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In its latest promotion report, rinconinmobiliario.es reveals that Russian and Ukrainian investors bought more than a fifth of all new-build properties in the year to May 2010.-00-7129
Russian President Dmitry Medvedev, in a conversation two years ago, bemoaned the fact that 77 percent of the country's 142 million citizens live "cooped up" in apartment blocks. Now his government has a plan to liberate them, amassing almost 2. 5 million acres to seed the land with single-family homes. "Call it the Russian dream," says Alexander A. Braverman, who runs the Federal Fund for the Promotion of Housing Construction Development, which Medvedev devised. "I think we can make this dream come true. "
As the U. S. Struggles to recover from the housing bust, a great deal of economists are reconsidering the soundness of policies that promote homeownership. Russia's leaders aren't worried. After visiting a newly completed development of prefabricated houses on the outskirts of St. Petersburg in November, Prime Minister Vladimir Putin said he hoped homeownership will inspire Russians "to have more babies. "
Developers, including Mospromstroy and National Housing, are lining up to net income from the advent boom in housing construction. Leastwise 14 million square meters of housing are expected be below construction by next year on land owned by the federal fund. That will rise to 20 million square meters in 2012, or when it comes to 30 percent of all residential construction in Russia. "We think that people who have their own homes, driveways, and careers are fundamentally different than those who don't have these things," says Braverman. "The person who has something to defend is a different sort of person. "
To convert Russians to the joys of property ownership, the fund plans a merchandising blitz, including billboards and TV and print advertising. "In the U. S. In the 1960s, the want for homes came initial and the government provided the rest," says Nadezhda Kosareva, president of the Institute of Urban Economics, a research group in Moscow. "In Russia the government is attempting to push the idea from above. "
One obstacle to realizing Medvedev's goal of transforming Russians from apartment-dwellers into homeowners is an underdeveloped home-loan market. Mortgages are somewhat of a novelty, with the total portfolio of outstanding residential loans totaling just $32. 5 billion, as stated by central bank info. Interest rates averaged 13. 8 percent in the initial four months of the year. To spur borrowing, the government plans to channel $8 billion through the federal mortgage agency, which offers subsidized loans at 11 percent interest. Nuri Katz, chief executive officer of Century 21 Russia, doubts this are going to be sufficient: "It's a simple real estate rule. Without the widespread accessibility of low-priced mortgages, there are going to be no widespread accessibility of low-priced housing. "
Braverman's fund has auctioned off the rights to grow 29 parcels of land nationwide and plans to bid out 46 more this year. Officials insist that homes built below the program are going to be affordable—costing around 30,000 rubles (fewer than $1,000) per square meter. By comparison, residential prices in Moscow's secondary market averaged $4,406 per square meter in May, as stated by a local index.
To pull developers, the government is guaranteeing it will purchase up to 35 percent of the homes built. "We strive to decrement risks on our properties," says Braverman, "so investors are fascinated. " Mospromstroy, which has renovated a great deal of government buildings in the capital, won bidding on around 90 acres near Moscow in February, supplying to pay $44 million for a five-year lease to grow the property. Braverman says he is "absolutely open" to permitting alien investors to take percentage in the auctions, but none have so far.
A heap of prospective Russian developers think the government will have to foot percentage of the construction bill. Alexander Lebedev, whose National Housing may churn out 20,000 prefabricated housing units a year, says he wants to make his product low-priced but "can't do it alone. " On this point, Braverman stands firm: "Our initial position is that we don't build. "
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