The largest developers overcame the negative economic situation, in aggregate, increasing revenues, gross and net profit. Development of the industry is hampered by low investment activity of the business and purchasing power of the population.
We present the rating of the 100 largest construction companies in the Ural-West Siberian region following the results of 2016, prepared by the AC “Expert”. Almost half of them (44%) represent the Tyumen region (with autonomous okrugs), 20% – Sverdlovsk region, 16% – Bashkiria. Compared with last year’s rating, the number of Tyumen companies has been preserved, with six companies from Bashkiria leaving the top 100, three from Sverdlovsk and Chelyabinsk regions, and two from Orenburg. Generally not represented in the ratings of 2017 and 2016 Kurgan region. The organizations included in the list, in aggregate, increased revenue by 11.9% compared to 2015, which allows us to conclude that the negative trend has reversed (in 2015, compared to 2014, top companies demonstrated a 10.6% drop). Gross profit increased by 61%, net profit by 81.5% (the total gross profit of the participants of last year’s rating, on the contrary, decreased by 23%, and net profit fell by 74%). We note here the insignificant growth of accounts payable and receivables – 9.34% and 5.03% respectively.
There is money – there is no work
The revealed financial indicators do not completely correlate with the reduction of one of the main sources of income of construction companies: according to Rosstat, the total area of residential houses commissioned last year compared to 2015 in the Ural-West Siberian region decreased by 12.8%. Of the large constituent entities of the Russian Federation, this indicator was increased only by Bashkiria by a symbolic 0.3%, but the Chelyabinsk region sank immediately by 23.2%, Tyumen (without autonomous okrugs) by 20.7%, Sverdlovskaya by 15.1%. The reason – a significant reduction in the purchasing power of the population, the uncertainty of people in the future.
– The macroeconomic situation had a negative impact: the mood of the population deteriorated sharply due to the loss of work and a sharp decline in wages. In 2015, sales volumes began to fall, prices were standing still, that’s when we had the most declarations for the termination of equity contracts due to the loss of work, “recalls Ruslan Muzafarov, Commercial Real Estate Sales Director of LSR Group in the Urals. – In 2016, volumes continued to decline, prices also declined. 2017 – a turning point: the mood of people has improved significantly – volumes have begun to recover, but prices are still at the level of last year.
– The increase in gross profit is due to the fact that construction companies learn to work in the new market conditions, reducing operational and management costs, reducing lending. Plus, the implementation of those facilities that were conserved and not sold over the past few years, “explains the director of IC Privilege, an expert SRO” Ural Association of Builders “Anatoly Tsalyuk. – The fact is that the construction market is a market for the postponed result. Now housing is being realized, which was built in 2014, and many construction projects conceived for implementation in 2016 – 2017, are simply postponed. The very situation in the construction industry is not improving – the operating costs of companies and the cost of building materials are growing, the credit conditions have become tougher. Some companies left the market altogether due to amendments to the Urban Development Code and 214-FZ “On Participation in Shared Construction of Multi-Apartment Houses”.
– Firstly, mandatory requirements to the authorized capital of developers have significantly increased. Secondly, developers now receive an opinion on the compliance of the builder and the project declaration with the requirements of 214-FZ, in fact this is a “permit for the sale of apartments” from government agencies. Thirdly, the requirements to the very form of the project declaration changed seriously: now it should contain the minute details of each project, while in general the format has become complicated and uninformative for the end user. Fourth, a compensation fund will soon be introduced, which will amount to 1.2% of the cost of each apartment. It is clear that the legislative tightening is aimed at reducing the risks of participants in shared construction. But all these measures directly affect the growth of the cost of erecting the object, and consequently, the cost of apartments. We also consider a significant risk factor to be the growth of distrust in the field of shared construction, the reason of which is an increase in the number of frozen facilities and a slowdown in the construction rate for a number of projects.
The way to a comfortable environment
What’s next? Let’s look at the example of housing construction. The aggregate revenue of the 20 largest companies in the Ural-West Siberian region for housing construction in 2016, compared with the previous year, increased by 6.2%, but net profit fell by 2.1 times.
“The peculiarity of the housing market in 2016 was a decline in sales and a decrease in the activity of potential buyers,” said Timur Ufimtsev, General Director of Sinara Development. – An essential role in stabilizing the market was played by the state support program for mortgages. This measure made it possible to raise additional funds for the construction of primary housing, primarily the “economy class” – it is in this segment that most of the apartments are purchased with a loan. Also, the economic situation affected the launch of new facilities: the activity has significantly decreased. In this regard, in 2017 we see a reduction in the volume of housing construction. The strategy of developers, which are market leaders, has shifted from the sphere of price competition in the direction of creating a comfortable living environment.
The largest companies for the construction of housing in 2016 012_expert_ural_43.jpg
The largest companies for the construction of housing in 2016
Nevertheless, participants in the housing construction market, predicting the situation for the next year or two, express a restrained optimism. Pavel Petrichenko expects that the market will begin to show moderate growth – an average of 5 – 10% per year.
– In the first half of 2017 in Yekaterinburg, we signed new contracts for the sale of 48 thousand square meters. meters of net selling space, which is 34% more than in the first half of 2016. The total value of signed contracts amounted to 2.7 billion rubles (+ 29%). There are almost no applications for termination of equity participation agreements. According to our forecasts, in 2018 sales volumes will increase and, accordingly, prices on the primary real estate market will also rise, – Ruslan Muzafarov said.
– In 2017 there is an increase in purchasing activity by an average of 13% compared to the same period in 2016, – said Timur Ufimtsev. – Drivers of this process – the leaders of the banking market, reducing mortgage rates, the process began in March 2017 and continues to this day. Including lowering rates is a joint effort of banks and developers. In particular, our company is a partner of Sberbank in the program, where you can buy an apartment in a mortgage at 7.4% for the entire loan period. Also now we are plunging into the next, after the white mortgage, a layer. These are people with a sufficient degree of income, which for various reasons can not give out a loan for housing in the bank. We ourselves work with this category of potential buyers. In terms of volume of transactions, we reached the indicators of the beginning of 2014. In general, we forecast growth in demand for multi-family housing in 2017 compared to last year. This is due to the continued development of mortgage banking products, for example, such as mortgages without down payment, as well as the development of trade-in real estate, when the developer takes secondary housing as a purchase of a new one.
Author: Pavel Kober
Article in Russian: Expert