PJSC Sberbank : Sber financing construction of 38 million m2 of housing in Russia

Sber's residential property financing portfolio exceeded RUB 1.2 tn in H1 2021, having doubled every year for the past two years. According to the Unified Information System for Housing Construction (UISHC), Sber's share of the housing project financing market in terms of credited area is currently 56%. The bank is funding the construction of approximately 38 million m² of housing through escrow accounts in 75 Russian regions (a total of around 67.5 million m² are currently being built in Russia using this new mechanism).

Financing the construction of residential and commercial properties is one of the key action lines for Sber's corporate investment business. The industry's portfolio accounts for almost 20% of the total corporate credit portfolio, including housing development, which makes up 8% of the total corporate portfolio. We can see that residential real estate is increasingly driving economic growth. This indicates that the transition to the new financing mechanism has been successful for developers: the industry is on the rise and construction of primary housing is being actively pursued, which means that the population is given the opportunity to live in modern, high-quality housing.

Sergey Bessonov

Vice President, Director of the Lending Products and Processes Division, Sberbank

According to Sber data, the total area of apartments under construction has not changed recently, amounting to approximately 100 million m² per year. The average exposure period for all primary housing has been halved over the year to make almost two years, in part due to the preferential mortgage program. This market situation increased the housing industry's investment appeal for developers. The capital regions are still the most interesting for investment in construction.

Over H1 2021, Sber received more than one-third more housing construction financing applications than in H1 2020 (approximately 950 and 700 applications, respectively). The number of applications approved during this period increased by almost 60% (approximately 650 and 400, respectively). All applications submitted and approved over the aforementioned six months involved an escrow mechanism.

Sber's share of project finance limits for H1 2021 has increased, up to almost 30% in Moscow and St. Petersburg (from 23% and 27.6%, respectively). It remains essentially unchanged in other regions of Russia, amounting to just over 43%. The average credit transaction in Moscow grew by almost RUB 1.5 bn over a year and now amounts to around RUB 6 bn. No significant changes were noted in St. Petersburg and other Russian regions (coming to approximately RUB 2 bn and RUB 0.6 bn, respectively).

This was facilitated to a large extent by the liberalization of conditions for leading market players both in Moscow and in the parts of Russia where the construction industry is actively expanding. The process took place in two stages (November 2020 and early 2021) and resulted in the removal of a number of restrictions on borrowing limits (for project and initial financing) and the adoption of a more flexible approach to pricing.