St. Petersburg Experiencing Housing Glut
Published: July 9, 2014 (Issue # 1819)
The amount of new housing available in the St. Petersburg real estate market for the first six months of 2014 is up 67 percent more than a year ago. The main introduction of new housing into the market came in the first quarter while the demand had stopped by the arrival of summer.
In the first half of the year, 1.4 million square meters of housing was commissioned, according to the city’s Committee for Construction. In the first half of 2013, 948,000 square meters were built.
In the first quarter, according to the committee, 934,000 square meters were put on the market, an increase of 60 percent. From February to April, interest in buying a home was attributed to currency fluctuations and people actively invested in housing still under construction, said Alexei Gusev, commercial director for the construction company Glavstroi-SPB.
According to Gusev, in April Glavstroi-SPB started renting out their fifth completed residential complex North Valley, which has a total area of 98,000 square meters.
By the end of the year there will be a total of over 470,000 square meters in North Valley. In the first half of the year, the average price per square meter was 70,000 rubles ($2,047), which is 5 percent higher than the year before, Gusev said.
Despite the high demand at the beginning of the year, prices for the first half of the year increased by only 2.9 percent when compared to last year in January and by June there was an increase of only 0.5 percent, said Irina Onishchenko, director of LenSpetsSMU’s sales department. A large number of new projects entering the market have kept the prices high and an increase in prices of 7 to 9 percent is expected by the end of the year, she predicted.
According to Inna Malinovskaya, a spokesperson for the Group of Companies Center of Shared Construction, or CDS, the average price for the mass-market segment starts from 65,000 to 75,000 rubles ($1,900 to $2,200) for 1 square meter, depending on the location, the quality of the housing and whether or not it’s under construction. According to Malinovskaya, demand remains high.
Despite more housing being constructed, it is selling at about the same rate as last year — approximately 2 million square meters in the first half of the year, said Onishchenko,.
By the end of the year, approximately 4 million square meters of housing will be made available for sale, according to Gusev. Denis Babakov, Commercial Director for LSR Real Estate North-West, is more optimistic, predicting 5 million square meters, but only under favorable market conditions and if all planned buildings are put up for sale.