Developers are waiting for revenue growth from the increase of the key rate by the Central Bank

Housing developers can indirectly benefit from an increase in the key rate by the Central Bank. According to the results of this year, an increase of 7% is forecasted, up to 2.32 trillion rubles. the total revenue of developers in four major real estate markets — Moscow, the Moscow region, St. Petersburg and the Leningrad region. The new rate of the Central Bank is expected to lead to an increase in the cost of housing loans in the secondary market, which may cause a flow of buyers to the segment of new buildings, where almost all transactions are concluded using preferential mortgages. Developers will continue to provide growth in revenues by raising prices, reducing the area of ​​apartments under construction, experts say.

As follows from Dataflat.ru’s forecasts made at the request of Kommersant, by the end of 2023, the total revenue of developers of the country’s four largest housing markets will increase by 5-7% year-on-year, to 2.27-2.32 trillion rubles. In Moscow, developers this year will be able to earn up to 1.33 trillion rubles from the sale of apartments, in the Moscow region – up to 421 billion rubles, in St. Petersburg – up to 438 billion rubles, in the Leningrad region – up to 122 billion rubles. However, the 17% year-on-year drop in revenues of developers in these regions, to RUB 2 trillion, that occurred in 2022, will not be recouped.

This year, developers’ funds will grow not due to an increase in the number of apartments sold, but due to higher prices for them, explains Alexander Pypin, CEO of Dataflat.ru. According to bnMAP.pro, in January-July 2023, apartments in Moscow houses under construction went up by 4.2% year-on-year, to RUB 321,000. for 1 sq. m, in the Moscow region – by 6.2%, up to 167 thousand rubles, in St. Petersburg – by 9.3%, up to 221 thousand rubles, in the Leningrad region – by 3.7%, up to 143 thousand rubles. The average cost in the primary market of Moscow by the end of this year may increase by another 5-7%, believes Vladimir Shchekin, founder of Rodina Group.

To support demand, developers began to build more smaller apartments, but against the backdrop of rising prices for buyers, such housing is still more expensive per 1 sq. m. m, adds Sergey Lobzhanidze, director of bnMAP.pro. So, according to Mr. Pypin, by the end of 2023, the number of lots sold will decrease by 3-5% year-on-year: in Moscow – to 76.6-78.2 thousand lots, in the Moscow region – to 52.6-53.7 thousand, in St. Petersburg – up to 46.3-47.3 thousand, in the Leningrad region – up to 19.2-19.6 thousand. 5%, up to 94 thousand lots, the expert notes. A year ago, large volumes of sales of apartments in a new building were observed only in the first quarter, but after the outbreak of hostilities in Ukraine in March-June, the market began to decline. The increase in transactions that began in July-August again declined in autumn after the announcement of partial mobilization.

This summer, buyers have become more active again. Only in Moscow in June, according to Rosreestr, 10.92 thousand transactions were concluded for the purchase of apartments and apartments in new buildings, which is 20.7% more year on year. The reason for such activity of the deputy director for sales of the Granel Group of Companies, Elina Khannanova, is the unstable exchange rate of the ruble. In such a situation in the mass housing market, buyers are trying to buy an apartment, even if they have accumulated only a down payment on a mortgage, adds Victoria Kovalevskaya, head of the research department at Glavstroy Regions.

Vladislav Preobrazhensky, Executive Director of the Moscow Investors Club (which unites capital developers), agrees with Dataflat.ru’s forecasts for developers’ revenues, but recalls that now the Central Bank’s key rate increased from August 14 to 12% will make its own adjustments. “This could lead to a reduction in revenue in the second half of 2023,” he said. However, the developers themselves predict that the increase in the key rate will contribute to the further growth of their revenue.

This will lead to an increase in mortgage rates to 13-15% for secondary housing, where there are no preferential lending programs, and it will be more profitable for the buyer to purchase a new building from a developer at 5-8% per annum, Vladimir Shchekin believes. In the total volume of transactions using mortgages in the primary market today, about 90% are loans, the rates for which are subsidized by the state, adds Anna Boim, Commercial Director of A101 Group. For this reason, Dmitry Golev, commercial director of Optima Development, agrees, a reorientation of demand from the secondary market to the segment of new buildings is quite likely.

Daria Andrianova