Now you know: how the cost of housing has increased in Russia and what is included in it
CrimeaPRESS reports:
In April 2024, the total cost of construction of multi-apartment residential buildings in Russia amounted to 81.1 thousand rubles. for 1 sq. m. This is 13.2% more than in April last year. For three years, reports RBC-Real Estate, the figure increased by 63%. Such data is contained in a study by the T-Zh magazine, based on data from the Union of Cost Estimating Engineers. Experts analyzed cost certificates, which are prepared based on a consolidated analysis of all project declarations; the data was supplemented by a series of interviews with industry experts.
Experts attribute this increase in costs mainly to the rise in prices of building materials amid inflation. Also, according to developers, labor costs have increased due to a shortage of workers in in-demand construction specialties.
The cost of construction in a third of Russian regions ranges from 81.3 thousand to 156.7 thousand rubles. for 1 sq. m, but in most regions it varies from 59.5 thousand to 81 thousand rubles, the study says. Predictably, capital regions and large cities, as well as northern territories, lead in cost due to climatic conditions and general distance from infrastructure.
What is included in the cost of construction
The study notes that over the past ten years, the share of costs not directly related to construction and installation work and the cost of building materials has increased significantly. At the moment, this figure is 54% of the total cost. It consists of a number of factors.
Land price can average up to 15% of the sale price of 1 sq. m. m. Where there is a shortage of plots for construction, prices for plots have increased most noticeably — as have prices for new buildings.
Costs of connecting the building to communications are about 10% of the price per square meter.
Social burden: when constructing a residential complex, the developer may be required to build social infrastructure facilities (school, kindergarten) along with the housing or finance the repair of social facilities. These costs are also included in the final price of housing, analysts remind.
Interest on loans. The main instrument for financing residential projects now is project financing. This expense item takes about 10% of the price of 1 sq. m. m.
Advertising. The increase in marketing and advertising costs in the last one and a half to two years has led to the fact that this expense item can reach 7% of the cost structure, the study indicates.
Finally, actually construction and installation work — their share in the cost of construction of 1 sq. m. m is 30–35%. This share is declining, reaching 70-75% ten years ago, the study says.
The profit of developers, according to experts, is approximately 15% of the cost of construction. The rapid growth of other cost components does not allow the developers themselves to increase profitability, the study says.
According to the RKS Development group, the growth rate of the cost of construction of comfort-class residential projects has increased in Russia. Thus, in 2023, the cost of construction and installation work increased by 18%, while in 2022 it increased only by 5%. General increase in cost of 1 sq. m of residential real estate in the mass segment for the period from the fourth quarter of 2020 to the beginning of 2024 amounted to 63%.
source: RBC-Real Estate
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