Every fifth developer in Russia is on the verge of bankruptcy
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Every fifth developer in Russia is on the verge of bankruptcy

17 July, 09:07EconomyPhoto: business71.ru
Every fifth construction company in Russia was on the verge of bankruptcy after restrictions associated with the coronavirus pandemic. Negatively on the construction market was affected by the global drop in demand for mortgages. Demand for new buildings decreased from 30% to 50%.

According to the Federal State Statistics Service, for four months of this year, every third construction company in Russia was unprofitable. By the end of the second quarter, 22% of construction companies were on the verge of bankruptcy, experts at the Higher School of Economics (HSE) estimated. In addition, the HSE recorded a decrease in the index of entrepreneurial confidence in the construction industry from minus 15 to minus 24. This is three percentage points lower than in the crisis of 2008-2009, writes finanz.ru

Every second head of construction companies notes a colossal decrease in demand in the real estate market, another third speaks of a decrease in the number of concluded contracts, more than a third states that the volume of work has significantly decreased.

Now every third company is forced to reduce its staff due to the deterioration of its financial condition. According to researchers, work in this sector may lose about 400 thousand employees. Already, the average salary of workers in construction has decreased by 8% to 38.7 thousand rubles.

Georgy Ostapkovich, Director of the Center for Market Studies at the Higher School of Economics, notes that the situation was affected by the decline in real incomes. Even those who did not lose their jobs during the pandemic period, switched to a savings model of behavior, and do not want to get into loans in the period of uncertainty without one hundred percent confidence that they will be able to close them. “A decrease in purchasing power will inevitably affect the housing market”, - said Ostapkovich.

In May of this year, according to Rosstat, the volume of commissioning of facilities decreased by a quarter. With the most optimistic forecast, the volume of housing commissioning for the year will decrease by 10%.

According to the Unified Register of Developers, now more than 112.3 million square meters of housing are being built in Russia, including 35.3 million with a delay in construction. In the metropolitan Rosreestr note a decrease in the number of concluded equity agreements for six months by 37%. It was previously noted that during the non-working days the demand for mortgages in April and May collapsed by 50%. Market participants believe that home sales by the year will be reduced by at least a third, and in the worst case, by half. In order to support the industry, the government launched a program of soft loans at 6.5% per annum. However, after the Central Bank once again lowered the key rate in June this year, preferential mortgages from the government in some banks turned out to be even more expensive than the proposed rates for the programs.

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