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- A meter of problems: a decline in the number of transactions may lead to bankruptcies of developers
A meter of problems: a decline in the number of transactions may lead to bankruptcies of developers
The mass transition of construction companies to floating-rate loans and reduction in the number of transactions in 2025 by more than a third may lead to bankruptcies of a number of developers, market participants and experts told Izvestia. According to the results of October in comparison with September the supply of ready apartments in new buildings decreased by 4%. On the background of expensive bank loans, reduction of mortgage programs and decrease in commissioning of new objects the market may be in the zone of turbulence. The industry notes that developers have reserves of strength for the near future, but if the situation does not change, there are risks that some companies may close.
Why the supply on the market of new buildings is decreasing
In Russia the supply on the market of new buildings has started to decrease. This trend was confirmed to Izvestia by several representatives of the industry.
Thus, according to the service "Yandex.Nedvizhimost", at the end of October in comparison with September it decreased by 4% with the median cost of a square meter in cities with a million people in 171 thousand rubles. The situation in this segment of the market is still estimated by analysts as stagnant.
Negative dynamics of supply volume on the primary market from 1 to 4% in all cities with a population of more than 1 million people, except for St. Petersburg and Samara, were also recorded by experts of the system of monitoring and analysis of new buildings bnMAP.pro.
- We can accurately say that the trend began to form in September, and in October it became more noticeable. However, it is not necessary to speak about its long-term character yet. To determine this, it will be necessary to track the number of new launches and the volume of real demand on a monthly basis over a long period of time, for example, for the whole of 2024. With the growth of demand and slower arrival of new volumes of new buildings on the market it is possible to further reduce the exposure, - explained the experts of the company.
Now in the active realization on "Cian" is 325 thousand ads from developers. This is 1.6% less than a month ago, but 2% more than at the end of September, said "Izvestia" head of "Cian.Analitiki" Alexei Popov.
- The trend towards a decrease in the volume of supply is explainable, although its scale strongly depends on the sample, which the analyst has. After July 1 (the date of abolition of non-addressable preferential mortgage) the area of new projects fell more than the sales volume. Developers began to revise their development plans, and banks began to evaluate more rigidly incoming applications for project financing, - explained Alexey Popov.
At the same time, according to him, the collapse of demand has been avoided so far. Family mortgage, installments, own rate subsidizing, point discounts - all this allowed developers to moderately reduce sales (by 20-25%), while the area of new buildings fell by 40-50%, explained the representative of the business.
- So far, the correction in the volume of supply is moderate in nature (reduction by a few percent) and it is difficult to notice it for an ordinary buyer. Developers have substantial stocks of unsold apartments, and even a long period with small volumes of new products should not lead to a deficit in the market, - said Alexey Popov.
What help is needed from the state
However, developers are still careful in assessments and do not see a significant reduction in the market.
- Now we do not observe a shortage of supply on the market. However, developers are really beginning to hold back the start of new projects, waiting for more favorable conditions on the key rate and, perhaps, new decisions from the state to support the industry - said "Izvestia" general director of the holding "RSTI" in Moscow Alexei Turkin.
As for the drop in market indicators, there is no decrease in sales in the premium class segment either.
- High-budget segments always react weakest to market fluctuations. On the contrary, we have even had more inquiries, but we attribute this to the introduction of a new sales scheme. Analysts note a decrease in new supply in Russia as a whole of up to 10%, but in Moscow it is not very significant yet. We will be able to talk about more precise data at the end of this year - beginning of next year, as well as about forecasts on market equalization and new project launches," he noted.
According to Olga Barabanova, Commercial Director of Sezar Group, a real estate development company in Moscow, the supply shortage does not threaten Moscow.
- With the transition to project financing, development cannot take a break and wait for the market to stabilize, as it was before. Credit obligations force them to move forward regardless of the current situation, inventing new opportunities. As a consequence, new projects regularly enter the market (in particular, we have four new residential complexes scheduled to start in 2025), and a wide range of apartment choices remains in all segments today," she explained to Izvestia.
At the same time, according to her, sales tools are limited, and even with unprecedented programs that developers are forced to implement, the volume of sales today is not comparable with the potential demand that could be in case of adequate mortgage payments.
Taking into account that the development cycle takes about three years from land purchase to the start of the project, we should not expect a sharp decline in the volume of new projects in 2025, Vladimir Shchekin, co-owner of Rodina Group, told Izvestia.
According to him, the projects that are at a high stage of readiness to start will enter the market.
