Pace of new housing construction to be less high in coming years


Moscow authorities have reduced administrative barriers for developers

 At the moment, more than 25 million square meters of real estate is under construction in Moscow. This fact was stated by the Head of the Moscow department of urban planning policy Sergey Levkin. According to him, more than 2.5 thousand projects are at different stages of construction. Earlier, the Moscow authorities have reported that it is planned to put into operation 9 million square meters of homes this year. During the roundtable UrbanTalks government officials and industry experts have discussed the administrative barriers in construction sector. The details are reported by the correspondent of Kommersant FM Anastasia Vedeneyeva.

In Moscow there will be established an integrated contact center for developers on issues of administrative barriers. According to the Head of the Moscow department of urban planning policy Sergey Levkin, a pilot version of the service will start working this year. It will also include the so-called “online calculator” for developers. There they will be able to find out what documents, where and when must be submitted to obtain construction permits. In general, Moscow authorities note a significant reduction of administrative barriers. Over the past four years, 12 out of the 14 state services in construction sector were made available in electronic format, said Sergey Levkin.

“This year, the service of obtaining an excavation permit was transferred to electronic format, and the procedure itself was facilitated for developer. For the moment the exhaustive list which was set at the federal level, includes 142 procedures for purposes of housing construction. The number of procedures related solely to construction, amounts only to 24,” told Levkin.

Market actors confirm the fact that Moscow has become easier place to build. Reducing administrative barriers could theoretically reduce the cost of real estate for buyers and investors, noted the public official of the Agency for Strategic Initiatives in Moscow Dmitry Volkov.

“In general, yes, they felt this but perhaps it is not so evident because it’s only one of the factors. Other factors are the presence or absence of mortgage and its rate, the standard of living and general business climate. All these factors contribute to the cost of square meter. Contribution of what we call the administrative barriers is estimated at 10% – 20% in absolute terms. This may not give much, probably cheap subsidized mortgage could definitely give more today,” assured Volkov.

Once administrative barriers have lowered, developers highlight other current problems attributed to the sales slowdown for real estate and the access to credit. As a result the pace of commissioning of new builds will be reduced in the coming years, said the President of the National Association of Property Developers Leonid Kazinets.

“Developers are now fewer, and their appetites have tamed, so it’s time to deal with the procedures. Today there is a strong need for that because procedures mean money and time expenses, while money appears to be a major problem in investment construction projects. When we asked colleagues, if they think that 80 million sq. m of homes is going to be built in 2017, 90% of respondents said that this volume will be almost impossible to keep, it’s a problem of money and sales decline,” says Kazinets.

According to experts of the Agency for Strategic Initiatives, the pace of housing construction in the current year will be lower than in 2015. However, analysts point out that it is good for the current economic situation; otherwise it can lead to the surplus in the housing market. As in the ASI experts stated, in the normal course of events the real estate prices will be down by 10% than in previous year.

In the near future the Moscow city government also promises to develop a procedure for cadastral registration of a real estate object without the involvement of a developer. The procedure will be carried out via interdepartmental interaction.