The ongoing global credit crunch has caused headaches for local developers, who have seen affordable financing from international lenders drying up, but Russian banks are increasingly stepping into the breach.
"International banks are not giving any money now," said Alexei Yazykov, a real estate analyst at Renaissance Capital. "Russian developers have been relying on Russian banks more heavily. … Credit from Russian banks actually increased last year."
The country's construction industry grew at a rate of more than 16 percent in 2007, accounting for over 5 percent of gross domestic product, but as international lenders tighten up, developers have seen interest rates increase to 15 to 18 percent.
