Finances could lead to problems for property developers
Moscow property prices are set to fall as liquidity-hit banks cut mortgages, industry leaders predict. The news comes as developers of Moscow's new financial district admit problems finding tenants.
Moscow has the world's second most expensive housing after London. Real estate rates have soared 30% this year alone. But the Denis Sokolov from Cushman & Wakefield, Stiles & Riabokobylko says the credit crunch is reversing that trend.
“It's not easy now to get a mortgage loan, so that's why that on the first hand will affect demand side on residential market. I think the effect will be quite serious, and I think in the residential market we will see a downturn in prices.”
Mirax is chief developer of the 200-acre Moscow International Business Centre. This claims to be East Europe's first office, home and entertainment complex and includes the two tallest towers in Europe. Dmitry Lutsenko, Board Member at Mirax, admitted that takeup on their new-builds has slowed.
“Clients here are the country's top corporations. Since the start of this month it's been taking them ten times longer to decide whether to rent an office.”
Some top real estate companies are already on life support. Sistema-Hals has $1.2 bln debts, with just $30million on its books. But where some see weakness, others sniff opportunity. Fitch threatened to put major residential developer PIK on negative rating Friday. The same day Russian billionaire Mikhail Prokhorov said he'd buy property firms “very soon”.