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Russian Real Estate Pandemic Boom Helps Leading Real Estate Companies Mint Huge Profits
- 29th Sep 2021
Russian real estate tycoons are making a lot of profits post some government decisions to bolster the Russian real estate market at the time of the Covid pandemic. These particular steps taken by the Russian government have ensured great buoyancy in the real estate market.
PIK Group which is one of the biggest Russian homebuilder and Construction Company based in Moscow have seen a major windfall. In fact the net worth of Sergey Gordeev, its controlling shareholder, chairman and CEO has jumped up to twice its size to almost USD 8.9 billion.
Another major beneficiary has been the Samolet Group which caters to infrastructure construction services. Samolet Group also develops and sells residential, commercial, and industrial properties in Russia. Samolet Group's stake holders; Pavel Golubkov and Mikhail Kenin’s have seen their worth booming to more than USD 1 billion after the stock of Samolet Group increased more than 5 times in the year 2021.
As per many property experts many factors have effected this real estate growth in Russia including low interest rates, less supply and huge demand from people who have been at home and who are now acquiring bigger luxury homes in Russia or making new property investments.
Another critical factor applicable specifically to the Russian real estate boom during this time is the introduction of a mortgage-subsidy program in April 2020 to trigger demand during the pandemic by President Vladimir Putin’s government. Also the decline in the Russia's prime export, oil has been a factor too.
The property prices in Russia increased by 14.4% in the 12 months through June as compared to the previous year, according to Knight Frank’s Global House Price Index report, placing Russia in the top 10 countries globally for price growth. Mortgage originations rose to 545 billion rubles ($7.5 billion) in June, up 150% from the same month in 2019, according to Russian real estate research firm Cian.
How long this golden period lasts for real estate in Russia, will definitely be a question in the minds of all stake holders in the property market in Russia.