Head of the Ministry of Construction Vladimir Yakushev on the situation in the construction industry
The coronavirus epidemic and the associated decline in economic activity could not but affect construction. To solve the problems of the industry, it will be necessary to use a whole range of stimulating and anti-crisis measures. The Minister of Construction and Housing and Communal Services of Russia Vladimir Yakushev spoke about the current situation and measures to support builders in an interview with RBC TV.
The Minister recalled that the period when all construction projects stopped in the country was short and lasted only a week. Then, in order to respond more flexibly to the situation, the question of stopping or continuing construction was moved to the regional level. Today, decisions about whether a particular building is working or not are made by the governor, who heads the regional headquarters with the participation of the head of the Rospotrebnadzor department, representatives of public health and law enforcement agencies. Most entities have already adopted the necessary regulatory framework to conduct construction work in a pandemic situation. You can work under the condition of strict observance of anti-epidemiological measures. Regular disinfection should be carried out at the construction sites, and sufficient personal protective equipment should be available. Before the start of the working day, it is necessary to conduct a medical examination of workers. According to the Minister, the production culture of developers is different. Those who organize high-level anti-epidemiological measures continue to work. The rest, in the words of the head of the department, are busy restoring order.
After April 6, work on construction sites began to resume actively. Moscow and the region today are in a special situation, and the decision on when the construction sites will start working there again will depend on the development of the situation. The measures taken by the authorities of these subjects of the federation, in the opinion of the head of the department, are adequate to the current threat of the spread of coronavirus. But when it decreases, the construction in these regions will resume.
Vladimir Yakushev confirmed his earlier statement that after the end of the period of self-isolation, housing demand could fall by 50%. At the same time, the Minister emphasized that this forecast is based on a serious analysis of the situation and consultations with developers. The main reason for the possible drop in demand is quarantine, because of which people cannot “reach the place” and make a deal. Although today many developers have begun to sell real estate through remote services, they are still not ready to use them. For many, buying an apartment is a very responsible step, and people prefer to personally inspect their future housing.
As for prices, the Ministry of Construction believes that if stagnation lasts for several months, as it was in 2014-2015, this will most likely not affect prices. Companies with good safety margins are unlikely to reduce them. If the pandemic continues for half a year or longer, a number of developers can go on reducing margins in order to get liquidity and fulfill their obligations.
Speaking about the situation with credits to developers, Vladimir Yakushev noted that banks provide project financing if the projected margin in the project is at least 20%. If the margin is at the level of 15%, then questions already arise with additional security, if below 15%, then it is difficult to get a loan. Therefore, the government is discussing a program to support regions where the margin of the construction business is low so that housing construction does not stop there at all. Most projects in Moscow and the region, as well as in St. Petersburg, have a high margin and will not experience problems with obtaining funding, the minister said.
Unfortunately, due to the growth of the dollar and the euro, the rise in price of those building materials that have a currency component cannot be completely avoided. At the same time, the Ministry of Construction, in coordination with other departments, monitors the situation in order to prevent price manipulation by individual importers and sellers. The Minister noted that the Ministry of Industry and Trade and the Federal Antimonopoly Service are taking a tough stance on this issue, and the Ministry of Construction provides them with all the necessary information about the building materials market.
As a result of long consultations with the government, it was decided to set the rate on preferential mortgages at 6.5%. For those citizens who decide before November 1 to purchase standard-class housing, this rate will be valid for the entire loan term. For these purposes, by the end of the year, 6 billion rubles will be allocated from the federal budget, which will allow providing at least 200 thousand applications with soft loans.
In connection with the crisis, alarmist forecasts appeared about the upcoming redistribution of the construction market. But the relevant department is confident that this will not happen. About 40% of the construction business is medium and small companies that are contracted by developers. This design allows you to work more flexibly. Therefore, the very structure of the construction business is such that it does not imply a strong consolidation and a wave of acquisitions. Of course, enlargements and takeovers always occur, the head of the Ministry of Construction noted, this is a natural process for the construction industry. But the main thing is that they should be friendly, not raider in nature, and the ministry will closely monitor that this is exactly so.
Source: Construction Newspaper