The Prosecutor General’s Office is looking into possible price collusion among construction companies, offering Russia off plan for sale in the Moscow and St. Petersburg markets. The prosecutor requested that the Federal Anti-Monopoly Service investigate whether collusion among construction companies was contributing to the runaway rise in apartment prices in these areas, the prosecutor’s office said August 11 in a written statement. Besides the Federal Anti-Monopoly Service, the Interior Ministry and prosecutors from Moscow, the Moscow region and St. Petersburg were asked to investigate local construction practices.
According to IRN.ru, an analytical agency for real estate, the average home price in Moscow grew by 50.5 percent in the first half of 2006. Earlier this year, First Deputy Prime Minister Dmitry Medvedev called on the anti-monopoly service to break the stranglehold of local construction companies on housing. “Serious efforts are needed to de-monopolize local construction markets,” Medvedev told Rossia state television.
Igor Artemyev, head of the anti-monopoly service, told reporters last month that up to 70 or 80 percent of land was allocated to developers without public auctions in the first three months of the year, according to a transcript of his comments from the Federal News Service.
But Artemyev said he believed the Moscow construction industry was “competitive.” “It is not monopolized in the sense that the anti-monopoly legislation reads into it. There are many companies. No single company can be safely said to be dominant in the market. The same is not true of the building materials market, where there are dominant companies,” Artemyev said.
Real estate experts say artificially high prices paid for construction materials such as steel and concrete significantly boost the price of new developments in the capital.