With what indicators did the short-term and long-term rental market in Russia, for which the pandemic turned out to be a serious test, finished the year? What happens to rental rates in capitals and regions, what tactics do rentiers choose and in which city do they look more confidently into the future?
The rental market is faster than other segments to respond to changes in the industry. Cyan experts analyzed how the segment has changed in 2020 and what factors influenced the short and long term rentals. The sample included cities with a population of over 1 million people, including Krasnodar.
Moscow and St. Petersburg, in contrast to the regions, failed to return to pre-crisis indicators. There were no tourists in self-isolation - the share of apartments that are rented for short-term rent decreased by half.
Short term rent
Daily rental rates lost 17% to self-isolation
Closed borders and the imposed self-isolation regime hit short-term leases in the first place. There were no tourists, business activity decreased (and along with it, the number of business trips to Russian cities decreased). Daily rent owners had to cut rates in order to attract demand and compete with hotels, which also fought for each client.
According to Tsian's calculations, the average daily rental rate during the period of self-isolation in cities with a population of over one million (including Krasnodar) decreased by 17% in lockdown: from 2.48 thousand in the pre-crisis December 2019 to 2.07 thousand rubles in April-May 2020 year. After the lifting of restrictive measures, the average rate gradually reached the values of the beginning of the year (2.42 thousand) in August (2.37 thousand rubles) - in the midst of vacations.
Instead of inaccessible foreign travel, many Russians went to travel across Russia, which increased the demand for daily rentals. But with the deterioration of the epidemiological situation in September and new restrictions, the daily rental rate shows a decrease again. Today it is 2.2 thousand rubles, which is 11% lower than in December 2019. Thus, the daily rent market was unable to return to last year's pre-crisis indicators.
Average daily rental rate in million-plus cities and the share of apartments for daily rent
According to Cyan Analytical Center
Among all cities with a population of over one million, only three - Krasnodar, Chelyabinsk and Kazan - have a daily rental rate higher than last year. The Krasnodar Territory in 2020 as a whole breaks all records in terms of demand and activity in the market: during the period of remote work, many have moved closer to the sea. Krasnodar is a few hours away by car from Russian resorts, and the average rental rate is 56% lower than, for example, in Sochi. Therefore, Krasnodar in 2020 was in demand both among tourists and among remote employees. Therefore, the daily rental rate has increased in comparison with the previous year by 5%.
The situation is similar in Kazan - the city is also interesting for tourists. Chelyabinsk is a non-tourist city, the rate of daily rent in which, during self-isolation, sank slightly - at the level of 2%. Among all cities with a population of over one million, it is Chelyabinsk that is the most affordable at a daily rental rate, even taking into account an annual growth of 5%.
In other cities, short-term rental rates have not recovered: in Moscow, the figure is 7% lower than last year, and in St. Petersburg - by 2%.
During the lockdown, rates fell in absolutely all cities. The largest decline was noted in Moscow (-25%) and Nizhny Novgorod (-11%). The minimum is in Omsk (–1%), Perm, Volgograd, Chelyabinsk (–2% each). St. Petersburg sank 8%.
Thus, the daily rental market suffered mainly in tourist cities and centers of attraction for the labor force.
Dynamics of the average daily rental rate in million-plus cities
According to Cyan Analytical Center
Rentier had to sweep
An alternative strategy for rentiers who rent out apartments for a short time was to "re-profile" the business: instead of renting out apartments for daily rent, the owners offered objects for a long time, which led to increased competition in the long-term rental market. After the withdrawal of self-isolation, rentiers began to return to the short-term rental market as a more profitable instrument.
In December 2019, 24% of all apartments in million-plus cities were offered for short-term rent (see the chart “Average daily rental rate in million-plus cities and the share of apartments for daily rent”). During self-isolation, the share dropped to 12-13% - rentiers preferred to rent their homes for a long time. The minimum share of apartments for short-term rent was recorded in June - only 10%.
Further, the indicator went up, reaching a local maximum in October – November (19%), after which at the end of the year the share of supply for short-term rent decreased again, including due to the leaching of volume due to the New Year holidays - many went to travel around the country. Today, in cities with a population of one million, the share of apartments for short-term rent is 16 against 24% a year ago at the same time.
