Krasnodar, 2 August – Yug Times. The term ‘escrow account’ means entrusting one’s money to the custody of third persons, acting Director of Sberbank’s branch in Krasnodar Tatiana Sergienko explains. Unlike the previous procedure, when there used to be two parties to a co-investment agreement on housing construction – the builder and the buyer, now there are three of them: the former two and the bank.
“While a construction company is building a block of flats, the money stays on deposit with the bank which gives a 100% guarantee of their safety,” Tatiana Sergienko recounts. “Upon the completion of the construction and commissioning of the block of flats, the money from the escrow account is directed to the builder and to repay its bank loan. A co-investor may open such account with any branch of the bank. What is important is that both the bank and the builder have signed a contract on opening of escrow accounts.”
Head of the regional Department for Supervision in Construction Sphere Maksim Karpenko noted that presently 37 banks in Krasnodar province are authorised to issue credits to construction companies. They have already concluded 28 contracts on escrow accounts with banks; 77 applications are being checked with the banks. Thereby, 9 million sq m of residential housing is being or will be constructed in Krasnodar province in accordance with the new rules.
First Deputy Governor Andrei Alekseyenko noted in this respect that due to the introduction of the new pattern of project financing, the regional authorities forecast that the situation on the regional realty market will change. It will not entail appearance of new deceived co-investors but it will oust small construction companies from the market.
“The will not be able to get project financing with the banks, because they lack sufficient floating assts,” Mr. Alekseyenko said. “As a result, petty builders will either leave the market, or merge into bigger companies.” In experts’ opinion, such phenomena as retirement of some building companies, project financing of building companies by credit institutions, and other macroeconomic factors will inevitably lead to the rise in prices for real estate. Realtors noted that the price for dwellings has been rising fast over the past year. In this respect, general director of a consulting company Ilya Volodko expressed an opinion that by the end of this year the prices for residential property may rise by 15–16% by the end of this year. What is more, by the end of 2020 the prices may go up by 25% as compared with the first quarter of this year.
Another factor worth taking into account is that in case of project financing the constructors will be reducing the terms of construction works, General Director of ABA Group of Companies Aleksei Yarovoi states. “If we reduce the terms of construction, we may reduce our overheads too,” he says. “Consequently, some expenditures will be smoothed over. As a result, there will not be a steep rise in the price of the flats.