Real estate market-2018: what will the changes in the law on shared construction lead to


Tangible consequences will be visible in a few years. Gradually, the volume of supply on the housing market will begin to decline, while apartment prices, on the contrary, will grow by 10-15%

About two months ago, on July 1, 2018, the real estate market began to live according to the new rules. Then came into force amendments to the law on shared construction, tightening requirements for developers. Now they can voluntarily (and from July 1, 2019 – on a mandatory basis) switch to sales using escrow accounts. Under this scheme, the money of the equity holders will be kept in the bank, and the developer will receive it only after the house is put into operation. Companies will start building at their own expense or with bank loans. The Elitnoe.RU portal asked real estate agencies and developers to comment on what the legislative changes will lead to, in particular, in Moscow. Most experts say that in the next few years everything will remain the same: developers have accumulated a sufficient supply of new projects and so far can continue to build according to the old rules. Then the volume of supply will begin to decline, and housing – to rise in price.

Yuri Shcherbakov, Head of New Buildings at Penny Lane Realty Residential Property Department:

– Of course, the changes that await the construction sector will be the most significant in the last ten to fifteen years, or even in its entire “recent history.” An escrow account is a possibly controversial term for the role it will play. In fact, it is an alternative to a safe deposit box. The principle is simple: it is thanks to the escrow account that the buyer will finally permanently lose the status of a shareholder (in fact, an investor) and become exactly the buyer. His funds for the purchase of an apartment, having entered the account, will not be available to the developer until he hands over the project and is able to conclude a sale and purchase agreement that is clear to everyone. This means that the “investment risk”, which was not customary to talk about earlier, but which still worried everyone, will be leveled.

What will the buyer lose? He will lose a cheap entrance ticket to the market, he will not be able, albeit with a risk, to purchase an object at the stage of the excavation. Yes, prices will rise in any case, since the money for the developer will rise in price due to the percentage of the bank financing the project. And if earlier the cost of a project under construction grew as it was ready, now only finished housing will enter the market, which, in general, can be called a completely civilized approach.

Many developers will leave the market, and the consequences may negatively affect those who are now in the status of their equity holders

If you look at the situation from the standpoint of developers, an extremely unfavorable environment is formed: the requirements are becoming more stringent, and a maximum of 50-60% of companies will be able to comply with them. In order to go to construction after July 1, 2018, you must already be a large experienced holding company with its own funds for construction, or have a reliable bank in its structure (what has been happening in the banking sector over the past few years, I think, is also understandable – and tidying up there).

This means that many developers will leave the market, and the consequences may negatively affect those who are now in the status of their equity holders. I hope that the regulator has a plan of action in case such a situation arises. For the sake of fairness, we note that the ordering of the system was not a surprise to anyone. The state has long tried to solve the problem of defrauded equity holders. We remember both the rather harsh measures (up to the imprisonment of the developers who did not justify the trust of the developers), and the repeated attempts to regulate the law on shared construction. However, the developers did not cope with the task, although they were pushed in every possible way to solve it. And now the regulator has taken a tough stance and is solving the problem as best it can.

In such conditions, not only market consolidation, but also monopolization is possible

It is still difficult to assess the damage that will be caused to the construction industry in the person of developers. I think many construction companies will continue to work, but not as developers, but as contractors, subject to the availability of construction capacities. It is not clear what role the bank will play. The body financing the project, it seems, will have the authority to influence the construction process, but does it have the necessary competence? And, of course, we all perfectly understand that no matter what correct and harmonious law is adopted, only the practice of its application will show how necessary and useful it is. In such conditions, not only market consolidation is possible, but also monopolization. And we, as sellers, undoubtedly understand that the high quality of products is ensured by competition.

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Head of relations with key partners of Est-a-Tet Roman Rodiontsev:

– The introduction of mechanisms that complicate and restrict the work of developers, in most cases, will affect the price of square meters. meters. However, there is also a positive side: subject to project financing, as well as the use of escrow accounts, risks for real estate buyers are minimized. It should be remembered that deposit insurance is valid only up to 10 million rubles, and this is the average proposal budget for a two-room apartment with an area of ​​about 63 sq. meters in the comfort segment. Apartments under 10 million rubles today occupy slightly less than half of the mass market segment. The cost of housing by the end of the year may rise up to 10%.

The volume of construction will also decrease, but this process will not occur simultaneously

Only reliable players will remain on the market, who will competently conduct financial planning and comply with the norms of the law. Construction volumes will also decrease, but this process will not occur simultaneously. Quite a lot of new projects came out this summer. For example, the volume of the new supply, which went into implementation in July, amounted to 96.5 thousand square meters. meters, which is 18% more than last month. The conclusion of new projects continued in August. In this regard, the market is currently overflowing with supply, and the level of competition is very high, and the surplus will be sold for another 3-4 years, until the situation stabilizes. The number of players will also decrease because new companies will, in fact, be barred from entering the real estate market. Indeed, in order to start implementing a new complex and receive all the necessary documentation, a developer must have experience in the real estate market for at least 3 years and a portfolio of completed projects with an area of ​​10 thousand square meters. meters.

