City Plans $2Bln for Developers

Moscow plans to spend as much as $2 billion bailing out developers who are struggling to fund projects in the world's third-costliest property market.

The city is in talks to buy land and apartments from construction companies in need of cash, Deputy Mayor Yury Roslyak said, according to his spokesman, Leonid Bratkin. The transactions will probably be made by the end of the year, Bratkin said by phone last week.

Builders including Mirax Group, Sistema-Hals and PIK Group are shelving some projects as the global credit squeeze pushes loan rates to as much as 25 percent.

Other measures under consideration include extending credit to real estate companies and buying stakes in individual projects, said First Deputy Mayor Vladimir Resin, reported Vedomosti.

"This should provide support for Russian real estate stocks," Alfa Bank's real estate analysts Yelena Mills and Alexei Kryuchkov wrote in a research note last week.

Russia's four biggest publicly traded property companies, PIK Group, Open Investments, AFI Development and Sistema- Hals, have lost most of their market values this year on concern that higher borrowing costs will crimp demand for apartments.

JPMorgan Chase last week said investors should "steer clear" of Russian real estate stocks because the industry will be the country's "hardest hit" in a global recession.