Around 20% of Russian property developers have found themselves on the brink of bankruptcy due to falling sales and high interest rates, and their share could soon exceed 30%. The most vulnerable are companies building mass housing and dependent on mortgage demand.

Around 20% of Russian property developers have found themselves on the brink of bankruptcy due to falling sales and high interest rates, and their share could soon exceed 30%. The most vulnerable are companies building mass housing and dependent on mortgage demand.

Source: Foreign Intelligence Service of Ukraine (FISU)

Details: More than 19% of property developers are officially postponing completion dates, and delays of more than six months categorise projects as “problematic”, the FISU said.

Quote: "The sector is suffering from low demand, limited state support, and the diversion of resources to the war against Ukraine. As a result, sales are shrinking, debt burdens are increasing, and construction is being frozen.

Investment in real estate in the first half of 2025 fell by 44%. Banks are harshly screening clients: in June, 50.6% of mortgage applications were rejected. Even for borrowers with impeccable credit histories, apartments are becoming practically unattainable – the real mortgage cost, including insurance and fees, is at least 25% annually."

Details: These interest rates put pressure not only on households but also businesses. In the corporate sector, the share of non-performing loans in Q2 rose to 10.4%, or US$111.9 billion, adding US$8.6 billion in three months. The sharpest deterioration was recorded in the real estate sector.

Russian authorities have already started considering the possibility of introducing a moratorium on developer bankruptcies, external administration, and the creation of temporary state funds to complete problematic projects, the intelligence service added.

Background:

The FISU previously reported that the share of non-performing loans in Russia’s banking sector is growing amid economic slowdown.The FISU also said that every tenth company in Russia plans to cut staff this autumn. Businesses are forced to reduce costs due to falling demand, higher taxes, more expensive loans, and other factors.Earlier reports also stated that for the first time since the start of Russia’s full-scale invasion of Ukraine, funding for the Russian military and weapons procurement accounted for every second rouble collected from taxpayers into the federal budget.Russia’s economy faces more severe problems than officially acknowledged, and there is a real risk of a systemic banking crisis within the next year.

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