Concentration in the housing construction market in Russia on the example of Moscow and the prospects for further industry consolidation

Abstract

The Russian residential real estate market has been largely restructured in recent years. In 2019, the transition to the use of escrow accounts began, in 2020 the market faced the coronavirus pandemic, in 2022 the market began to go through another crisis, demonstrating a significant decrease in sales at the end of the year. At the same time, both state support programs and joint actions of banks and developers were the mitigant of the ongoing shocks in the market. For example, the launch of mortgage subsidy programs by industry leaders quickly spread throughout the market — the actions of PIK, Samolet, Level Group to expand these programs to "mortgages at 0.1 %" forced other players to reconsider their pricing policy. However, not all developers are able to quickly adapt to changing market conditions. However, since January 2023, the practice of low mortgage rates has been largely limited by the regulator due to increased systemic risks. In this regard, the residential construction segment is once again facing a major challenge for the industry. Many developers leave the market as single projects are completed because: not everyone can fi nd the required capital; not everyone gets credit lines from banks; not everyone is able to withstand the turbulence in the economy. In this regard, there is a hypothesis that the housing construction market is becoming less and less competitive, and in the next 1–2 years the concentration in the industry will only increase.