The 18,000-rouble monthly rent, nearly $240 at the current exchange rate, provided her with almost as much income as her retirement benefits.
But when restrictions to curb COVID-19 started taking a toll on the economy, Elena’s tenants suffered a drop in income and asked her to reduce the rent to 10,000 roubles ($132). In June, they moved out and went back to their hometown outside Moscow.
“We’ve lowered the price to 16,000 roubles, we’ve been publishing the ad for three months and still can’t let this flat,” said Elena, who is 56. “Potential tenants say it is still too pricey even though that’s the average price. Demand has dropped, we don’t get many calls.”
Elena, who declined to be identified by her surname to protect her privacy, is one of many landlords who have lost tenants or been forced to reduce rent because of the economic fallout from the pandemic.
As in many other countries, the crisis has hit people in the pocket – some have lost jobs, others have seen their wages fall, and businesses have encountered difficulties.
Demand for rented accommodation in Russian cities has dwindled as tenants struggle to pay their rent or move to cheaper places outside the city to work from home. Foreign students, who usually help prop up the rental market, are largely absent because of the pandemic.
Prices on the residential rental market in cities of more than 1 million people fell by up to 12% from March to May before recovering slightly in July, said Alexei Popov, head of research at CIAN, Russia’s leading real estate database.
The fall was particularly bad in foreign currency terms as the rouble has lost around 20% of its value against the dollar and the euro this year.
Commercial bank Rosbank has said lower proceeds from real estate ownership was one of the factors behind the fall in Russians’ income in the second quarter.
With lockdowns in place to curb the spread of the virus, Russians’ real disposable income fell more than in any other quarter in the past 20 years.
The World Bank has said the drop in incomes will affect levels of poverty. Other economists have said lower incomes and rising unemployment could translate into poor consumer demand, having an impact on the broader economy.
That could undermine one of President Vladimir Putin’s promises – to increase real disposable incomes. But though the impact of falling incomes has hit the Russian authorities’ ratings overall, Putin remains popular, opinion polls show.
About 10 million people live in rented accommodation in Russia, and only half of them plan to continue doing so in the next two years, according to a study by the independent NAFI research centre.
“Employees of many companies still work remotely, which can lower demand for apartment rentals in large metropolises from employees from other towns,” the central bank said this month.
Like many Russians, landlords and real estate agents are finding it hard to make financial plans, and do not know when the market might recover. The novel coronavirus has infected about 1,104,000 people in Russia and killed more than 19,400, according to official figures.
“Many clients of mine lost their tenants after the quarantine measures: They just fled home and never came back. But those landlords who cut prices by 20-30% compared with early this year have found new tenants again,” said 42-year-old estate agent Tatiana Shotova from Moscow.
Nina, a 44-year old office manager from Moscow who did not want her surname published, is one those who has reduced her rent to ensure she has tenants.
Before the crisis, she used to let her Moscow apartment to a student from Georgia’s breakaway region of Abkhazia for 55,000 roubles a month, which in early 2020 was around $900 but is now worth only about $727.
She had to postpone refurnishing the apartment she lives in after losing the rental income but is relatively lucky as she can makes ends meet on a salary that is about three times bigger than the rent.