Developers of financial pyramids

The construction industry is on the verge of collapse.
Origin source
The crisis has led to massive bankruptcies of construction companies. According to the rating agency's building complex (RASK), in 2015 the market in 2700 left developers - it is five times more than the previous year - and only in January of this year, 167 companies went bankrupt yet.

While we are talking about small companies, which act as contractors and subcontractors during construction, but experts do not exclude that will soon follow for small companies and large.

Source "Co", close to the government of the Moscow region, says that now virtually all construction companies in the region is quite complicated financial situation. Precise data on their financial situation, developers do not disclose, boasting stable results in sales last year, but at the same time massively sell assets, explaining that the site, which they realize, now is not very interesting for the building. So do "Morton" and PIK. But there is a striking example: the company "SU-155", which in the spring of last year began selling non-core assets first - hairdressers, - andthen it is relevant - Elevator Plant.

What this led to is well known. Company deputy Mikhail Balakina is on the verge of bankruptcy. No one can guarantee that after the once-largest construction company in Russia will not be followed by other well-known developers in the market. Especially as there is a negative trend, although the developers are trying to convince everyone that they have everything in order. Again, according to the RASK, construction 11.5 million had been suspended last year quarter. meters of housing. This is almost 14% of the total volume of housing (83.8 million sq. M). Branch does not remember such a large decline even in the crisis of 2008-2009. Market participants admit in private conversations that if it goes on, then after two years in the construction industry will be 700,000 unemployed.

Bankrupt can not be pardoned

In late March, the Moscow Arbitration Court will consider the case of bankruptcy SC "SU-155". In early March, its creditors agreed to appeal to the court interim manager with a statement on the recognition of "SU-155" bankrupt and the opening of bankruptcy proceedings. This is whenth that the company is on the list of strategic enterprises and officials recently vowed that bankrupt her no one is going. But now the developer of the sanatorium - "Russian capital" Bank - said that bankruptcy can not do without. Sources of "Co" in the Moscow region government say that now many developers, even included in the top ten, are in an extremely difficult financial situation, and it is possible that it will soon need government support, as gossubsidirovanie mortgage rates could only partially restrain collapse sales. According to expert estimates, the drop in sales in the primary real estate market has reached 30% compared to last year. If it goes further, then followed by "SU-155" may be on the verge of bankruptcy and other major developers. "The situation is really quite serious. Last year, dozens of tenders, in which we, as the general contractor took part, nine were postponed until better times. Among them, the construction of hotels, offices and shopping centers, as well as residential real estate in Moscow ", - statedis CEO of Dekra Construction Sergey Denisov. According to him, in addition to the drop in demand from buyers, the strong pressure on the industry have very high interest rates on loans to developers. "If two years ago we were able to borrow at 12% per annum in rubles, but now the minimum rates at the level of 16-17% and often reaches up to 25%", - complains expert. Many facilities under such interest is simply not cost-effective to build, and in fact the share of borrowed funds in the construction of economy-class housing reaches 30-40%.

Deep freeze

Obese years when developers and realtors were selling all the apartments still under construction, is already behind us, recognize market participants. Estate offices are closing one after the other, large firms cut staff, explaining that the "secondary" arose. Accurate statistics on the market there, because for a long time Realtors revoked license, and open your agency can almost anyone. According to rough estimates, only last year in the Moscow region was closed 10% of realtor offices. However, the MaidenOpera continues to implement the projects already under way and lay more and more high-rise buildings at the expense of shareholders, who have not yet received the keys to the apartments in the previously sold-out buildings. This pyramid sooner or later collapse, burying under its ruins as the builders themselves, and shareholders hope to improve their living conditions. Experts believe that it is better to limit the mass construction, and not to indulge the construction madness by subsidizing mortgage rates, helping developers and taking on the fulfillment of obligations to equity holders. It went on this way Moscow authorities, who in mid-February introduced a moratorium on the construction of new residential buildings in Balashikha, the Queen, as well as limited new housing construction in Khimki. The official explanation for this decision - a lack of infrastructure and overcrowding, which makes the metropolitan periphery similar to a kind of ghetto. However, there is little doubt that the most near Moscow authorities want to protect yourself from the mass bankruptcies of construction companies, which will cause the appearance of tens of thousands of dollars defraudedschikov apartments which will have to pay, including from the regional budget. Judging by the situation in South Domodedovo, where customers, "SU-155" is already discussing the overlap of federal highway and organize pickets in front of the regional government in Krasnogorsk, Moscow Region authorities are clearly not interested in the repetition of the situation and development. Meanwhile, developers who understand the riskiness of the policy of continuing the construction of large-scale, self-frozen new objects that have not yet reached the market. On January 1, 2016 nearly 1,400 objects have been frozen throughout Russia. And this is not the limit, experts say. If the downturn in the market will continue, then in a year the volume of housing introduced in operation can not fall by 14% in 2015 and almost double. This will lead to the most ambitious in the recent history of Russia's withdrawal from the market of construction companies.

The negative margin

"Windfall construction companies - a fairy tale, which is told by those who are not versed in the peculiarities of the functioning of the sector. Today, developers income does not exceed 510% of the cost of the realizable property ", - says Sergey Denisov. And the reason is not in altruism developers. Over the last year significantly increased the cost of building materials, and even to preserve the current level of prices on the construction companies have to reduce their margins. In certain items of construction materials over the past year the price increase amounted to 15%. And some engineering equipment and finishing materials that can not be replace by its own, internal Russian production rose by almost 50%. In the segment of luxury housing share of foreign products reaches 40%. In Economy Class, you can almost completely avoid the Russian building materials. However, even the domestic cement and reinforcement last year went up, so when the cost of construction has increased, and prices - no, developers are forced to either lower income or even go negative. On the way they all bad, the developers have complained to officials, but in the current situation to blame the crisis is not only business developers all the past 25 years was similar to pyramid schemes because they finansirovali construction due to the inflow of money from new clients. Once the flow of customers has decreased, loans have become unaffordable and the pyramid began to crumble.

