The real estate market in Russia is currently booming compared to April and May when property views reduced by 50% to 70% region-to-region and the number of deals dropped by 50%, according to AMarkets Analytics Director Artem Deev.
First of all, it is a result of deferred demand. Some buyers who were able to complete the purchase before the lockdown are now registering the deals with the Federal Registration Service, notary officers, etc. Russians are also actively investing their money in real estate because they planned to do so before the lockdown was imposed.
Secondly, many Russians want to take advantage of the discount mortgage rate of 6.5% that the government announced as a measure of support for the public and the construction industry. As the Central Bank reduced its key rate, many banks are cutting their mortgage interest rates down to almost 7.8%. Developers are also reducing real estate prices to generate demand, by 5% on average across the country and by 7% to 10% in some regions.
Apartments on the secondary housing market are also getting cheaper. In the long run, we can expect that the boom will die down as many potential buyers lost part of their income because of the lockdown.
There is also an apparent problem in the housing and utilities market, which is accrued overdue utilities payments among the public and businesses, which is due to the obvious lack of funds. It can be expected that eventually, consumers will get back on track with their fees since the country is gradually lifting lockdown restrictions, people are returning to work and various sectors of the economy are resuming operation. As usual, utility rates will be adjusted for inflation on July 1.
CEO of City Innovative Technologies Sergei Minko believes that the housing and utilities sector has enormous development potential. As soon as this year, the company plans to open a representative office in at least two more Russian regions.
“The scope of work is growing and our tasks are scaling up,” the CEO said. “Expansion of the housing and utilities market is the most logical and natural process. As one of the largest companies in Russia, we are simply part of this process. I think by 2025, there will be two or three federal companies of this scale, operating a total of 300 mio sq m of housing. We are one of such companies. Moreover, by 2030, these companies may be operating up to 1 bln sq m.”