Housing prices shouldn't exceed 30,000 rubles ($934) per square meter for homes built with federal funds, Regional Development Minister Viktor Basargin said over the weekend, adding that the structures should also use energy-efficient technology.
"If the region isn't prepared to create high-quality yet affordable housing projects, we will bring the technology ourselves," he said, RIA-Novosti reported.
With the assistance of the federal and local governments, keeping the price of affordable housing to 25,000 rubles to 30,000 rubles per square meter is feasible, said Denis Sokolov, head of research at Cushman &Wakefield Stiles & Riabokobylko.
"With the federal program, the administration is helping with the land lot and utilities, which for some projects takes a big chunk off the price," Sokolov said. "If the local administration helps with the land and the utility connection, that dramatically reduces costs."
During the recession, the state has come to the assistance of developers who might otherwise have seen a bigger drop in demand, PIK Group spokeswoman Natalya Konovalova said.
"It's important that right now the state serves as the main client on the housing market, and it will occupy this role for quite a while," because of falling demand, she said.
PIK has no plans to participate in any affordable housing projects in the near future, Konovalova said. But the success of PIK-Region's Molodyozhny village in Kaluga, which relied heavily on federal discounts, may provide a model for other developers.
Created in a year and half in conjunction with Podmoskovye-160DSK, another PIK subsidiary, Molodyozhny is made up of 200 low-rise houses and is intended for young families of limited means. To keep such housing projects affordable, Sokolov said, both homes and infrastructure must be mass-produced to keep costs down.
Russia has recently begun to employ frame-and-panel technology, a process that produces prefabricated homes within a matter of days. The so-called "Canadian houses" are still new to Russia and require planning, funding and infrastructure to get off the ground.
Basargin estimated that demand for private homes would continue to increase, saying 52 million square meters will be built in Russia this year.
The number of people who have the means and desire to purchase homes rose 9 percent year on year in the fourth quarter of 2008, the Regional Development Ministry said.
"People have the resources and desire to improve their living conditions," the minister said. "What's needed is to increase demand."
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.