Analytics DOM.RF
The portfolio of Russian developers over the 12 months of 2023 grew by 7% and reached 106 million square meters. m, which is close to the pre-Covid level, was noted in a study by the analytical center DOM.RF. There were record rates of housing construction and rush demand. In 2024, a decline in the launch of new projects and a slowdown in market activity began, but reserves should be sufficient until 2027.
DOM.RF analysts report that in 2023, housing construction in Russia grew at an accelerated pace. Developers launched a record volume of new projects – 49 million square meters. m, 21% more than in 2022 and 17% higher than in 2021. Sales of new buildings in Russia increased by 42%, to 773,000, which is mainly explained by preferential mortgage programs, with the use of which 83% of all pre-need housing were issued in 2023. The number of mortgage transactions with state support increased to 642,000 LDUs (+72%), under market programs – to 42,000 (+12%). The number of transactions without a mortgage (89,000) continued to decline (-34%).
Buyers were eager to purchase real estate on affordable terms, and developers increased construction activity throughout the year, building up inventories until the expected end of preferential mortgages in July 2024. As a result, 39.3 million square meters were commissioned. m of multi-apartment housing – 6% more than in 2022. And another 12.5 million sq. m. m in apartment buildings, which are being built without attracting funds from shareholders.
Increased demand led to renewed growth in prices in the second half of the year (+9%) after their stabilization in the first half of the year (+0.7%). As a result, new buildings in Russia rose in price by 9.7%. The ratio of construction readiness to sales has increased to 80%, this is a borderline level, above which there is a risk of supply shortage. The lead time for the inventory of unsold homes has returned to balance from a state of oversupply (2.1 years after 3 years in 2022).
Top 20 regions in terms of the volume of housing under construction
Among the top 20 regions in terms of the volume of housing under construction (75% of the total volume), nominal prices for new buildings in 2023 increased most strongly in the Novosibirsk region (+19.4%) and Sverdlovsk (+16.5%), as well as in Krasnoyarsk Territory (+16.7%). A significant increase was also recorded in the Moscow region (+16.0%), Tyumen region (+14.0%) and Moscow (+13.8%).
New buildings have become more expensive, including due to an increase in construction costs: panel houses by 6.1%, monolithic houses by 5.4%, brick houses by 3.6%. Almost all of the growth occurred in the second and third quarters. 2023, when price growth for a number of building materials accelerated against the backdrop of a weakening ruble.
Demand and supply
In terms of the balance of supply and demand, the situation in the largest regions is heterogeneous – in five of the top 10 regions – Moscow, Tyumen and Sverdlovsk, Rostov regions and Tatarstan – risks of supply shortage are emerging. The ratio of sold-out and completed construction in these regions exceeded 80%, and the sales period for housing under construction is about 2 years or less. In the Leningrad Region and Krasnodar Territory, on the contrary, the risks of excess supply – the ratio is 65%, the sales period lasts about three or more years.
Developers in Russia earned 5.9 trillion rubles in 2023 from sales of housing under DDU – 1.7 trillion more than in 2022. Revenue from sales of housing under construction has been growing for the third year in a row – by 44% in 2021, by 7% in 2022 and by 39% in 2023. Last year, the leader in the primary housing market in Russia changed – the Samolet group of companies took first place, increasing its portfolio by 73% over the year, to 4.9 million sq. m. m as of 01/01/2024.
The developer managed to launch 3 million square meters. m of new projects is 8% more than the total construction volume of the developer at the beginning of the year (2.8 million sq. m). PIK, which previously held first place, reduced its volumes by a quarter to 4.3 million sq. m. m. “Unified Resource for Developers” clarifies that the top five also includes the LSR group of companies (St. Petersburg), GC FSK (Moscow) and DOGMA (Krasnodar Territory).
The ten largest developers have launched 8.8 million square meters. m – 6% more than in 2022, while other companies increased the volume of launches by 25%, to 40.6 million sq. m. m. At the same time, the share of sold housing in the portfolio of the largest developers (34% as of 01/01/2024) is greater than that of other companies (31%). The ratio of sales to completion reached 96% for the top 10 developers and 77% for the rest, which indicates increased demand for projects from the largest companies. At a normal rate of sales, the ratio is about 70%.
Conclusion
Experts believe that in 2024 the activity of developers will slow down due to a decrease in demand. This process has already begun – in January 2024, the output of new projects amounted to 2.3 million sq. m. m, 27% less than in the same months of 2023. At the same time, the amount of funds accumulated by developers in escrow accounts (RUB 5.8 trillion as of January 1, 2024) will ensure financial stability. In addition, the stock of housing under construction is estimated to be sufficient until 2027.
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