Money in real estate: should you buy shares of builders


Today, Prime Minister Dmitry Medvedev extended the subsidy program mortgage loans in the primary market until the end of 2016. It was originally planned that the reduced mortgage will be available to the Russians only until 29 February of the current year, however, the high demand for housing loans at a rate not exceeding 12% per annum has compelled government to reconsider the duration of the program.

According to the Finance Ministry, by the end of January in the country have been issued 227,6 thousand of preferential mortgage loans totaling 405,1 billion rubles, the Volume of state subsidies amounted to RUB 3.3 billion for January alone, banks issued 17 thousand preferential mortgage loans worth a total of 30.8 billion rubles.

The Minister of construction and housing Mikhail Men believes that the extension of the program of subsidizing the interest rate on the mortgage will allow the developers to resume the implementation of the “frozen” projects. He expects that by the end of this year the volume of new housing will remain at last year’s level 83-84 million square meters. the Ministry of construction has issued construction permits for more than 100 million square meters of housing by the end of 2016.

The revival in the property market may be of interest to participants of the stock market that wants to invest in the shares of the principal beneficiaries of the subsidised mortgages — by major developers, say financial analysts.

According to Basil Tanurkov, Deputy head of analysis of market shares in IK “Veles the Capital” growth of mortgage lending will contribute to improving the financial performance of developers. The demand for housing can, in his words, and to provide recovery in oil prices this year. “In any case, in 2016 the prices of apartments will not fall like in previous years”, — said the financier.

The action of certain developers can grow within a year, according to Tanurkov. He advises to pay attention to the securities of SPADES, which from the beginning of 2016 managed to grow by 16.3 per cent, and the shares of LSR Group, which, by contrast, fell during this period by 16.7% due to the decrease in sales by 36% in 2015. According to the analyst, LSR Group could significantly improve its position thanks to the project “Zilart” (residential complex of business class on Avtozavodskaya street in Moscow), which allowed her to become the second largest developer in the capital. The first houses in this residential complex will be commissioned only in 2017, but the sale of apartments has already begun, and their value will only increase, said Tanurcov.

Head of analytical Department of the criminal code “Russian standard” Sergey Suverov warns that investment in developers require a selective approach. “Now investors are investing money in stocks of companies with high dividends or buy those securities, which are growing rapidly. There are not that many developers who meet at least one of these criteria,” says Suverov.

The weaknesses of companies Suverov related revenue in rubles, which may decrease due to the slowdown in consumer demand. In his opinion, due to the fall in real incomes, real estate prices will drop another 10-15% this year, and hence the revenue of developers can be reduced.

Analyst UK “the alpha the Capital” Andrey Shenk configured in respect of the shares of developers is even less optimistic. “Now is not the time to buy paper developers. First, greatly decreased the demand for real estate and discounted mortgages is unlikely to help him grow significantly. Secondly, the developers focused on the luxury segment of the market, so the extension of the program of preferential mortgage will not make the weather for their business,” he explained.

Meanwhile, a survey conducted by the National Agency for financial studies (NAFI), showed that 14% of Russians plan to improve the housing conditions in the next three years. Of these, at least 42% rely solely on the mortgage. The previous year the proportion of Russians willing to improve their housing conditions through mortgage loan, constituted only 18%.