Safe and secure: what is happening to the market of new buildings in Moscow
The second half of this year has brought new inputs to the market of new buildings, which has been growing steadily over the past few years. Now, when the Central Bank of the Russian Federation raises the key rate time after time to record levels, and interest on mortgage loans skyrocketed, buying real estate on the primary market again began to seem to many people not only difficult, but also unsafe. On how to approach this issue in the current environment, which of the developers to trust and why, experts argue in the material "Izvestia".
Difficulties of choice
The situation on the primary real estate market at the end of the last and beginning of this decade has shown that buying housing in new buildings has become safer than in previous years. One of the reasons is the openness of developers: information about all the objects under construction became available and transparent. In addition, favorable mortgages have made apartments in new buildings more attractive to buyers. And one more important factor - the money for the apartment does not go directly to the developers, but is kept in the bank in an escrow account until the keys are received. And this, on the one hand, gives a guarantee of safety to the buyer, and on the other hand, additionally motivate the developer to do his work qualitatively and on time.
- When choosing a developer, it is important to work only with those who offer equity participation agreements. I would like to remind you that such contracts require mandatory registration, and it is under them that the shareholders' money will be protected, - emphasizes financial analyst and economist Elvira Mityukova. - All the money under share participation agreements during construction is on escrow accounts. This is the main guarantee for shareholders, as their funds are kept by the bank.
Nevertheless, in conditions of economic turbulence and constant growth of prices for square meters one should be as careful as possible when choosing a developer. Ivan Zolotarev, a leading real estate expert of the federal real estate company "Etazhi" in Moscow, believes that we are entering a period of quite a serious crisis in the real estate market.
- High inflation risks, of course, can affect the stability of developers. At least it is necessary to study information about the developer from open sources, to look at reviews of already realized projects, compliance with delivery dates, to study the dynamics of changes in the cost of objects in already realized projects, the expert explains.
Mikhail Kovalev, Director of the Citizens' Consulting Center of DOM.RF, offers his recommendations on choosing a reliable developer.
- Carefully study the site of the developer, check the availability of all necessary documents using the service of checking new buildings on the portal NashDom.rf. First of all, the building permit should be valid, the project declaration and photos of the construction progress should be up to date, - advises Kovalev. - Look whether the developer's houses are in the unified register of problem objects (ERPO), the register of unscrupulous suppliers on the Goszakupok site and in the register of unscrupulous participants in the auction for the sale of land plots on the Gostorgov site.
The expert also advises to make sure that the developer is not conducting liquidation or bankruptcy proceedings on the website of the Unified Federal Register of Information on Bankruptcy. And in the sales office do not hesitate to check all the documents in person and ask questions about the house and the terms of the contract. If the representative behaves suspiciously, does not provide documents, or imposes the purchase, it is worth taking a break.
Sustainability and reliability
One of the defining criteria of the developer's reliability is its operational efficiency and financial stability. The developer has the right not to disclose its statements, but companies aimed at development and strengthening the investment attractiveness, place them openly.
- To assess the financial burden of developers, you should refer to the accounting statements posted on the NashDom.rf website," recommends economist Elvira Mityukova. - Auditor's reports are available there, which will confirm the reliability of the data. This will allow you to determine the financial result and find out whether the developer is profitable or unprofitable.
There is another opinion. Real estate market expert, author of Telegram-channel "Economism" Alexei Krichevsky believes that you should look not so much at the financial stability, but at the portfolio and reviews of already built houses and LCD.
- They will be much more informative than a 9-month IFRS report for an ordinary buyer," says Krichevsiky. - Has all the social infrastructure been built? How does the management company work? Are there any difficulties with logistics, transportation? If someone is just entering a new market, as quite a lot of regional companies are doing in Moscow, you should look at projects in other cities.
Judging by debts
However, the sustainability of a developer is influenced by its ability to pay off its credit obligations. And here you should pay attention not just to the amount of debt, but to its ratio to the amount of funds in escrow accounts. If the amounts on escrow accounts exceed the volume of project loans of the developer, the developer's interest to the bank is reduced many times, and with them the financial burden and bankruptcy risks.
Real estate market analysts have studied open sources and IFRS reports for the first six months of 2024 top-10 developers of the Moscow real estate market. The study available to the editorial board primarily assessed the net debt ratio minus the amounts in escrow accounts.
The study showed that the ratio of net debt minus escrow accounts to EBITDA is minimal for Level Group (0.6), Setl Group (1.2), PIK Group (1.3), LSR (1.4), Etalon Group (1.4) and Etalon-Finance (1.4). The developers of SC "Samolet" (246 million rubles), SC "PIK" (158 million rubles), "Brusnika" (97 million rubles), LSR (69 million rubles), SC "Etalon" (66 million rubles) have the maximum values of net debt. The only developer from the top-10 with a negative net debt was Level Group: after deducting the amount on escrow accounts, the company's net debt amounted to minus 70 million rubles.
Based on the data obtained, analysts draw conclusions about the potential for strategic flexibility of a particular developer. Thus, in case the company has minimal values of the ratio of net debt minus the amount on escrow accounts to EBITDA, we can talk about good financial stability.
Top of the market
The Moscow real estate developers' market is one of the most dynamic and promising in Russia: there are many companies and a variety of projects. In order not to make a wrong choice, a buyer can be guided by the developer ratings, where developers are ranked by construction volume or revenue.
You can feel more confident if the developer is in the top 20 construction companies in the country and in the top 10 in the region. A large developer will invariably demonstrate a higher level of stability than small and local players. This is due to the comparatively lower unit costs of a large developer and more careful attention to its reputation.
According to DOM.RF, at the beginning of November 2024, the rating of developers by the volume of housing erected in the capital, as before, is headed by the group of companies "PIK", which builds in the capital 63 residential buildings (51.7 thousand apartments) with a total area of 2.14 million square meters. m. Projects of PIK Group of Companies occupy 11.6% of the total volume of new buildings being constructed in Moscow. The top three also include SC "Airplane" and "A101". The fourth place by the volume of current construction in Moscow was taken by MR Group. The fifth place is occupied by the company "Donstroy". The top ten also included FSK, LSR, Level Group, Absolut and Sminex.
Top 3 for "comfort"
If we consider the segment of new buildings of comfort class, then, according to Rosreestr data, the top 3 developers in Moscow sales are "PIK", Level Group and LSR. Comfort-class housing in Moscow, according to experts, is in the highest demand, so when choosing such real estate it makes sense to pay attention to all the under construction projects in the company's portfolio. A developer engaged in several projects at once is interested in long-term development. Large developers are less characterized by delayed delivery of housing, which is important for any buyer.
