Construction: Fast, High Quality, and at Volume

6 September 2022

Construction: Fast, High Quality, and at Volume

KEY CONCLUSIONS

Housing construction measures previously adopted in the Far East are bringing positive results

“I believe that the measures that were adopted in 2019 are bringing their first results. We will need only to support them from now on,” Aleksandr Prygunkov, Member of the Board of Directors, Samolet Group.

“In 2021, 25% more housing was commissioned year-over-year. If it is high-rise housing, it is 13% in the Far East in general,” Gadzhimagomed Guseynov, First Deputy Minister of the Russian Federation for the Development of the Far East and the Arctic.

“We see a grand potential in the Far East, which has increased its growth by over 200%. Which means there is potential,” Nikita Stasishin, Deputy Minister of Construction, Housing and Utilities of the Russian Federation.

Real estate price growth in the Far East will stabilize in the near future

“The volume of construction permits issued in the FEFD is growing at a good pace. In the Far East, more than 93% of housing is already being built using project financing. The number of unsold flats is about 65% of all that has been put on the market – this means that the price will stabilize, definitely not rise above inflation,” Nikita Stasishin, Deputy Minister of Construction, Housing and Utilities of the Russian Federation.

“There is a steady demand [for housing in the Far East, – Ed.] <...> The government needs to balance and create conditions in time for the supply to grow along with the demand with the same dynamics. Then the market break-even point reaches its best value and the cost of housing falls,” Gadzhimagomed Guseynov, First Deputy Minister of the Russian Federation for the Development of the Far East and the Arctic.

PROBLEMS

Housing construction business has no single opinion on parking

“Either we run after the level of motorization and increase the number of parking spaces and build car parks, or we go the way of developing urban infrastructure, public transport and thus transfer motorists to public transport, not building more roads, car parks, which for the most part stand empty. Thus, residents of standard-class facilities cannot afford to buy parking at the price offered for them, even when it is below cost. So, we suggest looking at this problem from the point of view of federal authorities of the Ministry for the Development of the Far East and Arctic,” Alexey Almazov, Managing Partner for the Regions Segment, FSK Group of Companies.

“A year ago, we made an important change to the Urban Planning Code: we gave the governors and their teams the authority to change the parking space ratio. In Tula Region it became an anti-crisis measure: [this ratio, – Ed.] was reduced without affecting comfortable living and creation of neighbourhoods. <...> But we cannot shift everything [responsibility for transport accessibility in Russian cities, – Ed.] to public transport [without creating parking spaces for cars, – Ed.],” Nikita Stasishin, Deputy Minister of Construction, Housing and Utilities of the Russian Federation.

SOLUTIONS

Extension of the Far Eastern mortgage until 2030 will help attract developers to FEFD

“It is important now to give a signal to developers so that we do not stop the pace [of construction, – Ed.] If we say today that our concessional mortgage programme is only until 2024, it is a very bad signal. <...> I would like to ask the Ministry for the Development of the Far East and Arctic to support the initiative to extend preferential mortgages until at least 2030. It would be a good signal to our developers that the government helps people to buy housing at an affordable price in the first place,” Gadzhimagomed Guseynov, First Deputy Minister of the Russian Federation for the Development of the Far East and the Arctic.

“We support the proposals to extend subsidized mortgages. <...> When the mortgage subsidy programme [is only designed, – Ed.] until 2024, the question arises: ‘What will happen next? <...> Mortgage subsidy programmes until at least 2030 will definitely support the development of housing construction,” Aleksandr Prygunkov, Member of the Board of Directors, Samolet Group.

“All of our five mortgage subsidy programmes are in place in the FEFD. There are preferential, family, Far Eastern, rural and military mortgages, as well as mortgages for IT specialists, but this is still a pilot project. In fact, only three programmes are in demand here: Far Eastern, rural and military, so the budgets that the Ministry of Finance initially earmarked to subsidize the preferential mortgage and family mortgage programmes are available for redistribution in favour of Far Eastern mortgages. <...> It is time to adjust the conditions of this programme because we need to extend it, without extending it we will not be able to make long-term development plans,” Anatoly Pechatnikov, Deputy President – Chairman of the Management Board, VTB Bank.

The Stimulus and ‘Far Eastern Mortgage Concession’ needs to be connected to social infrastructure construction in new neighbourhoods in FEFD

“In terms of social infrastructure, we are ready to offer our Far East concession. <...> We should provide a set of [measures, – Ed.], because when people come to a new neighbourhood, they should immediately see a school and a kindergarten, a hospital and a clinic,” Gadzhimagomed Guseynov, First Deputy Minister of the Russian Federation for the Development of the Far East and the Arctic.

“Social, cultural and community facilities <…> are a big part of the project the developer cannot cope with in low-margin projects. This is why the whole idea of including them in the Stimulus or the Far Eastern Quarter and the opportunity to subsidize them is very important,” Alexey Almazov, Managing Partner for the Regions Segment, FSK Group of Companies.

The government should support business in green-standard housing construction

“We are ready to take green standards [standards for the development, design, construction and operation of facilities that provide for the preservation of the environment, sustainable development and the creation of comfortable and safe living conditions for people, – Ed.] upon ourselves, but the government should stimulate and encourage it. I see it the following way: if you want to follow the green or environmental standard, you will get either a subsidy or project financing,” Vitaly Mutko, Chief Executive Officer, DOM.RF.

For more information, visit the Roscongress Foundation’s Information and Analytical System roscongress.org.`

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