Impact of COVID-19 on the construction industry in Russia 1
First response 1 Getting hold of the situation and how it might escalate 2 Prioritizing projects, stages of construction and delivery 3 Developing a plan for the industry 2
TOTAL HOUSING VOLUME DYNAMICS IN RUSSIA IN JANUARY-JUNE 2020 million m² million m² monthly On a cumulative basis 7 30 28 Planned 28,5% of planned total Covid-19 total of annual volume of 5,8 6 98 mln m² 5,5 housing 25 22,2 in 2020 5 Covid-19 4,9 5 18,6 20 13,7 4 3,6 15,4 2,9 14,3 2,9 3,2 15 2,7 2,9 10,7 2,7 2,8 3 11,5 9,5 1,7 9,9 2,3 1,7 9 8 1,9 1,5 10 2 7,4 2 5,2 - 7,1 5 - 2,8 - 2,2 4,7 - 8,1 - 33,4 5 1 + 19,3 - 20,5 - 5,2 2,7 - 2,2 2,3 + 3,9 + 19,3 + 7,5 0 0 may june apr jan mar mar apr may jan feb feb june Total Growth rate, 20/19 yy, % IHC Total хх хх Growth rate, 20/19 yy, % MDU IHC MDU IHC -Individual Housing Construction, MDU - Multiple Dwelling Unit
TOTAL HOUSING VOLUME DYNAMICS IN RUSSIA IN JANUARY-JUNE 2020 10 regions with the largest volume of housing delivery Names of regions Total % to volume of 01.07.19 housing delivery Moscow region 2 570,1 -28,4 Moscow 2 205,4 -1,8 Krasnodar Krai 1 908,4 +5,6 1 353,4 -5,2 Republic of Tatarstan Bashkortostan Republic 1 065,8 +8,0 Rostov region 976,0 -18,1 Dynamics Leningrad Region 910,2 -30,8 0%-18% growth -58%-0% decline +18%-156% growth Sverdlovsk oblast 751,7 +6,8 St.-Petersburg 724,9 +21,8 Nizhniy Novgorod region 705,2 +8,5
Transition to project financing Past Procedure before 01.07.2019 Construction is financed by money The developer enters into a shared 1 3 received from shared construction construction participation participants placed on the agreement with a shared developer's account opened in construction participant authorized bank The shared construction participant All of the shared construction 2 4 transfers money to the developer's participants’ money is spent by the account opened in authorized developer to the construction of the bank facility at his own disposal ₽
Transition to project financing The developer enters into a shared The Bank finances all expenses 3 construction participation agreement 1 under the agreed project with a shared construction budget, except for the participant, who opens an escrow developer's own money account in a bank Money can be transferred from the 4 escrow account The shared construction participant transfers money to the escrow • To the shared construction 2 account after the shared participant — in case of construction participation agreement termination of the shared is registered in the Federal Service of construction participation State Registration, Land Register and agreement or in case of refusal Mapping. of the contract obligation fulfillment • To the developer — after construction and title registration
Impact of COVID-19 on the construction industry in Russia Requirements for the construction industry for the restriction period Providing a distance of 2 meters when performing any type of work This increased expenditure Providing a distance of 2 meters when workers are transported in office vehicles to the construction site and back Cleaning of surfaces every 2 hours Work areas and common areas disinfection 2 times a day Use of individual masks and gloves on the construction site Suspension of construction workers were in contact with an infected co-worker
Impact of COVID-19 on the construction industry in Russia Expenditure One-time expenses Daily expenses Workspace disinfection 30 rub for м 2 Mobile health unit Meals 150-270 rub per Trailers for the Minimum ~60 person a day shift workers thousand rub per trailer (for 5 persons) Additional 75 % decrease in transport rental transportation capacity 1,8 mln rub per dining Modular dining room per each of the 6 room construction site areas Other expenses Individual masks, gloves, weekly testing Covid-19 testing 1,900 rub per test of 10% of construction workers, extra medical personnel on site
Measures taken regarding the spread of coronavirus infection With the spread of Covid-19, the state's economy has experienced a crisis related to restrictions, including restrictions on moving workforce, services and People construction materials across the country. Measures taken to minimize negative consequences Consequences A 6,5% mortgage rate for new construction purchase Lower economic activity Subsidies in the amount of 450 thousand rub for families Reduction of demand for house where the third and subsequent children is born purchase All foreign citizens residing in Russia will have their Decline in income documents term extended automatically Unemployment Changing the terms of loan agreements providing suspension of the borrower's obligations Prohibition on entry for foreign nationals
Measures taken regarding the spread of coronavirus infection Ministry of Construction, Housing and Utilities of the Russian Federation and Russian Agency for Health and Developers Consumer Rights have developed recommendations for the prevention of COVID-19 among construction Consequences workers. Reduced revenue, rising prices for materials and equipment and difficulties Government support measures taken: with cross-border Extending the validity of documents in the construction deliveries sector Slowdown in construction Freezing financial sanctions on equity participation and facility delivery and agreement risks of COVID-19 on construction sites Reduction of supervisory burden Reduction of interest rates on loans to developers Protection of system-forming organizations from bankruptcy
МИНСТРОЙ Realizing the possible risk of the second Development of the industry standard is done РОССИИ and subsequent waves of Covid-19, a in cooperation with construction organizations single industry standard of safety (including the professional Association of measures will be developed builders), expert organizations, and the experience of combating COVID-19 in such countries as: Creating a standard will allow us to systematize and Great Britain optimize requirements for the construction industry: Common requirements Singapore for the industry Canada Requirements based on the actual epidemiological situation (variables) Australia Epidemiological risks at all stages of the employee's activity Austria Optimization of expenditure: Netherlands Direct cost reduction by ~30% • USA Reduced indirect costs by ~75% • 11
Supporting the construction industry by stimulating demand 2020 Issuance of mortgage loans in Issuance of mortgage loans +20% in may 2020 +20,9% Thousands Bln rub of loans 116 420 Total 85,5 198,7 122 412 +4,6% Including: « Family 4,9 12,3 108 436 mortgage » Covid-19 « Far Eastern 0,4 1,2 -16,9% mortgage » -1,2% -0,4% 6,5% preferential 20,2 50,6 90 526 mortgage 77 817 85 474 Other loans for 3,9 15,8 new construction Secondary housing jan feb mar apr may june 56,1 118,8 market loans
What’s next? Planning in advance and stabilizing the industry Develop projects more adapt to disruptions Work closely with other industries and other countries
THANK YOU FOR YOUR ATTENTION 14
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