Money Growing: Catch Up and Overtake Switzerland

Moscow is one of the most expensive capitals in the world and prices in resorts and holiday homes in the Moscow region will soon catch up with the Azure coast and Switzerland. Turkey, Egypt and some other countries, in this respect, are already clearly lagging behind. About 10 years ago it was still difficult to find a luxurious resort that met maximum world standards in the Moscow region. Now new generation holiday homes promise to provide every possible service.

Moscow suburb stars

According to Tatiyana Alekseyeva, head of the research department at Vesco Consulting, the recreational services market in the Moscow region there are currently approximately one hundred modern out-of-town hotels ranging from 3-5 stars and approximately 400-500 children's camps, rest bases, etc. "Since the beginning of the 1990s all attractive Soviet rest zones have been bought up, a significant share of them has been repaired and turned into 3-4-star premises, and on the place of dilapidated boarding houses modern 4-5-star complexes are being constructed," says Alekseyeva. "However 70% of the resort real estate is formed by boarding houses and holiday homes constructed during Soviet times. There are not enough modern hotels with a high level of service and services," adds Igor Roganovich, deputy director of the consulting department at Knight Frank.

Holiday in the North

The most interesting resorts, in Roganovich’s opinion, are concentrated along Dmitrovskoye shosse in the area of Klyazminskoye and Pestovskoye lake/reservoirs. “The best recreational premises in the Moscow suburbs are near water. They are located in the Dmitrovsky direction, 10-50 km from the MKAD,” confirms Alekseyeva. “There are also interesting offers in the Leningradsky direction (Tver region, Konakovsky area) and on Novorizhskoye/Volokolamskoye shosse in the area of the Istrinskoye reservoir. The greatest number of tourist complexes, rest houses and hotel resorts are concentrated on the shores of lakes and rivers."

Pavel Zdradovsky, general director of Pauls Yard, lists the Bor complex, located in a pine forest 20 km from the MKAD on Kashirskoye shosse, and the Snegiri holiday complex in the Istrinsky area among the best resorts.

New Year is cancelled

According to Nataliya Vetlugina, head of analytics at Noviy Gorod, the starting price to stay at a holiday resort in the Moscow suburbs is 2,500 rubles per room per night. For detached cottages the price starts from 7,000-8,000 rubles per night. If you so wish it is possible to find a room/small cottage for 50,000 rubles per night. If medical services are included in the price, then according to her calculations, the price will be from 2,000 rubles per night, but this is per person. At Barvikha, for example, one night’s lodging costs 4,500 rubles per person.

In most cases holiday homes and resorts in the Moscow suburbs work all year-round. "There are very few seasons. Some months of the year it is completely unprofitable to operate, and the rest of the time the resorts are empty. There are seasons, of course, from the point of view of fillability. In the summer the normal level of fillability is 80-90%, while in the winter it is noticeably less. Although this is compensated by holiday periods. For New Year the price is normally 2.5 times more compared to usual prices. For a New Year vacation, it can more than easily cost 300,000-400,000 rubles - a level quite the same as European," explains Vetlyugina. Before the crisis even for such large amounts of money corporations reserved whole buildings for their employees. Now many companies have completely cancelled their corporate holidays or reduced the money spent on them. Those who will spend New Year in holiday homes or resorts will be those who ordered and paid for them in the summer. Next year, according to hoteliers, many companies will spend nothing on corporate leisure.

Low but stable income

According to Sergei Koshman, vice-president of the government of the Moscow region, tourism in region develops due to investments. "By means of private capital, old holiday homes, resorts and health clubs are being renovated and built anew," he says.

But in general there are not enough resorts in the Moscow suburbs market. "There are very few developers engaged in such projects," says Vladimir Yakhontov, managing partner at MIEL Cottage Real Estate.

"The hotel business tends to involve long-term money and low profitability - a level of 11% per annum. A reasonable level of profitability can only be reached by means of sale, therefore developers, as a rule, choose one of two variants,” continues Yakhontov. “The first is the sale of apartments in the hotel to private individuals who transfer the apartments to a letting agency company for rent. The managing company gets 30%, and the owner 70%. The second variant is to sell the hotel to a well-known company, as a rule, to a foreigner, which has lower profitability.

Vetlugina thinks that despite the constant high costs, for example heating and hot water bills, and the non-uniform fillability level throughout the year of a resort, this business is all the same profitable. According to her observations when, for example, in an office or shopping complex the share of vacant premises reaches 12%, the premises is already unprofitable. In resort hotels even if 40% of rooms are free, the business remains profitable. Therefore in the present difficult conditions a holiday house or complex, in her opinion, is quite good.

Zdradovsky agrees: the Moscow region market of resorts, despite the crisis, is quite confident. In many resorts there are even no vacant rooms despite the difficult conditions. But Alekseyeva notes that the limitations of liquidity and financial losses that many development companies bear, first of all due to the slow entrance to the market of new recreational projects, the recoupment time of which is much longer than, for example, residential settlements, and the initial expenses considerably exceed the minimum investments in cottage construction. In connection to this individual complexes will come on the market in the next 1-2 years.

Among new projects are the Kempinski Berezky Moscow hotel and sports complex, measuring 220,000 sq.m, 11 km to the north of Moscow on Ostashkovskoye shosse on Klyazminsky lake. Energogarant Kapital-Stroi and the Kempinski hotel group have concluded a contract on its construction. Kempinski Berezky Moscow will take its first visitors in 2011. According to Gianni van Daalen, vice-president of the Kempinski hotel group, within the structure of the resort complex there will be a 5-star Kempinski hotel with 200 rooms, a residential complex with 50 separate apartments, 40 cottages and mooring for 100 yachts. The complex will operate all year round. Swimming pools, restaurants and cafes, shopping pavilions, a business center, conference halls, a SPA center, a fitness club and every other possible convenience is planned for. For VIP visitors there will be presidential suites. The cost of the project will be $200 million.