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- Builders will be saved from the rate: the authorities proposed to introduce a moratorium on bankruptcies of developers
Builders will be saved from the rate: the authorities proposed to introduce a moratorium on bankruptcies of developers
The Ministry of Construction has proposed to introduce a moratorium on bankruptcy of developers until the end of 2025, "Izvestia" has learned. This measure is included in the action plan of the authorities aimed at supporting the construction industry - Deputy Prime Minister Marat Khusnullin instructed to form such proposals. The necessity of introducing a moratorium was also mentioned earlier by Federation Council Chairwoman Valentina Matvienko. As emphasized in the Ministry, "the decision is aimed at improving the quality of life of citizens and the development of the industry". Providing support to real estate developers in the current economic situation looks quite logical, experts agree. However, the proposed measures, in their opinion, will relieve construction companies of a number of problems in the future, but will hardly be able to alleviate their situation right now. Izvestia" investigated how the introduction of a moratorium on bankruptcy for developers will affect the real estate market.
Industry support
The document containing the proposal to introduce a moratorium dated November 23, which was read by Izvestia, was signed by Deputy Head of the Ministry of Construction Yuri Mutsenek. Deputy Prime Minister Marat Khusnullin instructed the Ministry of Construction to work out measures to support the construction industry, as follows from the minutes of the meeting of November 11 (Izvestia has it).
Deputy Prime Minister Marat Khusnullin
A moratorium on bankruptcy will not allow courts to initiate insolvency proceedings against some categories of legal entities. If a creditor files a bankruptcy petition during the moratorium period, the Arbitration Court must return it and not initiate insolvency proceedings against the debtor. Such a measure has already been introduced by the authorities during the coronavirus pandemic in 2020, as well as in 2022 against the backdrop of Western anti-Russian sanctions.
- The systematic work of the Russian Ministry of Construction in cooperation with relevant specialized agencies and expert community is aimed at improving the quality of life of citizens and the development of the industry," the ministry explained to Izvestia. - Various scenarios of the industry development are being analyzed and actual support measures are being worked out, focused on the mechanisms of improving the housing conditions of citizens and preserving the sustainability of developers.
The possibility of introducing a moratorium on bankruptcies in the construction industry was also suggested by Federation Council Speaker Valentina Matvienko. In late November, the Speaker of the Council of Federation noted that the industry needs "substantive support measures". Market participants told Izvestia that developers faced economic risks due to the high level of borrowing. Experts also warned that the mass transition of construction companies to floating-rate loans and the probable reduction in the number of transactions by almost a third in 2025 may eventually lead to bankruptcies of a number of market participants.
"Izvestia sent inquiries to the Ministry of Finance, Ministry of Energy, Federal Antimonopoly Service, Central Bank of the Russian Federation, development companies and banks.
Economic situation
Providing support to the construction industry in the current economic situation is quite logical, says Radik Nigmatullin, Development Director of Dvizhenie (ecosystems of development and real estate projects).
- In some regions the demand for real estate has fallen by more than 50% in the comfort-class segment. And this is the bulk of the country's real estate market," he told Izvestia. - Developers, when they considered their financial model, before July 1, did not assume changes in the key rate, did not lay down these risks. Therefore, many developers are now really in a difficult situation, and there is talk of bankruptcy.
In his opinion, the support measures proposed by the Ministry of Construction will protect the population, as well as stimulate developers.
- Whether these measures will allow to avoid bankruptcies depends on the amount of creditworthiness of a particular developer and its financial model of development, - said Radik Nigmatullin.
Bankruptcy of a developer is a disaster for shareholders and the Ministry of Construction together with the government should do everything possible to prevent this phenomenon from happening on a mass scale, believes Dmitry Khalin, General Director and Managing Partner of "Intermark Urban Real Estate" .
- However, it is not clear to the end how this problem will be solved. If bankruptcy will still be prohibited, but the developer will be unable to service its debts and carry out construction, then for shareholders, in fact, it will mean only that their problems with not getting the keys will be postponed for at least a year, " he explained to Izvestia.