- This is confirmed by the statistics: during the last two months the supply on the real estate market has not undergone significant changes. In particular, in the period from October to September the reduction amounted to 2%, and from October to August - 4%. Compared to last year, the total volume of supply has increased by 3%, - said the representative of the business.
However, taking into account the decrease in sales volumes, in a year the structure of supply on the primary market will change - the share of ready objects will grow, Vladimir Shchekin is sure.
Dmitry Khalin, General Director and Managing Partner of "Intermark City Real Estate", said that in the elite segment of Moscow new buildings market the opposite situation is observed.
- In the III quarter the share of new buildings in elite supply continued to grow dynamically, in the IV quarter we will also see a slight increase. This is partly because in the elite segment developers have never linked the success of projects with a favorable mortgage, and therefore for them no radically negative changes have not occurred, - explained "Izvestia" business representative.
Why the construction industry is experiencing a crisis
With all the optimism of developers, the crisis in the industry has actually already been recognized by the Ministry of Construction. As Deputy Head of the Ministry of Construction Nikita Stasishin stated at the end of November, the "quiet" period for sales may last until March 2025, while prices are still going down.
- It has already started to get cheaper. There is a tendency that today more than 60% of housing that is under construction is not sold. Therefore, one way or another, companies will regulate the market, including discounts, in order to ensure financial flow," said Irek Faizulin, head of the ministry, in a conversation with journalists.
The press service of the Ministry of Construction informed Izvestia that different scenarios of the industry development are currently being analyzed and actual support measures are being worked out, including those focused on the possibility of developers to concentrate resources on the completion of already started construction projects, as well as on the launch of new ones.
- At the same time, the mechanism of placement of funds of participants of share construction on escrow accounts, launched in 2019, allows to secure the funds invested by citizens in the real estate under construction, as the bankruptcy of the developer is the basis for termination of the contract of participation in share construction and return of funds, - explained in the Ministry.
According to "Yandex.Nedvizhimosti", in October the median cost of 1 sq. m. of one-room apartments in new buildings decreased in four million-strong cities. The leaders were Krasnoyarsk (by 3.8% for the month, to 134 thousand rubles) and Novosibirsk (by 2.6%, to 145 thousand rubles), less significant price reduction occurred in Krasnodar (by 0.1%, to 149 thousand rubles) and Kazan (by 0.1%, to 246 thousand rubles). A square meter of two-bedroom apartments on the primary market became cheaper in Krasnoyarsk (by 2.1% over the month, up to Br145 thousand), St. Petersburg (by 2.1%, up to Br290 thousand) and Kazan (by 2.1%, up to Br246 thousand). ), in Moscow (by 0.2%, to 356 thousand) and Krasnodar (by 0.1%, to 129 thousand).
Earlier, the head of the analytical center "DOM.RF" Mikhail Goldberg noted that in the conditions of weak demand and the persistence of high key rates until the end of 2025 for projects with planned commissioning in 2026 may require additional measures to support project financing.
In the consulting company "Yakov and Partners" meanwhile note that the number of transactions with primary real estate in Russia may decline by 19-35% in 2025 against the background of reduced availability of mortgages and reduced purchasing power. According to the analysts' research, which Izvestia has, in the base scenario it means a decrease in sales from 7.5 trillion rubles in 2023 to 5.3 trillion in 2025.
According to experts, the mass transition of developers to floating-rate loans in the current economic situation has created serious threats to the industry. Georgy Ostapkovich, Director of the Center for Conjunctural Research at the Institute of Economic Research of the National Research University Higher School of Economics, admitted that some construction companies may face bankruptcy next year because of this.
- By taking loans with a floating rate, they thought that there would be a reduction in the rate. But the situation has turned the other way, i.e. developers now cannot refinance at a low rate. On the contrary, they now have to borrow at higher interest rates. Of course, this hits the developers hard," the expert explained.
He also noted that the cost of commercial real estate has also started to decline. According to some analysts, in Moscow it has fallen in price by up to 50%.
According to Radik Nigmatullin, Development Director of "Movement" (ecosystem of projects in the sphere of development and real estate), the increase in the key rate affects the rise in the cost of construction and the cost of materials.
- Developers' projects that started last year and this year were not designed for the current key rate. Developers with more than 50% creditworthiness will be hit hardest. It is not excluded that they may face bankruptcy," the expert explained.
According to him, the construction business now needs support. Today it has become more profitable to rent housing rather than buy it with a mortgage.
