The objects of the street-retail segment do not often get investigated in cases of contesting cadastral value, since they are mostly small premises with a relatively minor cost, and in addition, the model of mass cadastral valuation for them often does not show overestimation, and mostly even underestimates the commercial potential. Nevertheless, sometimes such objects are found. Basically, these are quite symbolic objects of the prime segment, the cost of which can be comparable to entire business centers.
In the autumn of 2020, Valrus experts conducted an valuation of non-residential premises located on one of the oldest shopping streets in Moscow as part of a case challenging the cadastral value based on a ruling by the Moscow City Court. The premises actually represented a part of the building on 4 floors (from the first to the attic) with an area of more than 2 thousand square meters fully leased as the flagship store of one of the international fashion retail chains.
Starting from the XVIII century and up to the revolution of 1917, Kuznetsky Most was the main shopping street in Moscow, famous for clothing stores, bookstores, photo studios and restaurants. The street is located inside the Boulevard Ring of Moscow. It is a continuation of Kamergersky Lane, that runs in an arc, sequentially crossing at an almost right angle the radial from the center of Bolshaya Dmitrovka, Petrovka, Neglinnaya, Rozhdestvenka, Bolshaya Lubyanka and, as it were, merging into the latter along the perimeter of Vorovsky Square.
In most cases, such large objects of high-class commercial real estate in the street trade format are not exhibited on the open market, professional brokers of elite real estate are engaged in their sale and rental. As well as for high-quality office real estate, information on transactions with them is rarely posted on popular aggregator sites, price information is sent by agents directly to potential interested parties along with presentations of objects. Accordingly, this of course complicates the valuation process, namely the selection of analogues. Nevertheless, Valrus experts are professional market participants, although with difficulty, they managed to find comparable objects.
The first and defining task was to search for premium-class non-residential retail premises, both for rent and for sale in the nearest shopping corridors surrounded by the object of study, as rental rates and the sale price of street retail facilities on the main shopping corridors of Moscow may differ significantly from their local location.
The websites of luxury real estate agencies in Moscow were reviewed and comparable premium street retail facilities in the Kuznetsky Bridge shopping corridor, as well as several nearby ones, were determined. As a result, offer prices and rental rates on a retrospective date were found and analyzed for real estate objects selected as analogues.
The level of prices and rental rates for the most expensive objects in Moscow can shock people who are not very immersed in the market. So renting large enough stores (under 1000 sq.m) in 2 levels can cost 150 thousand rubles / sq.m per year. At the same time, it will be an absolutely clean lease, with additional operating expenses, utility bills, and not including VAT. The sales prices of such stores can be under 500-600 thousand rubles/sq.m and above.
One of these objects was the well-known flagship store of the Nike company with a total area of 2 914 sq. m., located opposite the object under study at the address: Kuznetsky Most str., 14 p. 1, which was on display for several years. This analogue is maximally comparable in its qualitative and quantitative characteristics with the object of research.
In addition to price information on analogues, quantitative and qualitative characteristics were collected, including the distribution of space by floor, data on leasable area, etc., which made it possible to reasonably make adjustments for differences between the object of study and analog objects.
As a result, the obtained results of calculating the market value of research objects for income and comparative approaches showed a slight dissimilarity between the final values, which may indicate the reliability of the results obtained.
The Valrus examination was already the third in the case. As part of the initial examination, the expert actually confirmed the plaintiff's claims and established a significant decrease in the cadastral value. The re-examination appointed by the court came to the opposite conclusions, the market value was determined above the cadastral value. The Valrus expert came to the same conclusions, the deviation from the previous examination was only 0.012%. The court decision was based on the conclusions of the Valrus expert, because in the second re-examination, the expert selected analog objects most comparable to the objects of the study and applied the necessary adjustments.
In case of exceeding the market value of the cadastral value according to the results of the State Cadastral Valuation, even if the plaintiff continues to support his claims and does not want to withdraw the claim, the court does not increase the cadastral value of the object, since this worsens the rights of the plaintiff as a taxpayer, but decides against the refusal to satisfy the administrative claim. This position is based on the explanations of the Constitutional Court of the Russian Federation, as well as the practice of the First Court of Appeal of General Jurisdiction.