Vladimir Karasenko, President of the Kuban Realty Chamber noncommercial partnership, one of the oldest realtors in the region, speaks of town-planning policy, grey business and construction market trends.

Q. How would you describe the current state of the primary and secondary real estate market?

A.: The secondary market is about 30 to 40% more expensive. The reason is that such realty is more attractive because its owners may safely benefit from their right of property, and the demand for it depends on the buyers’ financial resources rather than risks or developments in the construction industry. But people have less and less money, and their resources are rather modest.

As for the primary market, the construction volumes have lately been growing in the region, which is why most realtors concentrate their attention on this segment. It is fairly understandable, for it is much harder to render services at the secondary market.

It is huge risks that are the main drawback of the primary market. You may buy a non-existing flat, a castle in the air. There is no guarantee that you as the buyer will eventually get the keys from your flat. Just look at the number of unfinished blocks in Krasnodar. There are so many of them that the authorities prefer not to reveal the real figure.

The construction industry is known to react to a crisis with some delay. Now the moment has come. The number of unsold flats in Krasnodar approximates 60,000. You would have to keep on selling them without building any new houses for 18 months to have them all sold out.

Most of residential property purchase deals are done with bank loans. It may seem that the procedure is fully transparent and it leaves no room for any ruses – but in fact the situation is quite different. The developers resort to the so-called ‘grey’ schemes as soon as the buyer brings the first installment. This installment may be registered in different ways, most frequently as an IOU: as if the constructor borrowed the money and will return it with the residential property.

Such situation is evidence of the illness of our economy.

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