Russian real estate market bubble will burst but not now

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According to analysts of Unicredit Aton, the “bubble” in the real estate market of Russia will burst. First of all within next half year prices on the real estate in Russia will fall down at least by 10%. The reason for it are financial problems of developers: the single combined debt of Mirax Group, Systems-Gals, PIK, AFI Development, OPIN, needed to be repaid by the end of 2008, totaled over $1.8 billion. Banks practically do not grant credits even taking into account that they increased rates from 10% to 25% annually. Companies are already freezing constructions and cutting down the staff, writes today’s Kommersant newspaper.

In spite of all forecasts about collapse of the market, the housing prices are still stable or even show insignificant growth. In some types of supply the prices of Moscow housing continue to increase more quickly, stress experts of the Multi-broker management company. Within last three weeks, according to information of the company, most popular apartments – two-room apartments with typical area of 54 sq. m. — grew in price by 900,000 rubles. “Only within a week from September 16 to 23, their average price increased by 250,000 rubles to 9.5 million rubles,”a survey of Multi-broker says.

The price of commercial real estate also has not gone down, market players note. Artyom Tsogoev, the commercial director of Galaxy Group believes that in Moscow starting price of sale of 1 sq. m. in business-centers totals $4,000, in shopping centers — $ 9,000. “We do not see a substantial decrease of price. It is possible an insignificant correction,” the expert believes. In the long term, if problems with financing are not solved, leasing rates can decrease by 10-15%, suppose market players.