The lack of tourists in large cities will partially compensate
was done by employees working remotely. Not everyone had the opportunity to organize an office, especially when it came to a family with children. The solution for them was to rent a "home office" - they rented apartments for daily rent for work.
Long term rental
Constantly changing conditions of the game
After the announced self-isolation regime, many tenants lost their usual income level. As a result, they had to give up further living in rented apartments and look for more affordable options. Some of the employers left Moscow for the period of self-isolation (more often it concerned newcomers to the capital region). Others have moved temporarily to live with relatives or have agreed to rent with someone else to cut costs per person.
As a result, the number of apartments for long-term rent in cities with a population of one million increased in May 2020 compared to April by 13%. In April, a deposit could be used as the next payment for an apartment; in May, tenants were actively moving out, which led to a decrease in rates.
In Moscow, during the lockdown, the number of apartments offered for long-term rent increased by 9%, in St. Petersburg - by 6%. Excluding the capitals in other millionaires, the growth of such apartments was 21%.
Today, the volume of supply in the long-term rental market is 9% lower than in lockdown: the activity of tenants has increased, part of the rentiers have returned to the short-term rental market, therefore, competition in the long-term rental market is decreasing again.
The decline in the average rate for new ads also testifies to the crisis in the rental market. Let's take Moscow as an example. In April and May, new one-room apartments for rent came out at a rate lower than in previous months: in April versus March, the drop was 6.3%, in May versus April - another 4%. St. Petersburg also saw a decline of 3.8% in April and 5.2% in May.
In other cities with a population of more than 1 million people, such dynamics was not observed: new apartments for rent came out at about the same rates as before self-isolation.
Average rental rates for one-room apartments for new ads
According to Cyan Analytical Center
Regions are recovering faster than capitals
The main drop in demand occurred in May – June 2020. Moreover, Moscow and St. Petersburg faced a more significant reduction in rates than other cities with a population of over one million. During self-isolation, many tenants temporarily moved to other cities, which caused a sharp decrease in rates compared to the pre-crisis 2019.
IN MOSCOW, THE FALL IN JUNE WAS 10% FOR ONE-ROOM AND 9.8% FOR TWO-ROOM APARTMENTS. IN ST. PETERSBURG, THE MARKET IS INSIDED EQUALLY: –11.6 AND –11.3% RESPECTIVELY.
In other regions, the decrease due to restrictions was not so significant: –2.6% for one-room apartments. The average rate for two-room apartments showed the minimum growth of 2.4%.
Dynamics of long-term rental rates during self-isolation and in annual dynamics
According to Cyan Analytical Center
After the removal of restrictive measures, the rental market is recovering, but neither Moscow nor St. Petersburg was able to return to the values of December 2019. In the capital, the rental rate for one-room apartments is 0.5% lower than a year ago (38.7 thousand rubles as of December 2020). In St. Petersburg, the annual decline was 3.5% (25 thousand rubles as of December 2020). Regions are recovering more actively: the average long-term rental rate in cities with a population of one million is today higher than last year, by 4.1% (15.4 thousand rubles per month for one-room apartments).
Average long-term rental rate for one-room apartments in million-plus cities
According to Cyan Analytical Center
The average rental rate for two-room apartments in Moscow is gaining previous indicators worse than the rate of more liquid apartments due to their low cost. Now the rental rate in the capital is 5% lower than a year ago (53.5 thousand rubles). In St. Petersburg, the rate has practically returned to last year's values: -0.5% per year (40.4 thousand rubles). In other cities, the rate not only recovered after the fall, but also increased by 6.8% - up to 21.9 thousand rubles a month.
Average long-term rental rate for two-room apartments in cities with a population of over one million
According to Cyan Analytical Center
Due to the remote operation, rentiers are losing potential tenants, many of whom have temporarily moved to another city with a lower rate. The rental market showed growth in annual dynamics in Kazan, Krasnoyarsk, Rostov-on-Don and Omsk.