Flats, apartments and offices for lease: what the market offers instead of unaffordable mortgage
In 2025, the leasing situation may improve if the key rate of the Central Bank of the Russian Federation is reduced
In the context of restrictions and tightening of mortgage programmes in Russia, a new market is being formed — retail real estate leasing. The financial instrument is available to small and medium-sized businesses, which can lease both commercial real estate — offices or stores in shopping centres, and apartments and flats in residential complexes. Apartment leasing is a relatively new phenomenon in the Russian housing market. Read about if it will remain a niche product or can it become an alternative to unaffordable mortgages in a report of Realnoe Vremya's analytical staff.
“Real estate leasing has existed for a long time. But before, we were talking about corporate real estate leasing, when large companies bought businesses and shopping centres, warehouses and production sites for hundreds of millions or even billions of rubles. This is, for example, when a large enterprise bought a business centre in the center of Moscow through Sberbank Leasing,” explains Alexey Dolgikh, CEO of Leasing Trade. For small and medium-sized businesses, such a tool has not existed for many years.
Today, according to Dolgikh, about five regional leasing companies are actively working in the retail real estate leasing market: about three in the central part of Russia, one in the Urals and one in the Far East. “In fact, this is an emerging market. This is the leasing of apartments, flats, first floors of buildings. The average transaction check for us last year was 30 million rubles. These are real estate properties with an area of 150-200 square metres,” the interlocutor put an example. “Previously, we were talking about corporate real estate leasing, when large companies bought businesses and shopping centres, warehouses and production sites.”
“For example, we had clients from Moscow — an IT business with employees working all over Russia. And they periodically invited them to projects in Moscow. At first, the company rented a hotel for them, then apartments, then the owner realized that he had been renting apartments for several years, why not buy them. We bought two apartments for them, and he got a mini-hotel for his employees,” he says.
“When we were just creating the product a year and a half ago, we were worried that the maximum term was only seven years, and this is much less than the term of a mortgage. It seemed to us that the product might not take off and would be uninteresting,” Dolgikh admitted. “But it is surprising that even at that time, when the rates were quite low, people took out leases for 1.5-2 years.”
Today, when rates have become high, clients themselves ask for a shorter term to pay off faster and not overpay a lot of interest, he notes. At the same time, the interest rate on real estate leasing also depends on the level of the key rate. In addition, the interest rate can be revised depending on the change in the key rate.
“Credit and leasing cannot be compared head-on. If you are a legal entity with VAT, then the interest on the loan and on the lease are two different stories. Under leasing, you reimburse 20% with VAT, including interest. You can also reduce payments on income tax,” the expert explains. “In Russia, leasing for residential and commercial real estate for SMEs is only an emerging service, but in America and Europe, almost all real estate is sold on lease.”
This year, when the Bank of Russia introduced new macroprudential restrictions and seriously tightened the issuance of mortgages, including commercial ones, buying on lease is becoming a kind of way out, he believes.
In general, the tightening of the Central Bank of the Russian Federation primarily affected advances, and secondarily — the financial stability and financial burden of clients. “Today, banks will simply refuse most clients a commercial mortgage or will require an advance payment of 40 to 60%. “For commercial real estate, we ask for a 10% down payment, for apartments and flats — 20%,” Dolgikh noted.
Today, more than 60% of leasing transactions concern commercial real estate, these are the first floors, parts of shopping and business centres. And 40% are apartments and flats, including mini-hostels and hotels.
At the same time, if the owner stops making payments, the lease agreement is terminated and the real estate remains the property of the leasing company. The leasing rate today can be variable or floating, it depends on the current financial situation on the market and can be revised.
“The prospects of the retail real estate leasing market are quite high. This year, the screws were tightened on mortgages, and developers will also look for other ways to stimulate apartment sales. It is clear that this product is not for everyone. But many individuals have enterprises behind them,” Dolgikh believes.
It is difficult to withdraw money from a company, and buying on lease has a number of advantages
Head of ReAgentstvo Agency Yuri Chikirov noted that leasing is an expensive instrument in the current realities, and is critical to VAT. “Today, leasing is at a standstill, loans are practically at a standstill,” he outlined the situation.
At the same time, mortgages may not be given to those who, for example, have no credit history or have a high financial burden.
And it is easier to negotiate the terms of the initial payment for leasing,” noted Khabibrakhmanov.
The leasing market in Russia is in its infancy
“The real estate leasing market in Russia is in its infancy, especially in the retail real estate segment for small and medium businesses. In the current economic conditions, this product has the potential for development, but its success will depend on a number of factors,” commented Yaroslav Kabakov, Strategy Director at Finam Investment Company.
However, leasing also has its drawbacks, he warns. Interest rates on leasing are usually higher than on commercial mortgages due to the inclusion of the leasing company's profit in the total cost of the transaction. In addition, the leasing period is usually shorter, which leads to higher regular payments.
In the context of the increased key rate of the Central Bank of the Russian Federation, which affects the cost of borrowed funds, real estate leasing can become an attractive alternative to commercial mortgages for small and medium-sized businesses, especially given its flexibility and tax advantages, says Kabakov. However, for this instrument to be more widely distributed, it is necessary to reduce the key rate and develop subsidy programs that will make leasing more accessible and competitive. In the context of the increased key rate of the Central Bank of the Russian Federation, which affects the cost of borrowed funds, real estate leasing may become an attractive alternative to commercial mortgages.
According to the results of the first nine months of 2024, the volume of new leasing business in Russia decreased by about 8% compared to the same period of the previous year. The main reasons for this decrease are the high key rate and economic uncertainty, which increase the cost of financing and reduce investment activity.
In 2025, the situation may improve if the key rate of the Central Bank of the Russian Federation is reduced, which will increase the availability of leasing products and stimulate demand for them. However, according to forecasts, the difficult market conditions and uncertainty regarding inflation expectations will continue to put pressure on the leasing business, which may lead to a reduction in the volume of new business by at least 20% compared to the current year, Kabakov predicts.
In general, real estate leasing has potential for development in Russia, especially in the small and medium business segment. However, its success will depend on macroeconomic conditions, regulatory policy and the ability of leasing companies to adapt to the changing market environment, the expert concluded.