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28 Октября 2017

A Boomerang Effect

A Boomerang Effect
Источник фото: cian.ru

Krasnodar, 28 October – Yug Times. The construction industry is facing drastic and extremely unpleasant changes that may strike a crushing blow on both the developers and the buyers of homes.

The Federal Law No. 218 on protection of rights of the participants of construction under shared ownership terms in case of bankruptcy of the construction companies, enforced last August, strongly affects the Law No. 214 that regulates the work of companies at the market of newly-constructed homes, amendments to which are to be enforced next July. By these laws, the legislators increase the financial burden on the constructors and restrict their activities.

Then the market will change beyond recognition. First, the small companies that for a long while been spoiling the reputation of the industry will have to abandon the market. But the second and most important thing is that the companies that remain in the market will have to work by the rules that put at stake the entire construction business. Even the gigantic companies with immaculate reputation and distinguished authorities will become endangered. So for many participants of the construction market, the diagnosis may become lethal.

There are four factors that may change the market radically. The first factor is deterioration of business conditions for the developers and, as a result, rise in the cost of a square metre. The second factor is the legalized purge of the market, which only half of the companies will survive at the best. The third factor is a rapid drop in the construction volumes. And the fourth factor is permanently high demand for the homes. The prices will inevitably jump up — and it will happen in the nearest future.

For the time being, the developers have not reacted to the changing rules of the game. Many of them are addressing the State Duma and Federation Council hoping that the MPs would think better of it and change their minds. But in a month or so, they will understand that these populist bills will remain in force.

And then a real apocalypse will happen. Few will survive. The only way-out for the construction companies will be to raise the prices.

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