About Us

Our market

Our updated strategy maintains our focus on the St Petersburg and MMA markets for the medium term, as we believe these two geographies hold significant potential for growth. 

 combination of Russian macro factors and local supply-demand developments mean that the upper-economy, comfort-class, and business-class segments in which we operate should see robust, sustainable growth for years to come. We are already among the leading players in both of these geographies, with a strong reputation as a reliable developer of high-quality housing. Etalon Group’s strategic aim is to leverage its strong position to deliver profitable and rapid growth in the years ahead.

Market 1


There are four key factors that will drive demand in the MMA and St Petersburg residential real estate markets: urbanisation, better working conditions, access to financing and improving standards of living.


Historically, Moscow and St Petersburg have been Russia’s two main centres of economic activity. This has attracted migrants from other parts of the country and helped these cities grow faster than the Russian average, including in terms of the employed population. Population growth in Moscow and St Petersburg is significantly higher than the Russian average and above that of many major European cities as well. Moreover, the number of employed people has expanded at a higher rate than the overall population. This has helped keep unemployment rates in Russia’s two largest cities significantly below the national average and well below the levels seen in other European capitals.

Market2 Urbanisation

Better working conditions

Our core geographies enjoy robust employment levels, which are well above the Russian average and above those in other major European cities. This indicates the potential for stronger, more sustainable demand compared to other markets. Among Russian population centres, Moscow and St Petersburg also enjoy higher average monthly salaries, with RUB 64 ths in Moscow and of RUB 46 ths in St Petersburg, while other regions of Russia average just RUB 34 ths.

Affordability and access to financing

Housing in Russia has become significantly more affordable than in the past, reaching levels that are near the EU average, while the availability of housing stock still lags far behind. Increasingly accessible mortgage financing will be one of the keys to the further development of the Russian residential housing market, and the trend is positive: mortgage rates decreased by 2.5 p.p. to 12.5% in 2016, and are expected to reach the single-digit range in 2017.

As mortgages become increasingly accessible, this is likely to bring new buyers to the market (not just enable existing borrowers to refinance at lower rates). Russia still lags significantly behind other European countries in terms of the volume of mortgages issued as a portion of the overall economy. As of the end of 3Q 2016, mortgages in Russia represented only 5% of the country’s GDP, whereas in developed economies like France, Germany and the UK, mortgages amounted to 41%, 43% and 59% of GDP, respectively.

Market3 Mortgage Table

Access to mortgage financing in our core markets is enhanced by the number of banks offering mortgage products compared to other regions of Russia: 96 banks in St Petersburg and 371 in Moscow compared to an average of 42 banks operating in other regional centres across Russia. The potential for mortgage-funded growth in the housing market is further enhanced by the fact that Russians maintain a relatively high level of savings in bank deposits. As interest rates fall, however, bank deposits will become less attractive at the same time as mortgages start to become more affordable. Russian bank deposits held by individuals, which amounted to RUB 11.7 trillion as of 31 December 2012, increased by 57% to RUB 18.5 trillion as of 31 December 2016. However, interest rates for savings accounts (on a one-year term deposit) have declined in the last two years from an average of 13.11% in January 2015 to just 7.57% in December 20163. These two parallel dynamics are likely to provide further stimulus for potential buyers of residential real estate.

(3) CBR data


Improving standards of living

Moscow and St Petersburg have well-developed leisure infrastructure, with more than 300 museums and 100 theatres in the two cities. They are also home to 41 of Russia’s top 100 universities, and residents have access to high-quality medical services. This has helped to support an increase in the average lifespan to 74.4 and 76.8 years in St Petersburg and Moscow, respectively, compared to the Russian average of 72.3 years.


The Russian real estate development market has historically been highly fragmented, with only a small number of larger players controlling significant shares of the market. This is changing, though, as the biggest players have managed to consolidate the market, supported by many smaller players struggling to survive economic cycles, as well as regulatory changes that favour the market leaders. Over the years, the largest and most reliable players have also earned better reputations among customers, and they have developed internal know-how that gives them advantages over other players. As of the end of 2016, Etalon Group’s shares in the Moscow and St Petersburg markets were 2.1% and 12.4%4, respectively, and we aim to increase these figures to 7% and 15%, respectively, by 2021. Both the Moscow and St Petersburg markets remain undersupplied, with housing stock per capita significantly below European averages. Based on current estimates, there is no risk of this supply deficit being overcome in the medium term, giving Etalon Group an excellent opportunity to leverage its strong financial position and outstanding reputation to increase its market share in St Petersburg and the MMA.

Market4 IRN Research

(4) Source: research by Knight Frank and IRN


Significant potential for years to come

Looking ahead to 2021 and beyond, there is a strong case for new demand to develop faster than supply in our key markets. Even in a conservative base case, assuming GDP growth of just 1.5% and mortgage rates declining to just 9.5% by 2021, we forecast new demand of 94.7 million sqm, compared to new supply of just 56.9 million sqm. Using more optimistic forecasts, a ‘base+’ case foresees even more significant demand growth of 142.3 million sqm by 2021, suggesting even more significant opportunities for growth. 

Market5 Base Case