year). But it is too early to call such changes structural, as due to the reduction of demand this phenomenon can be temporary.

Demand


Chart 1.1 Demand analysis of expat housing in Moscow in terms of number of rooms

Chart 1.2 Segmentation of the demand according to the rental value of the properties in Moscow

Most of the requests (40%) for high-budget property fell on budgets ranging from $2.000 to $4.000 monthly per property. 22% of the requests were for the lowest budget up to $2.000 monthly per property. The proportion of requests for budgets above average ($6.000 monthly per property) reduced signifi-cantly: 1/5 of requests against almost 1/3 in the first quarter of 2014.

22% < $2.000

4% > $15.000

7% $10.000 - $15.000

5% $8.000 - $10.000

5% $6.000 - $8.000

18% $4.000 - $6.00039% $2.000 - $4.000

10% Studio

8% 4+ Bedroom

17% 1 Bedroom

39% 2 Bedroom

26% 3 Bedroom

Num

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of r

oom

sB

udge

t

According to Intermark Relocation, in the first quarter of 2015 the total demand for high-budget rental market in Moscow dropped by almost 30% against the same period in 2014.

Decline in demand from potential tenants is connected with the reduction of staff in many representations of foreign companies. Foreign tenants making 57% still dominate in structure of demand for high-budget apart-ments. However, in comparison with the last year, their share has declined. It is worth noting that almost two-thirds of all tenants requests (65%) accounted for foreigners.

The supply continues to grow, and at the end of March 2015 another maximum has been achieved. During the first quarter of 2015, an increase was 17% in comparison with 11% in the last year. The increase in supply includes nearly two-thirds of new apartments, i.e. apartments rented for the first time.

The number of apartments which have entered the market for the first time remained unchanged. Neverthe-less, the current situation is different because the increase in supply contains newly available apartments, tenants of which did not renew their contracts.

Leningradsky Prospect is a leader in terms of demand among Moscow areas. 11% of potential tenants were interested in this location. Arbat-Kropotkinskaya, Tverskaya Street and Zamoskvorechye got 8% of requests each.

Supply

www.intermarkrelocation.ru 4

Chart 1.3 Dynamics of the demand of Moscow’s prime rental market (January 2014 – 100%)

Chart 1.4 Most popular areas for living in Moscow (January –March 2015)

200%

180%

160%

140%

120%

100%

80%

60%

40%

20%

0%

2014 2015

I II III IV V VI VII VIII IX X XI XII I II III

Arbat-KropotkinskayaLeningradsky Prospect 11%

8%

8%

8%

7%

7%

7%

6%

6%

6%

6%

6%

5%

4%

4%

Krasnopresnenskaya

Leninsky Prospect

ZamoskvorechyeTverskaya-Kremlin

Patriarshie Prudy

Lubyanka-Kitay-Gorod

KuntsevoKutuzovsky Prospect

Frunzenskaya

TaganskayaProspekt Mira

Other

Tsvetnoy Boulevard

Dyn

amic

sLo

catio

n


Chart 2.3 Supply analysis of expat housing in Moscow in terms of area (sq.m.)

Chart 2.1 Dynamics of the supply of Moscow’s prime rental market (January 2014 – 100%)

Chart 2.2 Supply analysis of expat housing in Moscow in terms of number of rooms

In terms of square meters apartments with an average area of 140 sq.m. also dominate. Throughout the year the share of small apartments with a total area of 50-80 square meters (one-bedroom apartments) has decreased by 5% and now it accounts for about 16% of the market.

The main share in supply (almost 40%) belongs to two-bedroom apartments. About 30% of three-bedroom apartments have achieved a strong position in the market. The share of four-bedroom apartments has also increased throughout the year, and now these properties occupy nearly one-fifth of the entire supply.

15% 1Bedroom

2% Studio

37% 2 Bedroom28% 3 Bedroom

18% +4 Bedroom

200%

180%

160%

140%

120%

100%

80%

60%

40%

20%

0%

2014 2015


16% 50 - 80 sq.m.

3% < 50 sq.m.

14% < 200 sq.m.

14% 80 - 100 sq.m.

11% 100 - 120 sq.m.

22% 150 - 200 sq.m.

20% 120 - 150 sq.m.

