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Khrushchev’s legacy lives on Russia real estate market
The chief executive of Russian developer PIK Group sees one guarantee of his future success in an emergency decision made by the Soviet government of Nikita Khrushchev in the 1950s. Back then, tens of thousands of cramped communal flats were unpacked and whole families residing in single rooms were resettled into their own bright and new flats in hastily constructed five story kit buildings which came to be known as khrushchevki.
“It solved a problem for millions of Soviet citizens but the lifetime of these buildings is coming to an end,” Kirill Pisarev told the 2008 Reuters Russia Investment Summit. “Over a million square meters of housing are in these khrushchevki, which had a planned lifetime of 20-30 years. Now they are 40-50 years old. They will survive another three, five, seven years maximum.”
The resulting housing gap is his to fill. Pisarev, whose company builds flats for Russia’s rapidly expanding middle class, believes the global credit crisis will cut the pace of new housing construction this year, while demand will remain strong, keeping housing prices in Russia on the rise through 2009-10.