Sergey Korotchenkov, RDI General Director: Low-rise construction is just as profitable as apartment buildings

06/ 08

Contrary to the widely spread belief according to which high-density construction brings more profit to developers than low-rise buildings, we are talking about comparable figures. This was stated by Sergey Korotchenkov, RDI General Director at the exhibition “Moscow region construction week – 2014”, at section “Land resources as basis for the development of construction industry in Russia”. “Low-rise construction is a rather profitable business with a rate of return slightly lower than that of apartment buildings”, noted Mr. Korotchenkov. Moreover, he believes that low-rise construction may cost less than high-rise buildings subject to proper level of project management.

According to RDI estimates, average market rate of return for development in both segments is practically equal, comprising at least 30%. A land plot for a high-rise building may be small but considering the existing restrictions for high-rise construction and the fact that there are few vacant plots fit for construction, its cost is rather high. At the same time marketable low-rise construction is possible in places where integrated development of the territory is possible. There are not only more land plots which meet this criterion in Russia, but they are also less costly to the developer. Thus for example a high-density project on a 30 ha land plot and construction of a low-rise complex on a land plot of 60 ha brings about the same profit to the developer, subject to equal land cost. The difference here is that in building low-rise residential buildings the developer creates a higher quality product compared to bearing-wall high rise buildings, a product which meets modern consumer needs.

XVI International industrial exhibition “Moscow region construction week – 2014” is a Federal congress-exhibition event which runs at Crocus Expo August 6-8. This year all debating sections of the exhibition are united by the general idea “Moscow region - open region”.

The event is organized by the Moscow region government with support from the Ministry of construction, housing and public utility sector.

RDI is the General sponsor of “Moscow region construction week – 2014”.