"The market situation is further complicated by the fact that in 2012-2014. developers increase the volume of construction is much faster than the growing demand, now the demand went down dramatically, and the volume of residential real estate remained at the same level. Of course, creates a bubble ever burst, and this will lead to the withdrawal from the market a number of players "- said the president MPOO" Legitimate housing "Evgeny Shumeyko. At what point this will happen is hard to say: experts believe that the decline in demand of up to 50% will be enough critical. With regards to the bankruptcy of developers, basically it refers to companies that work with large amounts of borrowed funds. "I think that in most cases, many companies will be easier to freeze for a while and pay fines to those who have already bought an apartment on the FZ-214 than to build at a loss. In general, many experts agree that the current situation - is not so much a crisis as a new remajoring construction business, and those who can adapt to it, will be the backbone of a fundamentally new, more stable and efficient development ", - the expert concludes.

Salvation drowning - bankruptcy

In this situation there is a logical question: whether the state taxpayers' money to help developers who have maneuvered themselves in a crisis situation? On the one hand, the construction industry in Russia accounts for 4% of GDP, it tied up dozens, if not hundreds of thousands of jobs, and there is a risk of hundreds of thousands of defrauded investors, but on the other hand, the developers themselves have long worked on the principle of financial pyramid. "The need of state support is difficult to decide definitely. says commercial director Natalia Saakyants Rose Group - a very large number of people, and therefore the risks of default in this segment is highly undesirable, on the one hand, the construction industry is one of the key in the economy, which employs. - On the other hand, on the market there are situations where developers are incorrect policy beaminute work on the principle of a Ponzi scheme. In such cases, the troubled state in the first place it is necessary to direct the efforts to support the defrauded investors, rather than the preservation of the unfair business builder. " Of course, the state is interested in the construction industry, as a major. It is not only one of the largest sources of tax deductions to budgets of all levels, but also jobs. According to recent data, in construction today employs about 5.7 million people - more than 8% of the population. "To say that developers do not need help, because, by supporting the construction industry, the state supports the financial and building a pyramid, in my opinion, is absolutely incorrect. It's like offering to cut the hand because the finger splinter. After all, developers are now in a difficult financial situation, the entire industry "- says Evgeny Shumeyko.

Despite the fact that the number of real estate companies included in the list of system, the practice of the previous months by the example of "SU-155" indicates that this status does not always save the company from bankruptcyva. "The state is now much less willing to provide financial support even industry leaders. And this is the right approach. Business owners should be responsible for the business model they have created, and its viability ", - says senior analyst of the National Rating Agency Irina Grigorieva. Observed today in the economy do not belong to the category of force majeure and slozhnopredskazuemyh, so managers of construction companies have enough time to refinance borrowings, changes in the business structure and increase its effectiveness. The State shall take legislative efforts to protect the rights of shareholders, increasing the transparency of companies, developers and construction companies capitalization growth. According to experts, it is currently the situation in the industry is more comfortable than in 2008 - both in terms of shareholders risk reduction, and in terms of the structure of financial models developers. But at the same time as the oil industry, which the government is trying to raise taxes, real estate developers complain about their difficult share in a crisis, Even though they themselves have painted themselves into this framework.

Debt elevator

How else can the state, in addition to subsidizing interest rates on mortgages and direct financing of developers (which is not in the current crisis), can help the construction industry and generate sales? Several options. The authorities have a lot of leverage that can be used to support one or another branch. For the construction of this first of all subsidies for companies that specialize in economy class housing, as well as support for social government programs. The main problem of the current crisis - declining demand. To increase it, you need to attract customers lower prices and give him a guarantee that the facility in which it invests, will be completed and delivered on time. Hence, the ways in which the state has to go to stimulate demand. To give people the confidence, it is necessary to strengthen the control and ensure compliance with the requirements of FZ-214. "The price per square meter may be affected by several factors - it's concessional lending and subsidies for developers, and the abolition of rent for the land at the time of construction, androubleshooting administrative barriers. However, one of the most effective ways to reduce prices can become active government investment in infrastructure facilities and social institutions, because today the whole burden falls on the shoulders of the developer, which may not affect the price per square meter for the buyer ", - says Evgeny Shumeyko. "Most market mechanism - is to support customers through the subsidization of mortgage rates, which protects the state from the risks of investing substantial resources in inefficient projects" - does not agree with the idea of ​​subsidizing developers partner SRG Group Maxim Rusakov. An additional tool for promoting and may be an increase in the tax deduction when buying property (now the maximum deduction is 2 mln.). This mechanism allows the buyer of the apartment to return spent money on real estate, and therefore makes housing more affordable.

But the deadlock direction - selection of developers for debt assets, as it was in 2008. Many state banks have already burned on it, being unable to stateSRI received to sell real estate. "Ever since the last crisis, banks are closely involved in the activities of some developers. It is possible that their presence in the coming years on the market of housing under construction will become even more prominent. Nevertheless, one can not say that the banks are interested in the control of non-core assets - if possible they would prefer an alternative version of events ", - said the head of the service to work with the state bodies of the company" SPb Renovation "Dmitry Mikhalev. The most striking example - again, "SU-155": in this situation the builder Bank "Russian capital" chose bankruptcy rather than subsidizing construction and receipt of debt Elevator Plant.