Iskander Kalimullin: ‘The residential real estate market will stagnate’

“Speeding up the approval cycle to 6 months”

Mr Kalimullin, what problems of the real estate market are you currently working on? Are there any solutions for them?

There are such initiatives. In addition to easy reform solutions related to easing the coordination of land plots and land designation, we want to implement a programme that, according to our plan, should have the status of a state one. So far, we have conditionally called it “Low-rise Russia — prosperous Tatarstan”. The basis of this programme is to ensure that projects for certain real estate objects have the opportunity to receive an accelerated approval cycle.

The biggest problem faced by developers is the long regulatory deadlines for approval when developing a particular project. They range from 1.5 to 3 years at least, if we are talking about multi-storey buildings," said Iskander Kalimullin, the chairman of the committee. If we talk about low-rise construction, then there are certain tactics: for example, instead of following the procedure for obtaining a construction permit, one can opt for a permit for reconstruction. Regulatory measures do shorten the timelines, but even this is not enough.

In order to rectify the situation, we are working on a programme that should include the main aspect related to that we do not have to prove point-by-point on a particular property that reconstruction needs to be done here. Everything should be done in such a way that real estate objects fall under this programme, respectively, receive the status of an accelerated approval cycle of up to 6 months — this is our aim.

“The market has not yet known a period when real estate would become cheaper”

What changes is the commercial real estate market undergoing?

Colleagues may disagree with me, but I believe that the market has not yet known a period when real estate would become cheaper, especially commercial. Recently, the trend for detached buildings has been gaining momentum more and more. Unlike commercial spaces on the ground floors of residential buildings, a detached building has a number of advantages: they have a special positioning. In addition, problems with tenants, access roads and others are excluded.

You will be surprised, but there are many such buildings. For example, one of the directions is the central heating points. Tatenergo has been carrying out reform for about six years. All boiler equipment, which is necessary for the maintenance of apartment buildings in densely populated residential buildings, began to be transferred to the basement and basement floors of the same houses. Central heating plant (CHP) buildings located in the middle of residential neighborhoods turned out to be unnecessary. They were put up for auction, where many entrepreneurs purchased them.

How much has commercial real estate become more expensive?

It's hard to say for sure. If you look at the objects that we are dealing with, in a three-storey detached building with 44 apartments under construction with its own management company, on 1 August, a square metre cost 230,000 rubles, now it is 300,000 rubles. When the building is ready, the cost will start from 350 thousand rubles per square metre.

We rely on statistics on how similar apartments are currently being sold in the city. For example, there are companies that have set themselves a deadline for the completion of construction in 2026, but are already selling 400,000 per square metre. But I would doubt the validity of such a price even at the excavation stage. The cost of renting apartments in Kazan varies from 2.5 to 15 thousand rubles per day.

If we talk about commercial real estate in general, the amount depends on the segment: office, warehouse or retail space. The price range can range from 250 to 6.5 thousand rubles per square metre per month.

There are enough rooms, but not quite satisfied with the quality of those that are on the market. Unfortunately, many developers save on quality. Therefore, I think that there are enough office spaces, which cannot be said about apartments. There is a shortage of rooms in our city, so hotels are being built. The republic is actively attracting investments from all over the world. Every year we have some major event — recently, it was the BRICS summit. According to my forecast, this shortage of rooms will be closed by 2026-2027.

“Stagnation in the housing construction market is obvious”

What consequences will the next increase in the Central Bank's key rate lead to?

We can discuss this topic. My opinion is that I would not trust the banking sector in the sense of carrying money to deposit. Because when interest rates are raised, banks tend to burst periodically. We have had several such high-profile cases in Kazan, so I would advise you to be careful.

From the point of view of mortgages, you should not be afraid of this, you just need to correctly measure interest rates with your income level. There are companies that can offer both installments and a guaranteed return service, where customers receive 10% more than banks give.

We proceed from that even if we cannot influence the Central Bank directly, therefore, as developers, we offer installments, deferred payments, etc. If a company involved in, say, individual housing construction (IHC) is able to offer installment plans, that’s excellent. If it is not capable, then we invite it to our committee.

What is your forecast for the housing market?

The residential housing and multi-apartment residential real estate market will stagnate, but commercial real estate will only grow. Stagnation is obvious, because there are a lot of residential buildings now, but, unfortunately, in order to justify the demand, the developer is forced to save on construction, on materials, on landscaping. The general trend is that all residential real estate starts to look flashy from the point of view of the facade, but inside it does not reach the level for which developers are asking for money.

Will new buildings become cheaper?

No, I don't see any prerequisites for this. Developers can arrange some periodic promotions in order to create a stir, but real estate will not get cheaper.

What are the main tasks of the committee?

In a broad sense, development is an entrepreneurial activity aimed at repurposing real estate for different concepts, but the word “develop” itself translates as “development”, therefore, in fact, our committee is a development committee. This, in turn, means that we can develop and implement projects in absolutely any economic sphere where there is more marginality. This includes manufacturing, construction, IT technologies, tourism, agriculture, and entrepreneurial activity of the small business sector — shops, bakeries, anything.

The projects will be implemented not only by investment, but by a very interesting method — collective resource. It's not innovative, but it's not easy to implement. It can be described as a team-based work method. When implementing complex promising projects, it plays an important role in the fact that participants invest not only money, but also their own resources. Everyone is tied together. This increases motivation, in addition, distributes the load and risks.

Our task is to give the right business direction vector. Not just to provide money or help implement an idea, but to make sure that it will eventually succeed. The committee has created communities — these are entrepreneurs who have been working in the market in various fields for 15 to 20 years. All these companies will be involved in the project. They can invest either with finances, or with their competencies, their time.

“On-site, we assess the investment needs”

Before the conversation with Iskander Kalimullin, the Chamber of Commerce and Industry of the Republic of Tatarstan told how the idea to create a development committee arose. “The latest trends in development, namely: the development of new technologies, changes in consumer preferences, innovations in legislation, have prompted the creation of a development committee," said Elena Agzamova, Adviser to the Chairman of the Chamber of Commerce and Industry of the Republic of Tatarstan. She also oversees the work of the new structure.

According to her, the committee's goals are transparent — to increase the effectiveness of interaction between real estate market participants and participants in other areas of economic activity in Russia and Tatarstan. To support the development of the activities of small and medium-sized businesses in the field of real estate related to the construction of new facilities, reconstruction and restructuring of existing ones. To participate in the development of Tatarstan regions in the areas of economy and job creation.

Regarding the latter, I want to note that the activity is already practically underway. We travel to our municipal areas and look at investment needs on the spot, visit industrial facilities and those in need of renovation. A lot of work is being done, projects have been taken to the expert community of the committee for analysis and construction of financial models in order to understand their feasibility and marginality," explained Elena Agzamova.

According to her, the plans of the committee and the chamber are correlated, events and meetings are accompanied, first of all, by information: “It is important for us to convey to the business community what is inherent in the very idea of creating and functioning of the committee. In addition, the business trip to Azerbaijan, which was prepared by the Chamber of Commerce and Industry of the Republic of Tatarstan and the Honourary Representative of the Chamber of Commerce and Industry of the Russian Federation in the Republic of Azerbaijan, showed that there is a great need for organising and international interactions between entrepreneurs using such an instrument as the Tatarstan Chamber and the Development Committee.”