Around 20% of Russian property developers on verge of bankruptcy

Around 20% of Russian property developers are on the brink of bankruptcy due to falling sales and high interest rates, and that figure could soon exceed 30%. The most vulnerable are companies that build mass housing and are 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 put projects in the "problem" category, 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 property fell by 44% in the first half of 2025. Banks are ruthlessly screening customers: 50.6% of mortgage applications in June were rejected. Even for borrowers with impeccable credit histories, apartments are becoming practically unattainable – the real cost of a mortgage, including insurance and fees, is at least 25% annually." 

Details: The high interest rates are putting pressure on businesses as well as households. In the corporate sector, the share of non-performing loans in Q2 rose to 10.4%, or US$111.9 billion, with US$8.6 billion being added in three months. The worst deterioration was recorded in the property sector.

Russian authorities are starting to consider introducing a moratorium on developer bankruptcies, imposing external administration, and setting up temporary state funds to complete problem 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 the economic slowdown.
• The FISU also said that one in ten companies in Russia plan to cut staff this autumn. Businesses are being forced to cut costs due to falling demand, higher taxes, the increased cost of borrowing, and other factors.
• Earlier it emerged that for the first time since Russia’s full-scale invasion of Ukraine, funding for the Russian military and weapons procurement accounted for every second rouble collected from taxpayers for the federal budget.
• The problems facing Russia’s economy are more severe than officially acknowledged, and there is a real risk of a systemic banking crisis within the next year.

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