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«    March 2017    »

Developers’ ranking: the rescheduling of housing developments grows

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Developers’ ranking: the rescheduling of housing developments grows

Kirill Kholopik, National Union of Housing Developers (NOZA)

Wouldn’t this result in the growth of the number of hoodwinked co-investors and construction companies’ becoming bankrupt?


Recently, the first of this year’s investigation ranking developers concerning the amount of current constructions on RF territory, was published on NOZA’s website.

We have been publishing a monthly list of top developers since last December. Before that it was updated once every six months. And it should be remarked that a lot of companies had greatly increased housing developments before the end of the year. This is why many of them may have overestimated the value of current construction.

A more objective picture will appear in February when we publish a new rating that takes into account the results of housing projects at the end of December. Some developers may change their positions on the list, but there won’t be any changes in the top 10.

What needs to be clarified? Some regional developers are continuing to increase their construction work at the moment: VKB-Novostroyki GC from Krasnodar has moved to the 5th place, the KOSHELEV Corporation from Saratov has jumped over 13 places and now resides at the 25th position. Both developers are leading in two regions simultaneously: VKB-Novostroyki in the Krasnodar and Rostov regions, and the KOSHELEV Corporation in the Samara and Kaluga regions.

One of the main tendencies that should be paid attention to is that different companies have postponed different amounts of construction work. Thus, the LSR Group and PIK GC (who respectively hold the first and the third positions in the rating) have a very low index, and they keep to the claimed deadlines with starting housing projects. The same applies to a number of other companies in the leading group. Consequently, they do not retain the amount of current construction projects.

At the same time, the Setl Group holding and “Morton” GC (who hold the 2nd and the 4th places, respectively) have this index equal to 30%. These companies would have less housing in the construction process if they could commission everything they had built in 2016. The developers’ postponed housing plans’ statistics will be soon published.

As such, the growth of the current construction index does not always depict positive tendencies. On the other hand, the rating shows that the top 10 companies of the rating are steady on the list, meaning how much housing they start being approximately the same number of square meters they commission.

It is too early to give any forecast for 2017 on the basis of this rating.

There is a great number of postponed deadlines for housing developments all over the Russian market. If the tendency continues, there is likely to be a reduction in housing projects by developers in 2017 .

It is difficult to predict how much housing will be put into operation by individuals from the general public because we cannot determine all the regularities of this sector’s behaviour.

As far as developers are concerned, with their having reached the current figures in 2014 of uncompleted construction, ranging from 105—110m sq.m, this index has been retained due to the simultaneous growth of postponed deadlines for housing developments. It is a symptom of the reduction of housing projects in 2017. A more exact forecast will be given in February.

For many readers the growth of postponed housing plans looks very disturbing as this will lead to an increase in the number of hoodwinked co-investors and construction companies’ bankruptcies. I want to assure everybody that there is no such direct dependence.

The growth of postponed housing developments does not prove any misdirected use of funds or a decrease in financial stability. Rather, it shows that the sales of ready housing turned out to be lower than had been expected, and the new objects have not been financed intensively.

To evaluate the threat of the increase in the amount of hoodwinked investors one should pay attention to a different index, meaning the number of frozen objects, where there is no significant growth. We see a bidirectional tendency: new frozen construction sites appear, but many houses which were once frozen are now being put in operation. So there is no actual threat of either mass bankruptcies or an increase in hoodwinked co-investors.

I stress once again that postponing the development of an object and cancelling its construction are two completely different things. Postponing the commissioning of a house does not mean that a developer cannot fulfill his obligations.

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