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Everything is frozen until the dawn


The volume of new housing commissioning in St. Petersburg and Leningradskaya region remains at the level of the previous year, but new projects are announced less frequently. Sales of flats in new housing have decreased to the level in 2013: the decrease amounted to between 25–50% depending on the building type. 

Crisis in the primary residential market has influenced the sales volume first of all. According to experts the decrease amounted to between 25–50%.

Expected failure

Numbers differ depending on whether or not a company has introduced new projects in the market. ‘Introduction of a new project is accompanied by a pick of sales: customers try to purchase flats at the lowest prices,’ Svetlana Denisova, Head of the Sales Department in “BFA-Development”, says. That’s why decrease in sales for companies which have announced new projects was minimal, and for companies which have not introduced new projects it was quite noticeable.

‘No one had illusions connected with the first half of the year, even at the end of the previous year: excessive demand for flats in October-November exceeding sales plans of major developers by 3–5 times, covered real market needs for 4–6 months ahead,’ Maxim Ignatovich, Head of the Sales and Purchase Department of “Surveyor International Group”, comments. Herewith experts note that the market was declining unevenly. ‘In January 2015 purchasing decisions made in December were implemented, and also deals for December were closing,’ Elena Lashayeva, General Manager of “ARIN” company, says.  In January the market returned to the indicators of January 2014, and then the recession started, which was slightly slowed down by the subsidizing of mortgage rates.

‘Demand for properties in the primary residential market in the Q2 2015 was quite stable, due to the government support programme for mortgage lending,’ Olga Trosheva, Head of “Peterburgskaya nedvizhimost” Consulting Centre, notes.
According to the figures of “Peterburgskaya nedvizhimost” Consulting Centre, by the results of the H1 2015 in the primary residential market of St. Petersburg and the suburban area of Leningrad region 1.6 million sq. m of housing was sold (37.1 thousand flats), which is comparable to the level of the same period in 2013, however, by 35% less than in the H1 2014.
At the same time demand structure has not changed. Around 93% of sold housing accounted for the mass market residential segment. Around 42% of square metres (around 48% of contracts made) accounted for the suburban area. The majority of deals involved flats costing 1.5–3.5 million Roubles.

Complete the construction

The volume of the construction market of St. Petersburg and suburbs (up to 10 km from the Ring Road) in the first half of 2015 amounted to 8.9 million sq. m. Denis Babakov, Commercial Director of “LSR.Nedvizhimost Severo-Zapad”, says. According to him, in H1 2015 around 1.3 million sq. m was commissioned in this area. Olga Trosheva estimates the market at 10.57 million sq. m as of the end of July 2015. Around 4.95 million sq. m is not sold yet (this is the supply volume). 
As of the H1 2015, the share of commissioned blocks in the primary residential market of St. Petersburg is around 18%, Elena Lashaeva notes, 11% are partly commissioned. Around 70% of the total supply volume consists of buildings at different construction stages. Almost 30% of this amount is planned to be put into operation in 2015.

Everything for sale

In the H1 2015 flats in 64 new blocks entered the market; most of them being of economy class. Developers started sales in 24 new projects and 40 blocks in projects already being realized. ‘Compared to the H1 2014, this year around 38% less projects have entered the market,’ Alexey Gusev, Commercial Director of “Glavstroy-SPb”, says, ‘By the end of 2015 in terms of square meters 50% less, compared to the previous year, will enter the market”. 
For St. Petersburg and the region in total, according to the “Peterburgskaya Nedvizhimost” company, the area of new housing offered for sale in H1 2015 amounted to 2.2 million sq. m, which is comparable to the level of 2013. During that period sales started in residential projects with a total area of 2.3 million sq. m. However, this is by 23% less than in 2014, when 2.7 million sq. m entered the market in H1, and 3 million sq. m entered in H2.

Not the right time to rush

Output of new projects into the market has slowed down already; this fact is confirmed by developers.

“Regarding those projects which it was announced by the most confident developers would be ready for sale by the end of the year”, Maxim Ignatovich says, “it is already obvious: developers are in no hurry to bring to market many of the announced projects.”
Svetlana Denisova agrees, “Developers are acting cautiously, they don’t bring new projects to the market, and in so doing delay the start of sales”.

All the hopes of construction companies were connected with an increase in sales in August-September of this year. If the economic situation in the country has improved by this time, the market may reach indicator levels of spring 2015.


Maria Mokeicheva - maria.mokeycheva@dp.ru

"Delovoi Peterburg",  № 124, 08/07/2015 p13 (03)

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