Maria Litinetskaya, Managing Partner of Metrium, CBRE partner network:

– The main consequence of the adopted amendments and the expected rejection of shared construction is that the capital's market for new buildings is waiting for an abrupt increase in the volume of supply. Last year, on the eve of the entry into force of new requirements for developers, developers actively stocked up on building permits. Only in May and June in Moscow were issued permits for the construction of 6 million square meters. meters of residential real estate (two annual volumes of commissioning in the capital). At the end of the year, according to estimates by Moskomstroyinvest, the authorities may permit the construction of 12 million square meters. meters of housing.

Now the next stage of “preparation” for the transition to project financing begins – the launch of as many projects as possible on the market by July 1, 2019. It is difficult to predict how much the volume of supply will grow. I can note that in the mass segment of new buildings only in July, sales began in eight new projects – the same amount went into implementation in the first half of the year. The same process will be in business class. At the same time, competition in the market remains fierce, and the influx of new projects will intensify it. It can be assumed that sales in a large number of complexes will begin at very attractive prices – this is how developers will try to attract the maximum attention of buyers. Then prices will go up quickly, and investors will be able to make good money on this.

General Director of Tekta Group Roman Sychev:

– In the near future, the amendments will not affect the capital market of new buildings. According to the head of Moskomstroyinvest, Konstantin Timofeev, building permits issued to developers before July 1, 2018 are enough for most developers to work according to the old rules for another 3-4 years. I believe that in the coming year, sales of a very large number of new projects will start in Moscow, which will also not fall under the requirement of mandatory fundraising through escrow accounts from July 1, 2019.

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Finally, do not forget that large and experienced players work in the capital's construction industry, for whom the implementation of the new requirements of 214-FZ, most likely, will not be a big problem, even if they begin in the near future the implementation of projects under new permits received after 1 July 2018. Accordingly, the price situation in the coming years will remain stable or will be solely due to market factors not related to legislative changes. The number of developers may decline for several years after the market has completely switched to settlements through escrow accounts, but in the capital the number of “players” will not decrease in a way that is critical for the construction industry.

< p> Chairman of the Board of Directors of Kalinka Group Ekaterina Rumyantseva:

– From July 1, the countdown began for the transition period from shared construction to project financing, which will last until June 30, 2019. At this time, the main part of developers, according to our forecasts, will work according to the usual scheme, attracting money from equity holders. Nevertheless, companies are already emerging that are ready to build with the attraction of money through escrow accounts. With the transition to escrow, the financial burden on developers will increase. The need to take bank loans up to 90% of the construction cost will force prices to rise.

Purchases during the construction phase will be safe, but buyers will have to pay for their peace of mind

Under the new conditions, a significant increase in cost looks obvious, but buyers are not ready for this, so developers will have to mobilize all the resources they have and even partially go to reduce business margins in order to ensure the fulfillment of the sales plan. Ideally, purchasing during the construction phase will be safe, but buyers will have to pay for their peace of mind: according to our forecast, prices may rise by an average of 15%.

The state will try to support demand with mortgage programs, developers will offer installments and flexible payment methods, so a sharp drop in sales is not expected. Since the average construction period is two to three years, and the main volume of financing – up to 50% – is needed by the developer just at the initial stage, the projects that have already entered the market will be implemented according to the usual schemes. The market will be consolidated, since only large players will be able to work in the new conditions. We will be able to assess the real impact of the amendments on the market only when the projects built according to the previous rules are sold out.

Dmitry Khalin, Managing Partner of Savills in Russia:

– In my opinion, the housing market simply has no future without project financing. I believe that this is another big and important step towards making the market more civilized. Such changes will help to reduce the number of defrauded equity holders due to the fact that weak and unstable objects will start leaving the market. A banking team will join any project, which will conduct an audit, control the expenditures of non-credit funds, more pragmatically evaluate plans for the sale of apartments.

With this approach, bank mortgage lending will also become more accessible to the end consumer

< p> Buyers will definitely not lose. First, those large volumes of commissioning that are already planned guarantee price stability and will not require hasty decisions. Secondly, in my opinion, with such an approach, bank mortgage lending will also become more accessible to the end consumer, including due to the effect of increasing the scale of such lending and reducing the bank's costs for supporting the entire process of issuing a mortgage.

For developers, there will still be profits necessary to make the construction investment attractive. Now there are many companies that want to build and also make money on volumes. And most importantly, this business is scalable, that is, in the event of a request for large-scale construction, it can be easily expanded.


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