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. Last Updated: 07/27/2016

St. Petersburg Faces Surplus of New Housing




During the first quarter of this year, only 10 percent of the more than 1.5 million square meters of housing under construction in St. Petersburg was sold, realtors and developers say.


In an attempt to increase sales for the remaining 90 percent, sellers on the secondary market said they are cutting costs and developing a commission system so as to better compete with developers.


Realtors reported that new elite and higher-quality housing projects accounted for approximately 5 percent of their overall sales volume during the first quarter of 2000. They also said sales for new projects have been limited, especially in the city center, which accounts for 60 percent of demand.


With supply on the rise and over five new construction or renovation projects underway in the center, buyers have begun to demand lower prices, better quality and a better selection of services, said Igor Petrov, investment director of the Property Fund PSBLO.


Realtors report that the dramatic post-crisis increase in demand for cheap, small apartments has died off, and preferences have shifted toward two- and three-room apartments.


Petrov said the March presidential election changed consumer preferences, adding that demand for large, high-ceilinged apartments of 200 square meters or more has markedly increased.


Petrov said many buyers are purchasing neighboring one-room apartments and connecting them to their 120-square-meter, two-room apartments.


Analysts from construction firm Peterburgstroi's marketing department said prices on elite housing dropped somewhat during the first quarter of this year from 1999's average of just over $1,100 per square meter.


Petrov said prices for housing during the first quarter ranged from $700 to $1,100 per square meter, depending on the quality of the apartment.


According to figures from the Peterburgskaya real estate company, new construction sales accounted for 30 percent of sales on the "non-elite" primary market, while accounting for 17 percent to 25 percent of housing sales on the primary market as a whole.


Sales growth on the primary market has also led to increased competition between developers and agents on the secondary market. Nevertheless, Petersburg Realty's marketing director Ilya Yeremenko said there is no reason to anticipate changes in overall market tendencies. He said the hottest competition would be observed between developers building projects of similar quality.


Thirty-seven St. Petersburg housing projects were started or continued during the first quarter of this year.


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St. Petersburg Housing Prices Per Square Meter


Elite High-Quality Improved Quality Typical


Housing Housing Housing Housing


I QTR '99 $1,013 $670 $418 $385


II QTR '99 - $635 $334 $295


III QTR '99 $1,015 $663 $325 $289


IV QTR '99 - $660 $335 $295


I QTR '00 $985 $585 $332 $282


Source: Peterburgstroi