Introducing such measures, it is necessary to think how to help developers to complete the already started projects, the expert added. And companies that will be insolvent should not be allowed to start new projects and obtain new construction permits.
- It is important that the problem does not multiply, so that in a few years the state will not have to solve it on a much larger scale. There is a lot of talk now about the fact that a certain deterrent is the model of project financing, which does not allow you to collect money and immediately use it for construction. Over the past ten years we have forgotten what under-construction is, and if we abandon project financing now, then, given the financial unpredictability of the situation, the problem may arise again and on a larger scale," says Dmitry Khalin.
That is why it is necessary to help developers, he believes. It can be done by analogy with other important industries - for example, selectively support developers in terms of subsidizing the rate on project financing by the state. Then the risks will be reduced and the already started projects will be completed on time and without affected citizens, believes the representative of the industry.
The VTB press service told Izvestia that real estate construction is under pressure from many factors. The high key rate has significantly reduced the volume of mortgage lending, which, in turn, has led to a drop in housing sales and an increase in interest rates on project loans.
- We positively assess the support measures aimed at partial reimbursement of expenses on loans of construction companies, as well as postponement of introduction of macroprudential limits for housing developers," the press service emphasized. - At the same time, support measures from the budget should be focused on helping developers to complete projects, avoid the appearance of cheated shareholders and return loans.
With all its undoubtedly beneficial measures proposed by the Ministry of Construction, will not be able to radically change the situation, added Olga Khasanova, General Director of real estate projects Urban.
- If only because at the key rate of 21% any initiatives will have very limited effectiveness, - continues the representative of business.- These proposals will save developers from some problems in the future, but are unlikely to be able to alleviate their situation now.
According to her, over the previous years the construction system of the Russian Federation managed to balance quite well. Plausibly weak players were weeded out at previous stages - during the reform of shared construction and pandemic trials. So mass bankruptcy is unlikely, Olga Khasanova believes. However, large structures - metropolitan and federal - are likely to take advantage of the crisis situation to take over regional companies. At the same time, against the background of the Central Bank's tight monetary policy, the measures proposed by the Ministry of Construction are purely tactical in nature, Olga Khasanova noted.
Mikhail Goldberg, the head of the analytical center "Dom.RF", noted that construction of almost 98% of housing today is carried out at the expense of project financing. Therefore, potential difficulties for certain developers can be foreseen by monitoring the ratio of construction readiness of objects to the sold-out housing.
For example, by the end of this year the normal level is 70%, and for the next year - 40% (now this figure is even higher - almost 50%). In terms of housing sales, there are no problems for developers, says the specialist.
Difficulties may arise only for market participants with a high volume of corporate debt taken at a variable rate linked to the key rate or other rates, added Mikhail Goldberg.
Action plan
The action plan aimed at supporting the construction industry also includes other measures: reimbursement of part of loan costs for construction companies and postponement of the introduction of macroprudential limits.
So, in the next two years, may be duplicated about 18 million square meters of objects with the term of commissioning until 2026 for the amount of 54 billion rubles, the document says. In addition, Deputy Prime Minister instructed the federal executive bodies to consider the introduction of a mechanism for recalculation of the cost of construction contracts when the level of actual inflation exceeds the forecast construction indices, to work on reducing the cost of construction materials, prices for raw materials, energy and transportation tariffs, as indicated in the minutes of the meeting at the Deputy Prime Minister. Also proposed for consideration a set of measures to support housing construction, including the development of a mechanism for providing installments from developers and deferral of restrictions on mortgages.
- The proposed measures are timely and relevant, as they can compensate for the growth of construction costs and support developers in conditions of economic instability, - said Yuri Balabanov, Commercial Director of GC "AlfaStroyInvest". - They will also help to reduce financial pressure on real estate buyers, which will have a positive impact on demand. These initiatives can stabilize the growth rate of housing prices by reducing the cost of construction. This will make housing more affordable for citizens.
However, the success of these measures will depend on their implementation, as well as the overall situation in the real estate market and the country's economy, the specialist concluded.
