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07 Февраля 2019
Foreigners

Regional Building Industry in Frustration. What’s to Be Done?

Источник фото: barbeejackson.com
Источник фото: barbeejackson.com

Krasnodar, 7 February – Yug Times. Last week, Irbis Hotel in Krasnodar hosted the regional stage of the federal real estate summit, PROdevelopment.

The session was moderated by Ilya Volodko, General Director of Macon Consulting Company. He emphasised that the national building industry is on wane, and proved this assertion with some figures. In 2018, the total area of housing put into operation in Russia was 73.5 million sq m, or by 5% than a year before.

“The happy time when any accommodation would be sold out at once is gone,” said Ilya Piskulin, Director of the Etagi Consulting Agency from Tyumen. “Now only the investor that does all their work really well may be getting profit - and this applies to all infrastructure of the industry, not just housing.”

Forestalling the main idea of his speech, Development Yug CEO Serge Ivanov reminded that he has for 24 years been in the business. Since 2007, his company works in four Russian regions, apart from the Kuban, and this year they are planning to enter the markets of Nizhny Novgorod and Vladivostok.

“They often ask me why we went beyond the Kuban,” he said. “There were many reasons for that, but one of the main was that the construction market in Krasnodar was sick. It meant too low average price for a square metre, and thus too many colleagues were working with no profit or even at a loss. In Vladivostok, the price of a square metre is much higher than here, so the cost efficiency of the business is higher there.”

He stated that the regional construction industry should learn to survive in the near future.

“Starting from the second half of the year, the [construction] companies will have to work with escrow accounts, which means to come to arrangements with banks,” Mr. Ivanov added. The banks, in their turn, say that the service of escrow accounts will cost 5% and more per annum.

“In this case, we would have to give our margin and our profit away to the bank as service fee,” Sergei Ivanov said.

“This is why we have already begun to offer the banks to open up escrow accounts - although it’s not compulsory yet, but it will let us get the experience and develop some commonly acceptable dfecision.” The participants assessed the session as an open and useful discussion. The analysis of the situation revealed the most important problems of the real estate market and drew up possible ways to resolve them.


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