"Real Estate and Investments. Legal Regulation", the journal

Issue 4 (5) 2000

Real Estate Market and Economy Growth

Schtulberg B.M., doctor of economic sciences, professor, vice-chairman of the Council for Production Forces Studies (SOPS) of the Ministry of Economy of Russia and the Russian Academy of Sciences

Size and dynamic of the real estate market in locales depend on structure and perspectives of profitability changes of plants of the real estate, among which are the land lots, buildings, flats and premises. Structure of plants of the real estate varies mainly depending on intensity of reproduction processes of the fix goods of different assigning, which can have an expanded, simple or auxiliary character.

Profitability of plants of the real estate of industrial assigning is directly linked to a possibility of receiving of the profit from economic activities, and plants of non-productive assigning - from supply and demand on the land lots, housing and service spaces.

The effectiveness of usage of production assets depends on the situation in firms and corporations of a locale on the markets of profiling production and on possibilities of engaging of the necessary investments in a fixed capital.

Capacity and dynamic of the market of non-productive funds are appreciably defined by a level and prospects for the development of a locale economy: the higher is the level of incomes of the population, infrastructure and the economic activity of territory, the more expensive is the real estate.

Thus the market of the real estate is shaped under immediate and strong influence of economic situation and perspectives of economic growth in the subjects of Federation and cities.

In this connection to predict the market of the real estate the special importance is acquired by estimation of the social and economic situation and prospects for the development of locales. The performance of the present situation and reasons of social and economic development of locales includes valuation of:

  • Resource base (amount and quality of land, wood, water, mineral and raw resources);
  • Economic potential (structure and quality of the fix goods);
  • Infrastructural potential (security by potencies of an infrastructure: iron and highways, electrical webs and communication paths, air transportation etc.);
  • Personnel potential (presence and quality of manpower);
  • Level of economic development;
  • Level and quality of life of the population.

Generalizing indexes of economic situation in locales are the indexes of investment attractiveness and enterprise hazard which characterize probable conduct of the investors and allow by that to forecast the changes in the market of the real estate the coming one or two years.

The following data gives impression about regional discrepancies of such valuations (subjects of Federation in % to the average value in Russian Federation):

A longer prognosis of the real estate market changes is linked to valuation of long-term perspectives of economic growth of locales. Thus the first place is held by such factors, as resources, infrastructural and labor potential.

The prediction of social and economic development of locales of Russian Federation on short-term (one year) and intermediate term (2-3 years) period is systematically realized by the Ministry of economic development and trade of Russian Federation together with the subjects of the Federation. The Council on study of productive forces makes a long-term (10-15 years) prognosis of territorial development. Besides, a regional (federal and sub-federal) target program contains information on prospects for the development of locales. Taking into account, that the prognosis information has the important value for definition of the tendencies in economy of the real estate and valuation of singularities of the regional markets, the journal suggests to open a new heading: "Economy of locales and market of the real estate". In this heading the materials about perspectives of territorial development of Russia, prognosis of social and economic development of the subjects of the Federation and regional target programs will systematically appear.