In all probability, the special mechanisms for seizure of land envisaged in the aforesaid law will be very attractive for regional and municipal authorities. In March 2008 the Commission for Urban Development under the Moscow City Duma approved the draft amendments to Article 49 of the Land Code submitted by Moscow Mayor Yu. Luzhkov. The main purpose of this draft law is to extend the list of cases when the authorities will be allowed to seize land plots from their owners. At present such a seizure can be possible only when performing the tasks assigned to the federal level (the construction of power plants, national defense and security objects, transportation routes; the use of nuclear energy; and protection of the state border.). The amendments proposed by the Mayor of Moscow envisage more grounds for seizure of land: the necessity to construct “objects of social infrastructure”, including multi-storied apartment buildings, while the construction will be funded from the federal budget, the budget Chernyshenko: problema iz”iatiia zemel’ v Sochi “nadumana”. [‘Chernyshenko: the problem of the seizure of lands in Sochi is a “concocted” one’ // Ekho Moskvy [The Echo of Moscow] / www.gazeta.ru, 03.10.2007.
Thus, the law envisages that, in an event of concluding an agreement concerning seizure of land, the provision as to the buyout price of the land plot and/or of the immovable objects situated on it shall be compulsory only if “the land plots and (or) the objects of immovable property situated thereon are in private ownership” (Subitem of Item 25 of Article 15, No. 310-FZ).
Kozak: vykupat’ zemliu v Sochi budut “po spravedlivoi rynochnoi tsene. [Kozak: land in Sochi will be bought out “at a fair market price” //www.rosbalt.ru, 05.02.07.
RUSSIAN ECONOMY IN trends and outlooks of a RF subject, or local budget90. In fact, this means the creation of a “simplified” scheme for the seizure of a land plot as a general rule, including under an existing residential building and for new construction, including for commercial use. The possibilities for obtaining a fait market price and ensuring the judicial protection of the residents being evicted (the owners of dwellings) will thus become very slippery, while the status of a social dwelling can easily be forfeited. Evidently, no more comments are needed.
* * * Thus, some conclusions can be drawn. The latest changes introduced in state regulation in the domain of seizure and reserving of land are aimed at creating mechanisms for largescale redistribution of ownership and other rights to land both between different levels of authority and between private persons and the State. In this connection, the powers in the domain of seizure and reserving of land have now been granted to state bodies of all levels, which corresponds to the scope of the problem. However, due to a variety of factors (lack of efficient mechanisms for judicial and administrative control in respect of seizures of land, corruption, and the limitations and gaps existing in state regulation), fertile ground has been provided for misdeeds and violation of the rights of private persons in favor of public interests, or interests disguised as such.
One of the reasons for the emergence of this situation have been the list of the grounds for seizure of land for state and municipal needs, as determined by the RF Land Code, which can be interpreted broadly and grants to the State and to RF subjects the right of unlimited extension of this list. Actually, no one is speaking any more of the minimum necessary violation of private rights by the State; the current legal regulation of this issue allows for the State to impinge on private rights and interests at the levels of federal and municipal authorities, as well as at the level of a RF subject, without any risk of being brought to responsibility for such actions. Given these conditions, operative economic issues will be settled to the detriment of the development of the institution of private property and other rights of possession and use, as well as to the detriment of the of the constitutional rights of the citizens of Russia.
Thus, the most important conditions for improving the efficiency of the State’s activity in this sphere are as follows:
- the consolidation, in the RF Land Code, of a final list of grounds for seizure of land for state and municipal needs, with no possibility of its broader interpretation;
- the adoption, by the RF Government, of such a procedure for reserving of lands that will require the verification of the grounds for making such a decision at the federal level;
- strengthening of the supervision, by the federal government and procuratorship bodies, over the adoption, by RF subjects and municipal bodies, of legal acts concerning the reserving and seizure of land plots, and the introduction of measures aimed at their abolition or at bringing them in conformity with federal legislation;
- the introduction, into the RF Land Code and the RF Government’s Decree concerning the reserving of lands, of norms envisaging preliminary publication of the plans for reserving and seizure of lands at the level of a RF subject or a municipality, as well as the consolida See Kommersant. 2008. 5 March.
