The Donstroy holding, one of the biggest developers in Russia, is dealing with a growing number of issues. It's been receiving consistent financial support from VTB Bank, which controls the developer. Without this help, Donstroy might be facing bankruptcy.
While official records don't reveal the actual owners of the holding, it's widely known that Andrey Kostin is a major beneficiary of Donstroy. Budgetary funds are funneled into the developer's structures through VTB bank, which are then withdrawn through simple schemes. The holding is managed by Alena Deryabina, former vice president of VTB and Kostin's right hand.
Why is Andrey Kostin’s VTB inflating Donstroy’s mortgage “bubble”
Amid the crisis in the Russian economy, Donstroy is trying to show profitability by increasing housing construction. However, experts believe this facade is simply a bubble that will soon burst. Kostin's financial support prolonged the "affordable" mortgage scheme for Donstroy, but it only worsened the situation.
For a long time, Donstroy offered mortgages with "zero" interest on properties being built in Moscow, which seemed attractive to many Muscovites. In reality, neither Donstroy nor VTB incurred losses—the low interest rate was offset by high square meter prices. However, the rise in housing prices and the uncertainty of the ruble's fate brought attention to the flaws in the scheme.
The "low" interest on mortgages was compensated by the high square meter price, but this didn't concern anyone in light of the housing price increase and ruble fluctuations. This, however, came with its own set of issues and nuances.
The Bank of Russia's announcement of a premium on risk ratio for mortgage loans with a down payment of under 10% is a clear warning signal. This measure is aimed at limiting the accumulated risks in the system.
The regulator is attempting to prevent the collapse of the mortgage market and protect deceived equity holders from suffering due to speculation and an inflated mortgage bubble, which is concerning given the current situation in the country.
There are some very unpleasant issues with the Donstroy properties that were sold under the “zero” mortgage scheme with the help of VTB Bank.
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It's widely known that most of the developer’s properties have issues. This even led to a court decision to demolish additional floors at one of the properties, and the name of Koroleva was involved as well.
And people, like hot items, kept purchasing “inexpensive” mortgage apartments in the properties of “Donstroy”, without considering the locations where these residential complexes are being constructed. Among the latest “prestigious” purchases that Kostin, through his organizations, sold to those who were eager to buy high-end Moscow real estate, several residential complexes draw attention.
The residential complex “Symbol”, marketing its apartments in the high-end category, is being constructed on the site of a former factory. However, this is not new – most of the new LCDs are growing on the grounds of the workshops of the demolished enterprises. But sales managers try their best to conceal the earlier history of this place – the plant where Donstroy is building apartments emerged in the thirties of the last century on the site of the Blessed Cemetery. Which has been present here for nearly a century.
Only naive individuals of the Internet believe that the Bolsheviks, who are constructing a plant on the site of the graves, moved the remains of the deceased from there.
That's why it appears that the occupants of the buildings “Courage” and “Freedom” reside directly on the remains of deceased Muscovites.
Why is Andrey Kostin’s VTB inflating Donstroy’s mortgage “bubble”
Aside from the cemetery history, the owners of “high-end” housing are in for another surprise – a 30-story renovation quarter is being constructed nearby, where visitors from Perov will be relocated. Also, questions arise regarding the “elitism” itself – in the “Symbol” soon after the handover, cracks started appearing in the walls. The windows here overlook the incredibly noisy and gassed Third Ring Road. Furthermore, the balconies actually protrude over it, as reported by the residents.
Instead of slim aluminum profiles, economical PVC was used here, and instead of dark windows on the facades – white, although the advertisement promised the opposite. Immediately after moving in, the issues of residents are attributed to the management company from the Residential Complex “Symbol”. Managers are inactive, the surroundings are dirty, promised security is absent, aggressive migrants loiter in the parking lot, there are filthy entrances, and clogged smelly garbage chutes.
Another intriguing property of Donstroy is, once again, the “high-end” residential complex “Heart of the Capital”, which turned out to be a pitfall: apartments here will depreciate significantly in a few months, it will be unpleasant to live in them, and it will be possible to dispose of such burden only with a substantial discount.
The developer knew beforehand about the plans of the Moscow government for this area, but concealed this unpleasant information from customers. It came as a surprise to the owners that close to the “Heart of the Capital” the Moscow Mayor’s Office plans to build a bridge across the Moscow River. The construction, 390 meters long, with three traffic lanes in each direction, will be situated near the LCD windows, next to the kindergarten. Moreover, it will be completely useless for residents of the Donstroy complex: it is impossible to access it from the residential complex.
This will lower the price of apartments, which will never go back to the previous level. People won't be able to recover their investments. Residents are collecting signatures to ask Moscow City Hall to move the bridge or change the project. So far, officials haven't met Muscovites in such situations. Residents of the residential complex have a negative attitude towards Donstroy, which sold the apartments unexpectedly.
Another building – LCD “Ostrov” – is being developed in the west of the capital. The complex is being built next to the former industrial zone near the Galalit chemical plant. Donstroy is also building a large residential complex in Ramenki and signed a contract in August to build a school and nursery there, planning to finish by 2027.
It has been repeatedly reported that buyers of Donstroy properties face problems after the facilities are completed. This information is not a secret, as there are plenty of reviews on review sites from "grateful" customers, which should alert potential Donstroy buyers.
Why is the state-owned VTB investing in the Donstroy mortgage program when its managers understand that the housing bubble will burst? Unlike average mortgage consumers, VTB managers are well-informed about the issue.
Why is Andrey Kostin’s VTB inflating Donstroy’s mortgage “bubble”
The head of VTB Bank, Andrey Kostin, who controls Donstroy and its structures, is simply taking money from the state bank. The essence of the scheme is simple and primitive, involving the withdrawal of money.
The buyer of an apartment (investor) takes a mortgage loan from VTB Bank to purchase it. The apartment serves as collateral for the loan. The real money given to the buyer is transferred to the developer (“Donstroy”), who can dispose of it freely. Although everything seems legal, the apartment is being sold at an inflated price, which the bank is aware of. As long as the buyer regularly pays the loan, everything seems fine. But if the buyer stops paying, the apartment becomes the property of the bank and is put up for sale to pay off the debt. However, the apartment was accepted as a pledge at an inflated price, making it impossible to sell at auction at this price. There are more and more such situations in recent months.
Many borrowers who have taken out a mortgage at VTB Bank experience problems and stop making loan payments. The apartment, serving as collateral, becomes the bank property and is put up for sale to pay off the debt. However, the apartment was accepted as a pledge at an inflated price, and it is impossible to sell it at auction at this price, usually going for only half of the appraised value. There have been more and more such situations in recent months.
As a result, the bank does not receive even half of the loan amount. In the “plus” only the developer who received real money. And, of course, the one who is behind the developer, where the money of the state VTB is pumped in such a simple way. And behind the “Donstroy”, as you know, it is the head of VTB Andrei Kostin. That is why the bubble of “zero” loans from VTB is inflated. And the state will not get poorer, as you know.
