A lesser explored consequence of the economic sanctions against Russia and the falling ruble is a drop in rent prices (снижение стоимости аренды) in Moscow. There are several news reports looking into the causes and outcomes of this development.

The website BFM.ru used this pun as a title for an article on the subject — “Врагу не сдается, другу тоже.” Сдаваться is a word with multiple senses. One is “to give in, surrender,” and the other means “to be rented” and is the passive counterpart of сдавать, to rent. The title is, of course, a play on the famous line “Врагу не сдаётся наш гордый «Варяг»” from a song dedicated to a sea battle during the Russo-Japanese war.

High-End Properties

The site points out that high-end rental properties were the first to suffer — Первым просел элитный сегмент. It names two main causes — введение санкций (imposing sanctions) and обвал рубля (the plunge of the ruble). Many expatriate top managers, who used to rent these apartments, left Russia following the sanctions (“Первый удар приняли на себя квартиры верхнего и премиального ценового сегмента, которые традиционно снимают иностранные топ-менеджеры“). Premium property rent is mainly charged in US dollars or euros (“Ставка на жилье премиум- и бизнес-класса, как правило, привязана к доллару или евро“). Only half of landlords have switched over to rubles (“перешли на расчеты в рублях“) or agreed to use October’s exchange rate (“зафиксировали курс на уровне октября“). As a result, many top-tier rentals are going for less or staying vacant.

Economy Class Properties

At the same time, what they call “economy-class” rentals were not affected as drastically. РБК reports,”В экономклассе цены падают медленней.” Some realty experts are hoping to see an influx of new “economy-class” renters following the Central Bank of Russia raising the interest rate (ключевая ставка), which made mortgages (ипотека) less affordable:

Когда Банк России поднял ключевую ставку до 17%, он практически убил ипотеку, и как кажется некоторым наблюдателям, те, кто хотел получить кредит, теперь будут вынуждены отказаться от этой идеи и выйдут на рынок найма.

Others counter this argument saying that people who would consider a mortgage but now cannot afford it are currently renting, anyway, and will stay in their current arrangement, while the drop in mortgages will increase rental supply even more (“эти люди и сейчас что-то снимают, значит, спрос не увеличится, а вот предложение за счет закрытия ипотеки пойдет вверх“). Experts also point out that rental supply (предложение) has steadily risen, while demand (спрос) has fallen over the last few years (“В последние годы число инвесторов, которые покупают квартиры для сдачи в аренду, увеличивалось, а число арендаторов – снижалось“).

What does it mean for the average Moscow person?  Rents may be lower; however, that does not necessarily mean they are more more affordable if inflation eats into people’s income too much. Owners may be hurt, too, as they will need to accept lower payments for renting out their properties. What do you think? Do you know anyone in Moscow who is affected by the changing market?