Section Institutional Problems tion of the possibility to appeal against the decisions concerning planned seizure and reserving;
- the introduction, into the Land Code, of the notion of “state and municipal needs”, without any possibility of its broader interpretation;
- the adoption of measures aimed at preventing violations in the domain of seizure and granting of land plots, including misdemeanors in office;
- promotion of the process of delimitation of lands, as a factor conducive to the execution, by state bodies of different levels, of their powers in respect of land;
- the adoption, for purposes of it being applied by arbitration courts and courts of general jurisdiction, of an explanation of the procedure for establishing the fact of lawful possession of a land plot, which will recognize, as the sufficient and necessary proof of the possession and use of land, the acts adopted by bodies of state authority, contracts and other documents issued to persons in accordance with the law, say, after 1990; this will make it unnecessary, for persons, to recall and substantiate the lawfulness of their rights of possession and use of a land plot since the 1960s, thus limiting the opportunities for depriving, on formal grounds, the owners and possessors of land of compensation for seized land;
- the adoption of measures aimed at ensuring the purchase of land by municipalities and RF subjects;
- the adoption, at the federal level, of a decree consolidating the evaluation of lands in Krasnodar Krai on the basis of its market price, with ensuring adequate control over its implementation, as well as allocating the funds necessary for the payment of compensations.
5.4. Russia’s Housing Market In 2007, the national market for housing found itself affected by alternate factors of socio-economic development.
On the one hand, as in the past years, GDP was likewise growing at a high (8.1%) rate, while investment posted yet a greater (20%) growth rate, the budgetary system remained stable, foreign investment and capital continued to pour in, and the net value of the latter proved to be record-breaking. The population’s welfare was on the rise, which was evidenced by growth in real disposable incomes (up 10.4%) and real salaries and wages due (up 16.2%).
These favorable developments were propelled by the growing export proceeds in forex equivalent, as the price for Urals on the world market was soaring practically during the whole year, with short breaks in August and December.
On the other hand, however, financial stability was challenged by a clear acceleration of inflation rates on the consumer market, which became particularly notable between the late summer and early spring. As a result, it became evident by the end of the year that the annual inflation rates had accelerated for the first time since the late-1990s. In the late-2007 Russia’s economy began to sense echo from crisis developments in the world economy, which manifested themselves in the decline of stock market indices and some tightening of the consumer loan and mortgage conditions for the population.
Meanwhile, the country held stability and a relative predictability on the domestic political arena, which helped maintain a generally favorable background for the economy on the whole, including, in particular, behavior of players on the real estate market.
RUSSIAN ECONOMY IN trends and outlooks 5. 4. 1. Price Situation: Main Outcomes of The general characteristic of the situation on the housing market is reflected by the data of Table 16, which presents the value of the average specific offer price for apartments in Russian cities in the late 2004, 2005, 2006 and 2007 (in USD equivalent) calculated by data provided by the certified RRG real estate market analysts91.
Table Dynamic of the Average Specific Apartments Offer Price in 2004–USD/ sq.m Index December December December December City (region) December December December December 2005 to 2006 to 2007 to 2004 2005 2006 2007 December December December December 2004 2005 2006 Moscow* 1,953 2,658 4,828 5,429 1.361 1.816 1.124 2.St. Petersburg* 1,083 1,180 2,593 3,200 1.089 2.197 1.234 2.Yekaterinburg 882 1,062 2,415 2,615 1.204 2.274 1.083 2.Moscow oblast** 908 1,121 2,522 2,536 1.235 2.250 1.006 2.Novosibirsk 748 1,012 1,658 2,350 1.353 1.638 1.417 3.Perm 680 882 1,430 2,258 1.297 1.621 1.579 3.Tyumen … 864 1,600 2,192 … 1.852 1.370 … Krasnodar* 720 790 1,370 2,088 1.097 1.734 1.524 2.Krasnoyarsk 763 842 1,115 2,016 1.104 1.324 1.808 2.Ufa 766 997 1,729 2,000 1.302 1.734 1.157 2.Yaroslavl 566 876 1,758 1,910 1.548 2.007 1.086 3.Kemerovo … … 1,369 1,883 … … 1.375 … Izhevsk 663 982 1,837 1,865 1.481 1.871 1.015 2.Tver 542 688 1,370 1,833 1.269 1.991 1.338 3.Rostov-on-Don 656 830 1,385 1,770 1.265 1.669 1.278 2.Ryazan … … 993 … … … … … Penza 480 536 890 … 1.117 1.660 … … Ulyanovsk 405 486 859 1,243 1.200 1.767 1.447 3.Petropavlovsk* 595 711 952 1,128 1.195 1.339 1.185 1.Sterlitamak (Bashkor- … … 867 927 … … 1.069 … tostan) Shakty (Rostov oblast) … … 480 … … … … … * – Cities where prices are quoted in USD.
** – The average weighted specific offer price for apartments across 100 locations (cities and settlements), in USD equivalent.
