Igor Kreslavsky: "The real estate market is close to a break-even point"

Igor Kreslavsky, the chairman of the Board of GC RosStroyInvest, in an interview to Construction Weekly newspaper told about the indicators the company closed 2015 with, whether it is ready to invest into new projects and how changes in city-planning documents influence a developer's work.

– As of year-end 2015, many developers stated decrease in the volume of sales. What indicators did GC RosStroyInvest close last year with?
– We fulfilled 100% of all our construction and sales plans. The company commissioned three housing estates with a total floor area of 72 thousand sq. m – "Morning Star", "House with Chimes" and "Strawberry Meadow". Besides, we completed works at the biggest in Russia infectious diseases hospital of 110 thousand sq. m. Yes, the sales volumes went down against 2014, but their volume was sufficient to continue the implementation of all the started projects to the utmost. According to our estimation, decrease in the volume of sales against the 2014 level in our company was not more than 10-15%, that was good for the market.

– Will activity in the real estate market be going down this year, according to your estimates?
– I think that the situation will be similar to the one we observed in 2015. In my opinion, the market hit the bottom or is close to this state. It is not unlikely that in future we are in for its fluctuations, but yet the industry is near the break-even point.

– Will the housing prices decrease resulting from purchasing power reduction?
– No, they have already reached their lowest point, they have nowhere to fall. We state the increase in construction prime costs alongside with decrease in property developers' margin. We try to optimize all our projects, take necessary measures aimed at correcting technical solutions without losing the construction quality. It is necessary to keep economic indicators at the level acceptable for the company. Therefore we do not expect any decline in prices, in the long term there will be a smooth increase in prices.

– Many developers prefer not to bring new projects onto the market. What is your company's position in this respect?
– We are planning to start new projects in St. Petersburg this year. I am referring to infill construction like our "Kremlin Stars" residential complex in the Moskovsky district of St. Petersburg. In Leningrad Region, we will also continue active work, in particular we will start to implement the new phases of the housing estates already under construction – "Golden Domes" and "Old Fortress".

– What is your attitude towards the new Rules for land use and development which will be adopted soon and provide for large-scale housing development not higher than 40m?
– The new land use and development rules will, indeed, include an average hight indicator for large-scale construction. But they also stipulate the establishment of a height deviations commission that will discuss the possibility or impossibility to build a dominant in each specific place. So, we believe that the construction of high-rises will go on in St. Petersburg. But a decision on their construction will be up for a more detailed and lengthy debate. We are ready for such discussions and ready to present our opinion to the distinguished experts.

– Does the company plan to participate in further construction of the problem-plagued off-plan property development objects in St. Petersburg and Leningrad Region?
– Our company has had such an experience. For example, we completed the construction of the "Brigantine" apartment building which we got after the Impulse Ltd company. But the scope of work there was small and we knew the mechanism of interaction during the project completion. The projects the completion of which we are talking about now, for example, those of the SU-155 company, are large-scaled ones and they need additional financing. In principle, it is possible to discuss the options with the authorities, but nobody has approached us with such a proposal yet.

– What is your attitude towards the proposal by the Smolny Palace to allocate 10% of flats in a developer's project to the citizens on the housing waiting list?
– In general, the intent of the innovation is to determine different “allocation degree" for each project. In some projects, where the developer is open to it, a decision is taken to allocate a number of flats for social needs. In other projects, where the developer has a high social burden, a commitment to build social objects for the city needs will suffice, to my mind. In other case, the developer has already committed to take part in the creation of additional social infrastructure besides day-care facilities and schools. If we refer to partnership relations, it is important to discuss possible options with the developer and to reach reasonable compromise.

– Were your projects discussed in such a way? For example, was the company proposed to take part in widening the problem-plagued Petrozavodsk highway near your "Peter the Great and Catherine the Great” project?
– No, we never received such proposals. But in view of the fact that obligations to build social infrastructure are already included in the project economy, we have no economic possibilities to build roads in addition.