REUTERS
Last year, the number of bankrupt property developers in Russia increased fivefold due to the crisis, Russian newspaper Kommersant reported with reference to The Rating Agency of Building Complex data.
Such trend can result in the suspension and slowdown of construction work, as noted in the report.
A total of 2,700 property developers were declared bankrupt in 2015, which was five times higher than in 2014. The negative trend has sustained also in the beginning of 2016: thus, 167 companies were declared bankrupt in January, with the number being higher by 81% as compared to January 2015.
In most cases, small-sized companies acting as contractors and subcontractors in the construction are exposed to bankruptcy.
Experts attribute the increase in the number of bankruptcy cases in construction industry to a heavy debt load. Another cause was also named the reduction in funding for public construction projects.
It is noted that production activity has also been declining in Russia. According to Rosstat, 83.8 million square meters of residential property were commissioned last year, 0.5% lower as compared to the previous year. The agency noted that new facilities, which construction started in 2015, accounted only for 13% of the volumes, while in 2014 their share reached 44% of the total volumes.
The overall decline in construction work in Russia last year is estimated at 7%.