Superstructures have grown near the construction site – Newspaper Kommersant No. 221 (7422) dated 11/29/2022

At the end of 2022, more than half of the final cost of apartments in new buildings will fall on the costs of developers not directly related to construction. We are talking about the costs of purchasing sites, creating engineering networks, and servicing loans. Before the pandemic, such expenses did not exceed 31%. Developers say that the increase in indirect costs is associated with an increase in the cost of sites and requirements for social infrastructure. However, the margins of the companies also increased significantly.

As follows from the report of the consulting company SMPRO available to Kommersant, by the end of 2022, the share of other costs that are not directly related to construction and installation works (CEW) in the price of apartments will exceed 51%. For comparison: a year earlier, this figure was 46%, in 2020 – 40.7%, in the pre-crisis 2018-2019 – 31% each. Developers had the lowest such costs in 2015-2017 and ranged from 24% to 26%.

Developers include other costs, in particular, investments in the purchase of building plots, costs for engineering networks and commissioning of facilities, interest payments on loans and marketing. In the first half of 2022, the cost of construction and installation works, including building materials, on average in Russia amounted to 55.2 thousand rubles. for 1 sq. m, and the average cost of selling apartments in the primary market is 112.7 thousand rubles. for 1 sq. m, says Vladimir Guz, managing partner of SMPRO.

Alexander Ruchev, President of Osnova Group of Companies, confirms that construction and installation costs have not been the largest share in recent years. According to him, a significant part of the costs – up to 25% of the total costs – falls on the purchase of plots with all building permits. The cost of building social infrastructure in residential complexes reaches 20-30%, adds Vladislav Preobrazhensky, executive director of the Moscow Investors Club (which unites developers).

The indirect costs of developers also increased after the transition to the escrow account system, which led to an increase in the cost of servicing loans under project financing, says Denis Konovalenko, managing partner of Prime Life Development. But some developers, for example, in the Granel Group, say that with a good pace of housing sales in new buildings, the project financing rate does not exceed 1%.

But from the middle of 2020, after the launch of the preferential mortgage program for new buildings, which increased demand in this segment, and before the start of a new crisis, the marginality of developers grew much faster than the cost, says Irina Dobrokhotova, Chairman of the Board of Directors of Best Novostroy. “Prices rose not naturally, but speculatively,” she adds. Vladimir Guz also agrees with this thesis, calling “one of the drivers of the current growth in the share of indirect costs of developers is the increase in their profits.”

Judging by the reports of large developers, before the new crisis, they were able to accumulate a reserve of liquidity. For example, PIK Group increased its net profit by 20% year-on-year in 2021, Etalon – by 48%, Samolet Group – by 89%.

The rush price increase in 2020-2021 in the primary market today has a negative impact on the developers themselves and they have to compete with the secondary market. According to CIAN.Analytics, in October of this year, for the first time in a long time, the cost of housing in the secondary market in the whole country turned out to be cheaper than apartments in new buildings – 110.8 thousand rubles. for 1 sq. m against 123.4 thousand rubles. for 1 sq. m.

“Obviously, in the foreseeable future, due to a decrease in demand for new buildings and its flow to the secondary market, developers will have a decrease in profits,” says Ms. Dobrokhotova. In turn, Denis Kovalenko argues that due to falling demand, developers will not be able to raise prices everywhere and will be forced to reduce the margins of projects. He does not rule out that in the current environment, developers will freeze projects that have not yet begun, focusing on ongoing construction projects, where credit tranches have already been received and building materials have been purchased.

Daria Andrianova