Market development in 2022

A sharp deterioration in the geopolitical and macroeconomic situation in the first quarter of 2022 can have a significant impact on Moscow’s housing market. This can stimulate demand for newly built housing, with customers investing in real estate trying to prevent the depreciation of their savings. Going forward, however, demand for housing may decline as incomes fall.

To support the industry, the Bank of Russia, the federal government and municipal authorities have announced the following measures (based on the below data as at the end of April 2022):

The government-subsidised mortgage programme is extended for the period from 1 April to 31 December 2022, with the rate of 9% and the maximum loan amount of RUB 12 million (in Moscow). Leading Russian banks (Sberbank, VTB, DOM.RF) have announced that they would issue subsidised mortgages at reduced rates. Subsidised mortgage programmes for families with children, residents of the Far Eastern and rural areas have been extended without changing the terms.

Interest rate subsidies for developers. The state support mechanism provides for bank loans to developers at a rate not exceeding 15% per annum. Banks will receive a subsidy covering 7.5% of the interest rate to compensate for lost income. These terms apply to loans issued prior to 31 December 2023.

The Moscow government has allowed investors in construction projects (with the exception of job creation projects) to delay commissioning deadline for six months without facing penalties.

Building permits expiring on 1 August 2022 will be automatically extended by one year. The deadline for using the urban development plan of the land plot to prepare design documents is also extended for one year, if they expire before the end of 2022. In case of increased construction costs due to the replacement of materials, state review for developers will be conducted free of charge and in a reduced time frame of up to 14 days. The second state review will be cancelled if the cost of construction has increased by no more than 30% and does not exceed RUB 100 million.

Owners of land plots changing the permitted use for construction purposes will receive an interest-free deferment for the second quarter of 2022. They will be eligible for extension of the bank guarantee for six months against personal surety of the beneficiary.

The installment payment rate for land plots leased for construction has been reduced in 2022 to 9.5%. The payment for changing the permitted use of privately owned land plots has been reduced to 9.5%.

Moscow has introduced a moratorium until the end of 2022 on rent increases for land plots and non-residential real estate owned by the city.

Lessees of non-residential real estate and land plots for construction will receive until 31 December 2022 a deferment in rental payments for the second quarter of 2022.

The issuing of construction permits has been accelerated by at least six months, with changes to the master plan, land use and development rules, as well as planning solution for the project now considered simultaneously. Public hearings will become uniform. The deadline to provide land for construction will be reduced.

Annual increase of rental rate will be cancelled for investors who received land for construction without bidding for 2023. They can also defer for six months installment payments for the second quarter of 2022.

Investors implementing projects under the job creation programme beyond the Third Ring Road will receive preferences when determining the amount of a bank guarantee.

Under consideration is phased release of funds from escrow accounts.

INTECO has started 2022 as a financially stable company with growing key financial metrics and a balanced leverage. We expect to further strengthen our market standing taking advantage of the government support for the industry. To this end, the extension of the subsidised mortgage programme will help maintain demand for comfort and business-class projects. The state subsidising of the interest rate will reduce the financial burden of loan repayment, while and other measures will cut the administrative and financial expenses.