Page 118 - RusRPTDec21

Thursday citing updated data. Traffic on the domestic airlines grew by 31% to 7.3mn people compared to October 2020, and by 22% compared with the same period of 2019. In January–October, combined passenger traffic soared by 59% to 94.6mn passengers.
9.1.4 Construction & Real estate sector news
Real Estate the number of deals on the primary market up 30% y/y in 9m21 but market cooling anticipated in short-term.
According to Rosreestr, the total number of deals on the primary market (DDU) in Russia has increased 30% y/y, to 632,000, during 9mo21. Moscow region showed the best dynamics, with 76% y/y surge (to 86,900 deals), followed by Krasnodar krai (+46% y/y, to 43,700) and Moscow (+42% y/y, 102,000). In 3Q21, the number of deals in Russia was 209,500 (flat y/y), while Moscow had 33,715 DDUs (+10% y/y).
Such strong sector results are largely due to the subsidised mortgage programme, which was the key demand driver and had attractive parameters for the participants until 1 July 2021: a 6.5% rate, RUB12mn mortgage limits for St.
Petersburg and Moscow and RUB6mn for other regions. After the 1 July, the rate of the subsidy was increased 50bp to 7% and the mortgage limits are now lower, at RUB3mn for all regions. Partially offsetting this, the family mortgage programme (with a 6% rate, and a limit of RUB12mn for the capital and RUB6mn for the regions) was prolonged until YE23, and its participation parameters were lowered. The family programme now requires just one child born after 2018 (vs. at least two before). We think the sector is going to cool in the short term, due to the modification of the subsidised mortgage programme, which is now less attractive to the customers.
Across the listed universe, there is to be a reversal in mortgage sales (72% of deals in 3Q21 vs. 60% prior to the introduction of subsidised mortgages) in the near term, we expect, mostly on the lower mortgage limits in Moscow and St Petersburg, as the family mortgage programme is unlikely to compensate fully for this. 3Q21 results of the listed developers are generally in-line with these trends: Etalon's numbers were down 35% y/y (+30% y/y in 2Q21). LSR has not yet reported its operating update, but we would assume comparable dynamics. The exception was Samolet, which had +70% y/y growth in sales, which was largely due to the company’s recent aggressive expansion and prices that are lower than competition, with a 25% discount to the blended price of its public peers. Other near-term sectoral downside risks include the higher interest rate environment, as well as fragile consumer budgets, while prolonged subsidised family mortgages improve the longer-term outlook.
The Ministry of Construction has proposed a new set of regulations for individual housing being constructed within cottage complexes that will
118 RUSSIA Country Report December 2021 www.intellinews.com