Housing Construction Stagnating

The amount of new housing created in Russia in the first nine months of this year was 35.19 mln cu. m., according to Rosstat data. That represents 3.9-percent growth over the same period last year, when the growth rate was 31.3 percent. Builders and government officials expect zero growth in the sector this year, and negative growth by 2010. Falling housing creation has been recorded in all federal districts. The most dramatic decreases were seen in the Central (115% to 87%), Northwestern (47% to 8%), Volga (41% to 11%), Siberian (37% to 16%) and Southern (42% to 6%) Districts. The Urals and Far Eastern Districts were somewhat better off with reductions of 31 and 29 percent to 20 and 28 percent, respectively.

Moscow Region remains the center of construction activity in Russia. There were 3.6 million sq. m. of housing built in the suburbs of Moscow in the first nine months of the year. Last year, there was 31-percent growth in housing construction there, while this year there is a 3-percent decrease. The situation is much worse in Moscow itself. There was a 1-percent increase last year at this time, while there is a 45-percent decrease now. In St. Petersburg, last year’s 139-percent growth rate has fallen to 95 percent. In Leningrad Region, it fell from 69 to 33 percent.

Builders began to talk about problems receiving financing in April. But they say that September was an especially hard month. There is little reason for optimism about the future. “The construction sector has fallen into a depression,” says Artem Tsogoev, investment director of Galaxy Group developers. A Ministry of Regional Development spokesman stated that measures are being drawn up to stimulate housing construction in the regions and amendments will be made to the national project for housing to support the industry. Targets have been revised from 72.5 million sq. m. of new housing this year to 61 million sq. m. and 52 million sq. m. next year. There are 70 million sq. m. of housing in various stages of construction at present.