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. Last Updated: 07/27/2016

Handovers Boom on Mild Weather

The number of residential developments handed over by construction firms in the first two months of 2007 increased by 68 percent on the same period last year, figures released by the State Statistics Agency show.

The data come in spite of the fact that the start of the year traditionally represents a slowdown in the sector, as this is the period when the market dips after the rush to commission properties at the end of the year.

In January and February, 5.5 million square meters of floor space were handed over, the statistics agency said. The period from November to December 2006 saw the release of 20.8 million square meters, 41 percent of the total for the whole year.

Experts attributed the anomalous surge to the unusually mild winter, overall growth in personal income and recent changes in the laws governing construction, Vedomosti reported Monday.

But these factors combined still do not account for such a dramatic increase, said Yulia Tseplyayeva, head of ING Bank's analysis department, the newspaper reported. This year's rise follows alterations by the State Duma to a law that had previously prohibited construction firms from accepting payment from developers before they have received all the necessary permits, Knight Frank senior vice president Andrei Zakrevsky said, the newspaper reported.

Dmitry Lutsenko, director of Mirax Group, denied that the national housing project was responsible for the boom. The package of measures included in the project would not have such a dramatic short-term effect, he said.

But the surge in the market seems likely to be a one-off, as overall rates of construction have not increased and problems with the electrical network and labor pool have not been resolved, said Building Media Group general director Sergei Yeliseyev, Vedomosti reported.