Go to mobile


16:23 26-06-2017
Mongolia to join construction of Asian Super Grid
16:04 26-06-2017
$50-million stock breeding complex to be built in Russian Far East
15:40 26-06-2017
Fast neuron reactors help to make atom “green” – Rosatom’s head
15:07 26-06-2017
New bridge across Ob River in Siberia to be funded from federal budget
14:45 26-06-2017
Austrian Strabag to build musical road in Hungary
14:09 26-06-2017
Company with Turkish capital to build first phase of Saratov airport
12:55 26-06-2017
Ismailov’s mall in Las Vegas seized for debts to Bank of Moscow
12:19 26-06-2017
Jewish community gets historic synagogue in Simferopol
11:49 26-06-2017
Sales of new buildings in USA grew by 3%
11:22 26-06-2017
Georgia completes construction of its largest nuclear power plant
10:39 26-06-2017
Using Nord Stream 2, Russia takes revenge on Ukraine - Poroshenko
09:50 26-06-2017
Russian billionaire’s company buys British Holland & Barrett
16:56 23-06-2017
Cabinet of Ministers allotted land plot for construction runway-3 in Sheremetievo
16:31 23-06-2017
KamAZ to invest €50m in production in Senegal
14:46 23-06-2017
Lukoil won a tender on supply of 2,700 tons of oil to Severstal enterprises
14:17 23-06-2017
President Putin to control pipeline mating at the Turkish Stream construction
13:37 23-06-2017
Reconstruction of Moscow conservatoire to be completed
13:26 23-06-2017
Thrill rides to be built in Moscow Luzhniki
12:54 23-06-2017
Unique green roofing to be built in Moscow during renovation
12:32 23-06-2017
The Chinese participating in Moscow Metro construction
11:16 23-06-2017
Grand fraud discovered at a business centre construction site in Krasnoyarsk
18:02 22-06-2017
Rostec to restore enterprise producing acoustic equipment
17:50 22-06-2017
Seven plants to open in Dubna special economic zone
17:35 22-06-2017
Putin heads for Anapa to control Turkish Stream pipeline link-up
17:12 22-06-2017
Heineken sells its brew-house in Belarus
16:53 22-06-2017
Tesla signs preliminary agreement on plant building in China
16:35 22-06-2017
Industrial warehouse in northern Moscow put on auction for $751,000
16:02 22-06-2017
China suggests project for Changchun – Vladivostok high-speed railway
15:33 22-06-2017
Europe’s gas demand exceeds Nord Stream 2 capacity, Wintershall says
14:56 22-06-2017
Poland to demolish 500 monuments to Soviet soldiers
All news


«    June 2017    »

Moscow construction complex – 2017: not all developers will survive

logo russianconstruction.com
Moscow construction complex – 2017: not all developers will survive

How the amendments to 214-FL will impact the work of the capital’s developers

Moscow authorities are going to tighten the grip on companies attracting citizens’ finances for housing construction. Moscow Deputy Mayor for urban development policy and construction, Marat Khusnullin, spoke about it at the “Dialogue with an investor” seminar.

According to him, the number of hoodwinked investors has reached 1060 people. Last year they totalled 676. The capital’s authorities cannot explain why this unfortunate index has grown by almost 57%, but they remark that it is inadmissible to damage citizens’ confidence. 

The numbers of co-investment agreement and hoodwinked investors are growing

In March, 2016, Marat Khusnullin made optimistic forecasts claiming that the number of cheated investors would not grow. He remarked that not all companies fit into the preplanned terms, although despite this they are concluding the construction of their objects.

In May, Head of Moskomstroyinvest, Konstantin Timofeev, at a city government sitting remarked that 676 people had been added to the list of people having suffered from unscrupulous developers. As such, the number has now grown to 1060 hoodwinked investors.

According to Konstantin Timofeev, there are 6 unfinished constructions by the notorious CU-155 company. The most problematic objects are situated in Scherbinka at Balaklavsky Avenue and in Bochkov Street.

At the same time, despite the economy present condition, Muskovites continue investing their money in joint-funded construction work. The total volume of the attracted financing under the existing co-investment agreements amounts to 700 bln roubles ($11.34 bln), and since the beginning of 2016  318 bln roubles ($5.15 bln) have been invested in new buildings in Moscow.

Moscow authorities have stressed more than once that the population is the main investor in housing construction, and the number of the concluded co-investment agreements grows annually. Thus, more than 1.6 trn roubles ($25.9 bln) have been invested in joint-funded construction during the last 6 years.

It is a huge sum of money, isn’t it? “16 Moscow Central Ring Roads might be built for this money”, Konstantin Timofeev remarks.

Legal vacuum

It is not surprising that, as Marat Khusnullin puts it, the authorities are interested in strictly following all the norms and regulations of 214-FL. The Vice-Mayor stressed that Moscow’s government intends to control this sphere firmly, despite the fact that, “Some developers do not like it”. 

Following him, it is inadmissible to damage citizen’s confidence in this issue as the population finances 70% of the objects’ construction cost.

“Can we reject 800 bln interest-free roubles a year?” he asks a rhetorical question and answers, “Of course, not! And we shall do everything for this money to stay in the industry. And I’ll ask the developers to switch over to 214-FL with minimal losses.”

As Marat Khusnullin said, some criminal cases have been initiated due to violations of the law..

In his turn, Konstantin Timofeev complained that until the end of the year, construction companies will stay in a “legal vacuum”. But he expressed his hope that the amendments to 214-FL, declined by the RF Minisrty of Finance and the Ministry of Justice, will have been adopted before the end of 2016, making it then much simpler for developers to work.

Moscow construction complex – 2017: not all developers will survive

You have not been inspected yet? We are coming!

One of the measures to secure co-investors is via initiating inspections by Moskomstroyinvest. For 6 years, the institution has organized 770 such events (including 308 preplanned, 392 unscheduled, and 70 together with law-enforcement agencies). The number of checks has increased 5-fold when compared with the previous year. 

In 2017, half of the Moscow companies attracting the population’s money may avoid such inspections. This is connected with their status as “small business” enterprises (almost 50%), and President Putin has more than once forbidden the idea of demonising small businesses.  Nevertheless, Moskomstroyinvest intends to conduct non-scheduled inspections of citizens’ and law-enforcement agencies’ resorts. 

Another criterion to judge a developer’s reliability is the increase of a company’s authorised capital.

— It is a delicate issue. But, in our opinion, anyone who needs public funding should satisfy the legal requirements, the head of Moskomstroyinvest announced, addressing the developers, before reminding that the authorized capital is the company’s own money, which is there to cover the risk they bear. 

To remind you, the deadline for bringing the authorised capital to correspondence is July 1st, 2017.

Timofeev also added that at present 24 companies in Moscow are violating the norms of financial stability, including the norms concerning the designated use of funds, with large market players among them.

It is too early to judge yet if the amendments to the law regulating housing construction at the expense of the population’s money will turn positive or negative.

On the one hand, the appearance of such a document is the reply to the current reality. Construction companies should have become more open long ago, and the market should be devoid of unconscientious players. 

On the other hand, some amendments have not been elaborated properly, and introducing “raw” regulations may deal a blow to the construction industry on the whole.

Not all developers may survive such a shock, especially with regard to small and young companies. In this case developers will ask the State for help again, which will create an additional burden for the budget. 


Related publications