Num

ber

of r

oom

sA

rea

Dyn

amic

s

Rental Rates and Budgets

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Chart 2.4 Supply analysis of expat housing in Moscow in terms of rental budget

Chart 3.1 Dynamics of the average asking price for the tenancy in Moscow’s prime rental market (January 2014 – March 2015)

www.intermarkrelocation.ru

The budget structure shows noticeable tran-sition from higher to lower budgets. In com-parison with the first quarter of the last year, the share of the most expensive apartments from $15.000 monthly per property has declined by 3% and now is 6%. Proportions of other budgets, except the lowest one, have also decreased on average by 3-4%.

A maximum of the high-budget apartments is still avail-able in Arbat – Kropotkinskaya area - 24% of all lots. The share of this district in the geography of apart-ments’ supply is stable with an annual increase by 2%.

In comparison with March 2014, the share of the market in the area of Tverskaya Street and the Kremlin increased by 4%. One-tenth of the proposals is presented in the area of Leninsky Prospekt, which corresponds to the level of the last year.

• Reduction of rental rates slowed down in March 2015. The average supply rate decreased less than by 5% in month vs. 17% decrease in the beginning of this year. Now the average rental rate for high-end property in Moscow is $5.540 monthly per property. This rate is lower by 26% than in March 2014.

• Specific rental rate (per unit of apartments’ area) was $575 per for a sq. m. of a leasable area per year. In com-parison with the same period of the last year, the reduction amounted to 12%.

• The most expensive area is Arbat-Kropotkinskaya area with an average monthly price per property of $7.240. Other popular areas with the highest rental rates and biggest demand among expats are Patriarshie Prudy and Krasnopresnenskaya.

• The average budget requested by the tenant at the end of the first quarter of 2015 was $4.840 monthly per property. Compared to the same period in the first quarter of 2014, the decline was about 25%.

8000$

7500$

7000$

6500$

6000$

5500$

5000$

4500$

4000$

3500$

3000$

2014 2015


Arbat-Kropotkinskaya

Leningradsky Prospect

24%

14%

10%

8%

8%

3%

3%

2%

2%

1%

1%

8%

7%

5%

4%

Krasnopresnenskaya

Leninsky ProspectZamoskvorechye

Tverskaya-Kremlin

Patriarshie Prudy

Lubyanka-Kitay-Gorod

KuntsevoKutuzovsky Prospect

Frunzenskaya

TaganskayaProspekt Mira

Other

Tsvetnoy Boulevard

13% < $2.000

4% > $15.000

9% $10.000 - $15.000

8% $8.000 - $10.000

36% $2.000 - $4.000

11% $6.000 - $8.000

19% $4.000 - $6.000

Bud

get

Loca

tion

Changes in immigration procedures for Highly Qualified Specialists

HQS are exempt from the newly introduced requirements to submit medical certificate and certificate proving the knowledge of Russian language, history and laws as a part of the application package for work permit;

The HQS salary calculation method has been changed (starting from April 24, 2015): minimum salary level for the employee to be categorized as HQS will be calculated on a monthly basis (instead of the annual one applied previously);

The employers responsibility for violating their obligations on HQS salary and insurance were strength-ened – the violators will lose the right to recruit HQS for the two year period ahead.

In practice this rule means that employers will need to pay out 100% salary to HQS (even in case of their unpaid leave/illness/etc.)

Quarterly Immigration Overview

2015 has started with introduction of essential amendments to the Russian immigration laws. These changes affect almost all categories of foreign employees and immigration processes.


Olga MakeshinaHead of Immigration [email protected]

CIS countries: key immigration changes

Quota system became inapplicable to employees from the CIS countries and employers benefited from this being released from the large amount of work connected with applying to the relevant authorities for quotas;

Starting from 1 January 2015 CIS nationals are to have international passport to enter Russia (nationals of the member countries of Eurasian Economic Community and Customs Union are the only one exception);

At the end of 2014 new member state Armenia joined the Eurasian Economic Community and Customs Union. The next country to join the Com-munity will be Kyrgyzstan (staring from May 1, 2015);

CIS national intending to seek emloyment in Russia should state “Work” as the purpose of his visit in Migration Card to have the right to apply for work permit after entering Russia.

