‘Developers were cautious with the start of projects’: how 2023 to be remembered in real estate sector in Tatarstan
A rise in the Central Bank rate, a new housing maximum, and the end of preferential mortgages — how the construction industry has survived the year and what it is preparing for
The Russian real estate market faced a new series of challenges in 2023: a series of unexpected ups and downs were followed by sharp declines. Builders owe their sales records not to favourable conditions at all, but to the desire of buyers to “jump into the last car” in anticipation of rising rates and the end of preferential mortgages. In general, the situation in the industry was more stable than in the conditions of shocks a year earlier. Tatarstan managed to overcome the new level of 3.4 million square metres of housing, however, by reducing the volume of apartment buildings. Nevertheless, it seems that the republic will prematurely close the task set by Moscow to increase the volume of commissioning.
Records and market falls
The main event that changed the Russian housing market in 2023 was the increase in the Central Bank's rate. The regulator raised it five times, starting from July and up to December inclusive (from 7.5% to 16% per annum). As a result, project financing of construction and mortgage loans rose in price.
But the increase in the Central Bank's rate also caused a rush for mortgages. It is expected that by the results of the year, banks will give Russians about 7.6 trillion rubles for the purchase of housing, or by almost 60% more than in 2022.
Another incentive for the development of the market was the upcoming completion of preferential mortgage programmes with state support. If they decided to extend the “family” programme everywhere, then the “preferential” one is only in regions with low demand, Russian Deputy Prime Minister Marat Khusnullin stated at the end of the year. The list of these subjects has not yet been made public, but Tatarstan is unlikely to get into it — there is still a high demand for apartments in the republic. Earlier, the down payment for state support programs was raised to 30%, and the limits were reduced to the same level for all regions — 6 million rubles.
In winter and spring, the construction market experienced a recession and stagnation, in summer there was a surge in sales, which was due to government support measures. According to the Ministry of Construction of Russia, the main indicators for housing commissioning are 93.2 million square metres, in the stage of housing construction — 107.3 million square metres (as of December 1). Russian Deputy Prime Minister Marat Khusnullin said at the beginning of the month that the country would break a new record — it would commission more than 103 million square metres of housing by the end of the year. Tatarstan has set its maximum.
Half of this volume (1,702 million square metres) fell on residential housing, the rest (1,737 million square metres) — on apartment buildings. Other indicators are given so far only based on the results of ten months of the year. Tatarstan residents have issued almost 60 thousand mortgage loans totalling 223.6 billion rubles. Of these, about 82 billion were issued under equity agreements.
Innovations of the year: escrow accounts in housing and communal services and modernisation of public infrastructure
The Tatarstan real estate market is going through drastic changes this year. Already at the beginning of the year, the rais of the republic, Rustam Minnikhanov, supported the idea of transferring the powers of municipalities to develop basic urban planning documents to the republic level in order to avoid uncontrolled residential development. In December, deputies of the State Council of the Republic of Tatarstan voted for this decision, making an exception only for Kazan and Naberezhnye Chelny.
At the same time, large-scale work on the master plan of the Kazan agglomeration was carried out in the republic during the year. Developers are also waiting for the release of this document — it will determine how much housing and where exactly can be built around the Tatarstan capital. In the meantime, new housing construction in the vicinity of the city has been frozen. As Oleg Grigoriev, one of the developers of the master plan, director of the Institute of Spatial Planning of the Republic of Tatarstan, announced to Realnoe Vremya, the planned volumes of housing commissioning within the agglomeration will have to be greatly reduced, in some areas — by 2 times, since the level of development of social and engineering infrastructure lags far behind.
Another grandiose event of the year was the launch of the M12 Vostok highway, which connects Kazan and Moscow by a high-speed route and cut the path to the first capital in half. The longest bridge across the Volga has also been introduced on the new road. The opening of the autobahn will contribute to the development of the territories through which it runs.
