In Its Latest Investment Report, Rinconinmobiliario.es Suggest That Russian And Ukrainian Investors

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Russian President Dmitry Medvedev, in a speech two years ago, bemoaned the fact that 77 percent of the country's 142 million citizens live "cooped up" in apartment blocks. Now his government has a plan to liberate them, amassing closely 2. 5 million acres to seed the land with single-family homes. "Call it the Russian dream," says Alexander A. Braverman, who runs the Federal Fund for the Promotion of Housing Construction Development, which Medvedev formulated. "I think we are able to make this dream come true. "

As the U. S. Struggles to recover from the housing bust, some economists are reconsidering the soundness of policies that advertize homeownership. Russia's leaders aren't worried. After visiting a newly finished development of prefabricated houses on the outskirts of St. Petersburg in November, Prime Minister Vladimir Putin said he hoped homeownership will inspire Russians "to have more babies. "
Developers, including Mospromstroy and National Housing, are lining up to net income from the advent boom in housing construction. At least 14 million square meters of housing are expected be beneath construction ...
... by next year on land owned by the federal fund. That will rise to 20 million square meters in 2012, or regarding 30 percent of all residential construction in Russia. "We think that persons who have their own homes, driveways, and careers are basically dissimilar than those who don't have these things," says Braverman. "The individual who has something to protect is a dissimilar sort of individual. "

To convert Russians to the joys of property ownership, the fund plans a syndication blitz, including billboards and TV and print advertisement. "In the U. S. In the 1960s, the need for homes came firstborn and the government provided the rest," says Nadezhda Kosareva, president of the Institute of Urban Economics, a exploration group in Moscow. "In Russia the government is attempting to push the idea from above. "
One obstacle to realizing Medvedev's goal of transforming Russians from apartment-dwellers into householders is an underdeveloped home-loan market. Mortgages are more or less of a novelty, with the total portfolio of swell residential loans totaling just $32. 5 billion, as stated by central bank information. Interest rates averaged 13. 8 percent in the firstborn four months of the year. To spur borrowing, the government plans to channel $8 billion through the federal mortgage agency, which offers subsidized loans at 11 percent interest. Nuri Katz, chief executive officer of Century 21 Russia, doubts this are going to be enough: "It's a simple real estate rule. Without the widespread availability of low-cost mortgages, there are going to be no widespread availability of low-cost housing. "

Braverman's fund has auctioned off the rights to develop 29 parcels of land nationwide and plans to bid out 46 more this year. Officials insist that homes built beneath the program are going to be affordable—costing around 30,000 rubles (fewer than $1,000) per square meter. By comparison, residential prices in Moscow's secondary market averaged $4,406 per square meter in May, as stated by a local index.

To pull developers, the government is guaranteeing it will buy up to 35 percent of the homes built. "We strive to diminish risks on our properties," says Braverman, "so investors are fascinated. " Mospromstroy, which has renovated some government buildings in the capital, won bidding on around 90 acres near Moscow in February, supplying to pay $44 million for a five-year lease to develop the property. Braverman says he is "absolutely open" to permitting alien investors to take part in the auctions, but none have so far.

A heap of potential Russian developers think the government should foot part of the construction bill. Alexander Lebedev, whose National Housing may churn out 20,000 prefabricated housing units a year, says he wants to make his product low-cost but "can't do it alone. " On this point, Braverman stands firm: "Our firstborn position is that we don't build. "

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