DAGESTAN IS THREATENED BY BANKRUPTCY OF REGIONAL REAL ESTATE DEVELOPERS

A threatening situation has developed in the primary real estate market of Dagestan. At a meeting of the Guild of Builders of the North Caucasian Federal District, the Deputy Chairman of the Republican Government Insaf Khairullin announced that the region might be left without local real estate developers. The reason for this was the changed legal requirements for the transition to escrow accounts.

Earlier, the Ministry of Construction of Dagestan has already reminded local developers that starting from July 1, 2019, the construction of real estate objects in Russia (first of all, apartment buildings) is possible only with the attraction of money through the escrow accounts or at the expense of the developer himself.

17 months after the law came into force, only one real estate developer company has drawn up a contract, submitting documents for financing the project.

In mid-2020, RD Development company from the city of Kaspiysk began to build an apartment building using an escrow account. According to Khairullin, this means that in case of further delay of the Dagestani developers, related to paperwork in accordance with the legal rules of the current legislation, they will face inevitable bankruptcy. The companies will be forced to lay off their staff, and due to the weakening of competition, the cost of housing will inevitably increase.

Experts note that at present, more than 90 credit institutions operate in Dagestan, but only a few of them (Sberbank, Rosselkhozbank, Gazprombank, Promsvyazbank, a branch of DOM.RF bank) are ready to open escrow accounts.

As of mid-2020, the construction of 29 residential buildings is underway in the republic, the useful area of which is more than 400 thousand square meters.

The construction of all the buildings was previously formalized in the form of equity participation agreements.

Experts note that more than 800 companies and entrepreneurs working in the republic are the members of self-regulatory construction organizations (SRO). Many small companies that perform construction work on a subcontract basis may not be members of SRO.