Protection against illegal migration

Some legislative novelties were introduced in line with the general policy of struggling against illegal migration and irregular stay and employment of foreign workers in Russia:

Requirement for foreign citizens to obtain medi-cal insurance policy from accredited medical organizations for the validity equal to the period of their labor activities in Russia;

The terms for notifying the relevant state authori-ties on the conclusion and cancellation of labor contracts with foreign employees have been reduced to 3 business days (instead of 10 days applied previously);

Starting from 2015, violators of the immigration rules are banned from entering the country for up to 10 years (depending on the type of violation, including irregular overstay).Federal Migration Service is monitoring the new laws enforcement and is working out operation procedures to improve the existing laws effectively and to make Russian immigration system more transparent.

www.intermarkrelocation.ru

New services

Moving Service

Your move is always unexpected, and typically you do not prepare for it in advance. This process is difficult and requires various types of packing and rather long preparations if you plan it independently. To simplify this task, our company is ready to offer you Moving Service and assume all the “difficulties of moving”.

Office Search Assistance

HR Online Portal

For 23 years Intermark has been supporting clients and partners with search of housing. We received a lot of requests for help with the search of office space and decided to create such a service. So, looking not only for apartments but also for an office space? We shall help you to find it too!

This HR portal was designed by our team specifically for Human Resource and Mobility managers. Users will have all the information about assignees in just one click away. While we work with assignees, HR specialist can always follow the process online at his/her own convenience and peace.

Pro-Active thinking in crisis:

Housing Сost SavingIntermark constantly monitors real estate market and predicts changes in rental cost. Our professional team of negotiators is trained specifically to address rental costs and ensure that these are negotiated immedi-ately (even in the mid-term of the lease) for the benefit of the client and without damaging tenant-landlord relationship. We carefully assess all client contracts and target only those which do not correspond to the market reality. During Q1 2015 Intermark team has successfully conducted over 200 lease negotiations achieving over $2.000.000 annual savings on housing costs. Contact our team for support asap.

Lease Management Russian landlords are not exactly easy to handle, more so if you are a foreigner, more so if you are a foreign corporate in Russia. Intermark has developed a program that smoothens landlord-tenant relationship and ensures that all corporate requirements are streamlined and complied with. Lease management, or «Sublease» project allows our corporate clients legally avoid any communication with the landlord and transfer its obligations to Intermark. In addition, the project offers numerous advantages for the client: • client has no legal relationship with the landlord;• all lease agreements are identical and signed at client’s convenience; • all rental payments are handled by Intermark;• renewals and terminations process is easy and unified;• damage assessment procedure is secure and unified.

8

Moscow Relocation Guide

Inside of the 3rd edition of Intermark Moscow Reloca-tion Guide you will find information about Moscow housing market and differ-ent areas of the city, includ-ing the most popular residential areas, interna-tional schools, medical care

and, of course, practicalities of living in Moscow.

Regional Guides

During the last several years international compa-nies have been actively expanding and relocating their assignees not only to Moscow, but also to other regions of Russia. Intermark Relocation created guides for regional cities to make life of expats easier and more interesting.

Minsk Relocation Guide

New country, covered by Intermark, is Belarus. We are happy to present Minsk Relocation Guide, which contains useful information about migration proce-dures, housing market, sightseeings of Minsk and other interesting facts.

Guide to Rentals in Russian Regions


New Materials

Country Pages

These guides were created for people, who relocate to such countries as Russia, Kazakhstan Azerbaijan and Georgia.

Country Pages will ease your life in another culture and make it interesting. You will find an immigra-tion and visas information, description of tradi-tions, intercultural and business communication styles and other useful tips.

Despite various types of locations there are many similarities in how the relocation process is organized and what chal-lenges and solutions to them one finds along the way. This guide will give you an opportnity to feel yourself comfortable in every city of Russia.

7/1 Kropotkinsky PereulokMoscow, Russia, 119034

+7 495 502 95 [email protected]

© Intermark Group, Inc. 2015

Irina YakimenkoManaging [email protected]

Marina SemenovaManaging [email protected]

Intermark Quarterly Report. Q1 2015

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Transcript of Intermark Quarterly Report. Q1 2015