Khandshteli

Khandshteli is an informal real estate phenomenon observed in several cities of the former Soviet Union, particularly in Moscow and Saint Petersburg. It refers to the building or renovation of apartments in residential buildings that are then sold or rented at a significantly higher price than the original cost.

The term "Khandshteli" originates from the Russian word for "castle," with the suffix "-shteli" indicating a cluster of them. The practice is often associated with unscrupulous developers or wealthy individuals who take advantage of the situation to profit from the construction or renovation of private apartments.

Typically, the process involves converting a small, underutilized space within a shared residential building into a separate, albeit small, apartment. This new unit is then sold or rented to a buyer or tenant at an inflated price, often with exaggerated square footage or unique features. The increased value is usually achieved by achieving legal compliance, which is often a significant factor in the renovation or construction of the new apartment.

The practice of Khandshteli raises concerns about unequal access to housing opportunities in Russia's major cities. Since the construction or renovation typically takes place within existing residential buildings, unaffected by municipal development plans that often target empty spaces in old buildings. The reduced availability of local housing options due to Khandshteli undermines public access to these areas.

Rules against such conversions and their enforcement in cities vary, which contributes to a lack of understanding or programs to minimize their persistence.