The authors’ calculations are based upon monthly data on the average specific housing offer prices in Russia’s cities presented by certified by the Russian Realtor Guild analysts of the real estate market: Lutskov V.M, Kazimir L.M. (ACC of MIEL holding), Sternik S/G. (Sternik’s Consulting Ltd.), independent analysts Beketov A.G., Sapozhnikov A.Yu. (all from the city of Moscow and Moscow oblast); Khorkov M.A., Antasyuk A.A., Tukhasvili G.T. (all – RITS-UPN, Yekaterinburg), Stepanova A.A. (SAN Expert, Ufa), Cheremnykh A.M. (UK Assa-Stroy, Izhevsk), Smelov P.L., Vysoskaya T.V. (Sibakademstroy Nedvizhimost), Ermolayeva E.A. (Rid Analitics) (all Novosibirsk), Troshina V.M. (CG LEX, Tyumen), Chumakov A.M. (Titul), Proskurin E.A.
(Yugro) (all Rostov-on-Don), Davletshina R.M. (Perspektiva-Konsalting), Epishina E.D. (all Perm), Kaminsly V.N. (TITAN, Tver), Blinkov S.V.(IKPKG “Zhilye”), Kalinina E.V. (Megapolis-Nedvizhimost) (all Penza), Yarsina N.A. (Tsentr nedvizhimosti), Isaeva M.A. (Zolotoy Klyuch) (all Ulyanovsk), Eydlina G. Yu. (Rielti, city of Shakty, Rostov oblast), Reshetnikov M.A. (Agentstvo “Maximum”, Tomsk), Trushnikov AV. (B.I.N.-Expert, Sterlitamak), as well as analysts who are currently undergoing the certification procedure: Zyryanova G.N. (KuzbassInveststroy, Kemerovo), Burmakina E.V., Churinova I.V. (AREVERA) (all Krasnoyarsk), Afanasyeva N.N.
(Adalin-Expertiza nedvizhimosti, Yaroslavl). The analysts provided the data in the currency typical of their respective cities’ markets. In addition, the authors employed official data on the average monthly USD rate, inflation, and other macroeconomic indicators published by CBR of RF.
Section Institutional Problems So, according to the 2007 results, the greatest price rise rates for housing (over 1.times) were noted in Krasnoyarsk (at 81%), Perm (58%), Krasnodar (52%), followed by the group of cities where the price rise increment over the year was in the range between 30 and 45%: those were Ulyanovsk (at 45%), Novosibirsk (42%), Tyumen (42%), Kemerovo (7.5%), Tver (34%). All other cities of the sample (Table 16) posted the price rise under 30%, while in Moscow oblast’s cities and Izhevsk price levels appeared just slightly different from that of December 2006. In 2007 to 2006 the price rise slowed down in most cities, except for Krasnoyarsk, while the slowdown in prices in Perm proved to be symbolic (58% in 2007 vs. 62% in 2006).
Meanwhile, it is worthwhile to note that despite the deceleration of the 2007 price rise rates for housing in most cities, in the city of Moscow prices exceeded USD 5,000/sq.m., in St. Petersburg – USD 3,000/sq.m., in a group of cities (Perm, Tyumen, Krasnoyarsk, Tyumen, Novosobirsk, Krasnodar) – 2,000/sq.m., and in Ulyanovsk and PetropavlovskKamchatsky – 1,000 USD/sq.m. In Yekaterinburg, the price level for housing began to overrun the Moscow oblast ones, while the situation had been opposite in the past three years.
All the cities of the sample can be split into four groups by the nature of the price dynamics in USD equivalent:
1) cities where prices were stable from the early 2007, i.e. they fluctuated insignificantly relative to December of the prior year (or even declined), with a growth noted over recent months: the city of Moscow, Moscow oblast, Yekaterinburg, Izhevsk, Yaroslavl;
2) cities where prices were on the rise in the beginning of the year, followed by their stabilization: Ulyanovsk, Ufa, Sterlitamak, Tyumen, Petropavlovsk-Kamchatsky;
3) cities where prices were on the rise in the beginning of the year, followed by their stabilization and consequent growth renewal: St. Petersburg, Novosibirsk, Rostov-on-Don, Tver, Perm, Krasnodar;
4) cities that displayed a price rise: Krasnoyarsk (where prices posted an extraordinary rise).
In terms of the three year (2005–07) interval, prices more than tripled in Tver, Yarsolavls, Perm and Novosibirsk; rose at 2.9–3 times – in Yekaterinburg, St. Petersburg, and Krasnodar; 2.8 times – in Izhevsk; 2.7–2.8 times in the city of Moscow and Moscow oblast;