But increasing the volume of housing remains an important task to achieve the parameters of the national project, and therefore in Russia, they rely on the private sector, which also accounts for almost half of the input nationwide. For the development of the residential housing segment, starting this year, it has been decided to extend the same conditions as in apartment buildings — mortgages and escrow. It is noteworthy that Tatarstan was the first in the country to introduce this innovation.
In September, the contractor from Tatarstan received project financing for the construction of individual residential buildings. DOM.RF Bank also undertook to finance the project for the first time. The Kazan company KST will build private houses under a contract using escrow accounts. The credit line in the amount of 20 million rubles is opened at a special rate of less than 6% per annum. The bank estimated that the introduction of escrow accounts for the residential housing market with a contract will triple the volume of commissioning of such facilities, since the share of those wishing to build a private house with the involvement of contractors may increase from 13% to 39%.
Experts attributed one more innovation to the most important events of the year — the programme of modernisation of municipal infrastructure. In total, 42 billion rubles were distributed among 65 regions, where the first step is to upgrade linear facilities. In total, thanks to the 5-year programme, about 100 infrastructure facilities and 8 thousand kilometres of networks are being modernised. Three million people will be provided with high-quality public services. According to the new mechanism, the regions receive subsidies for the renovation of public utilities facilities and networks.
“In other regions, the budget does not amount to as much as our construction complex”
The head of the Tatarstan Ministry of Construction, summing up the results of 2023, told how the builders of the republic worked and what challenges they had to face. The turnover of the construction complex of the Republic of Tatarstan is growing annually, as well as in the country as a whole. If last year it amounted to 573 billion rubles, then this year it is expected to be 685 billion rubles, and the industry occupies about 7% of the republic's economy.
“Housing construction has gained good momentum. Today, the bar for Russia has been set — more than 102 million square metres of housing. The task by 2030 is to introduce 120 million square metres, where the republic will contribute at the level of about 3.5 million square metres. Every year, we strive for this level," the minister said.
Housing construction is inextricably linked with the renewal of social and engineering infrastructure. Therefore, all 44 regional programmes continue to be implemented in the republic, which remain for next year: “We have implemented five state programmes related to federal money, seven national projects and a total of more than 4 thousand facilities per year totalling 126 billion rubles. This is also a huge amount for us compared to other regions where the budget is not as large as our construction complex," Marat Ayzatullin said.
A major renovation programme is also being implemented on a large scale — 740 apartment buildings were renovated for a total of 6.7 billion rubles in 2023. The Our Yard programme in 2023 covered 960 yards, their landscaping cost 9 billion. Plans for next year are to renovate the adjacent territories of houses for 10 billion. As part of the formation of a comfortable urban environment, 68 public spaces were landscaped, and almost 3 billion rubles were spent.
Housing and communal facilities have been built in a number of districts. Thus, the city of Nurlat and several neighboring villages received a new water supply system and high-quality drinking water. A water treatment plant was commissioned in the village of Alekseevskoye, and treatment facilities were built in the village of Nurlat.
The project of reconstruction of sewage treatment plants in Kazan has been implemented for three years. Upon completion in 2024, the capacity of the treatment plants will increase to 650 cubic metres a day. Today, the design capacity is 430 cubic metres. Besides, the reclamation of silt fields is underway in the capital: “This is about 100 hectares of silt deposits accumulated since the 1960s, which lie along the Kazanka River. Now we are geotubing them using technology, and in four years they will turn into ordinary soil that can be used for landscaping," the minister added.
The development of new residential areas is impossible without the commissioning of social facilities. In 2023, 11 schools for 10,000 students were built in the republic, of which five schools with 1,521 places each and all with swimming pools. 83 educational institutions have been renovated as part of the overhaul programme. Not a single year for the construction complex of the republic is complete without iconic objects. In 2023, work began on the new building of the Kamal Theatre in Kazan.
Tatarstan