Gabriel Tetro-Farber, Andrey Ostroukh
MOSCOW (Reuters) – Before the start of the coronavirus pandemic, pensioner Elena rented out a one-room apartment in the Moscow region – this is how she managed to make ends meet. The monthly rent of 18,000 rubles provided her with almost the same income as her pension.
But when restrictions related to the coronavirus began to affect the economy, tenants asked Elena to reduce the fee to 10,000 rubles due to falling incomes. In June, they moved out and returned to their hometown.
“We have been publishing an ad for three months and cannot rent it, they have reduced the deposit, the amount of 16,000 rubles per month. Potential tenants are asking to lower their rent, they say it’s expensive and they will not pull, although this is the average price for the area,” she says.
“Demand has dropped dramatically, even calls are few.”
Elena, who chose not to give her last name, is one of many property owners who have lost tenants or were forced to lower their rents due to the economic impact of the pandemic.
As in many other countries, the crisis hits the pockets of Russians – some have lost their jobs, others have lost wages, and companies are facing difficulties.
Demand for rental housing in Russian cities has declined as tenants struggle to pay or move to cheaper housing outside of the city, working remotely. The fact that foreign students left because of the pandemic also had an effect.
Prices for rental housing in cities with populations of more than 1 million fell by 12% between March and May, but prices recovered slightly in July, said Alexey Popov, head of the CIAN think tank, the leading Russian real estate database.
The fall was particularly strong in foreign currencies, as the ruble lost about 20% of its value against the dollar and euro this year.
Rosbank previously reported that the decline in income from real estate ownership was one of the factors behind the drop in incomes of Russians in the second quarter.
The real disposable cash income of the population of the Russian Federation, according to the Federal State Statistics Service, in the second quarter of 2020 decreased by 8.0% in annual terms – the maximum since 1999.
The World Bank previously said that falling incomes would affect poverty levels. Economists say lower incomes and rising unemployment could lead to weak consumer demand and affect the wider economy.
This could hinder the fulfillment of one of the promises of Russian President Vladimir Putin – to increase real disposable income. But while the impact of falling incomes has affected the overall rating of the Russian government, Putin remains popular, polls show.
About 10 million people in Russia live in rented housing, and only half of them plan to continue to do so over the next two years, according to the analytical center NAFI.
“Employees of many companies are still working remotely, which may reduce the demand for renting apartments in large metropolitan areas from nonresident workers,” the Bank of Russia said earlier in September.
Like many Russians, landlords and realtors find it difficult to make financial plans, and they don't know when the market might recover.
“Many of my clients lost tenants after the quarantine. Tenants just left home and never returned. But those (owners) who dropped in price by 20-30% compared to the beginning of the year, that is, before the pandemic, were able to find tenants again. “, – said a realtor from Moscow Tatiana Shotova.
Nina, a 44-year-old Moscow office manager who asked not to be named, is one of those who lowered the rent to find tenants.
Before the crisis, she rented her Moscow apartment to a student from Abkhazia for 55,000 rubles a month, which at the beginning of 2020 was about $ 900, now the apartment brings her only $ 733.
($ 1 = 75.6300 rubles)
(Andrey Ostroukh, Elena Fabrichnaya, Gabriel Tetro-Farber, Tatyana Voronova and Olesya Astakhova; Translated by Anna Rzhevkina. Editor Marina Bobrova)