Page 101 - RUSRptApr17

years in 2016 when a total of 79.8mn square meters of housing was built, 6.5% less than in 2015, which was a record year with over 85.3mn square meters of new housing. However, last year’s result was due to the completion of projects started in the pre-crisis period, and in 2014-2015. Since then many investors have postponed new projects, the RUSK report concluded.
Bankruptcies are rising with 3183 construction related companies going bust in 2016, up 17.3% y/y to 2713 bankruptcies. And some well known names have gone out of business: 66% of bankrupt firms have existed for at least seven years, according to the report.
As a result, since September 2014 the share of the construction industry in the loan portfolio of banks is continuously declining - from 9.7 to 7.4%. And the share of overdue debt on ruble loans made to the construction sector was 24.7%, according to the report. Almost half of the total loan portfolio was for Moscow (49.7%), followed by is St. Petersburg (8.1%).
But the market maybe about to turn as despite the decline, investment activity is improving , with a higher number of deals and a more even breakdown across sectors and regions, the real estate consultant and broker added.
“Stable exchange rate together with the economy climbing out of recession supported the rise of investments,” Vladimir Pantyushin, Head of Research, JLL, Russia & CIS, said in a press release. “Rental market stabilization across all segments became the key factor stimulating investor interest in real estate assets. Moreover, the volume of deals at the negotiations stage and under due diligence shows a sizeable pipeline of future transactions and further improvement of the investment market.”
JLL analysts expect investments to grow in the near future. According to their forecast for 2017, investment volume will reach $4.5bn vs $4.2bn in 2016.
101 RUSSIA Country Report April 2017 www.intellinews.com