A decrease in CS may lead to an increase in land transactions in St. Petersburg

In St. Petersburg and the Leningrad region, the land market is becoming more active, due to the recent reduction in the key interest rate by the Central Bank. This was reported on September 24 by the Delovoy Peterburg newspaper.

Despite this, the total volume of transactions in this segment remains significantly below the level of last year. In 2023, only 18 transactions were concluded with plots for residential buildings and apartments, and the investment amount amounted to 43 billion rubles, which is almost two times less than a year ago. According to experts, although the rate cut creates a psychological effect, there is still no real boom in the market.

"Land for residential housing and for light industrial projects remain in demand categories. Prices for these segments are showing steady growth. However, high rates on bridge loans and generally weakly attractive lending conditions restrain activity, which is reflected in a reduction in the share of leveraged transactions," says Anatoly Klinkov, Director of Investor Relations at A101 Group.

Further expansion of the market and a return to buying large lots, according to him, are possible only with a significant reduction in the key rate. This will make loans cheaper for developers themselves and revitalize the mortgage market, which should switch to market-based programs, reducing dependence on government support.

In particular, interest is growing in areas where urban planning parameters have already been determined or they will be fixed by new Rules of Land Use and Development. While the demand for land within the Ring Road and the suburbs is growing, developers are still cautious when choosing large plots in the Leningrad region, where it is possible to work in stages or with the involvement of partners.

Low-rise construction sites and comfort-class projects are particularly attractive for developers. This segment is consistently in demand, even in conditions of economic instability.

At the same time, developers are actively looking for sites with a clear development perspective, especially in the context of possible changes in urban planning regulations. According to experts, new MANPADS can make certain locations more attractive, but at the same time limit development at some sites.

Reducing the key interest rate creates opportunities for strategic players who are willing to invest in projects with a long-term perspective. In the coming months, the market will remain active, but without massive transactions.

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Finance Minister Anton Siluanov stressed on September 9 that the Central Bank is closely monitoring the budget deficit and its impact on monetary policy. He added that banks and the budget form the money supply, so reducing the budget deficit will create more opportunities for lending by commercial banks and ease monetary policy.

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