Changes in housing construction industry in the RF: securities as an alternative to Shared construction participation agreement

Abstract

Changes in housing construction entail a corresponding reaction of the real estate market especially with regard to residential real estate since developers have lost “free” funds of shareholders-natural persons. As a result of transition to project financing volume of housing construction has decreased by 14.8% in the Russian Federation over a recent year. Housing construction is characterized by zero and negative profitability in half of entities of the Russian Federation due to low solvency of its population, according to Expert RA Agency [1]. Banks do not provide developers with financial resources in such situation. To achieve success construction companies have to raise additional capital which can be obtained from the public debt market. Improvement of transparency and reliability in the construction industry under the ongoing reform, structurization of developers groups, formation of credit-rating dossier should attract investors’ attention to builders’ securities and reduce the size of risk premium which developers-issuers have to pay today. According to the authors, entering the securities market of 20-30 huge developers in the next 2-3 years will guarantee attraction of investment flows in housing construction in an amount of up to 40 billion rubles.