State procurement order and new rules will not save housing construction market

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April 22, 2016 18:45

The construction industry is failing as the driver of economic growth in the regions. Despite the extremely high demand for new housing, loan programmes cannot ensure effective funding for the industry.

New regulations on the construction market have reinforced control over the industry. Market mechanisms have been replaced with stronger state regulation. As a result, in the short-term, the housing construction market in Belarus will shrink.

In January 2014, new lending rules on the construction market took effect. State control over concessional lending for housing construction market has strengthened. The state procurement orders in housing construction imply that social housing will be constructed at soft loans provided to regional contractors. Construction companies will act as customers. Apartments will be sold upon completion of construction after signing a sales contract. The final beneficiary will need to contribute their own funds amounting to the difference between the apartment’s cost and the soft loan’s amount.

Another regulation, which has taken effect recently, envisages additional conditions to be met by the construction market players, for example, it has introduced a certification procedure for construction organisations.

For reference.

Housing construction plans in 2013 largely failed. Only Minsk and Minsk Oblast fulfilled their plans. In Minsk, 1.6 mln square metres of housing was commissioned (planned 1 mln square metres). In Minsk Oblast, 1.415 mln square metres of housing was commissioned (planned 1.4 mln square metres). The overall plan in 2013 was fulfilled by 81.1% (5.274 mln square metres was commissioned out of planned 6.5 mln square metres). Nevertheless, compared with 2012, in 2013 the housing construction market made a small recovery. In 2012, Belarus commissioned 4 million 484 thousand square metres of housing, in 2011 - 5 million 480 thousand square metres.

Recent trends