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PIK is one of the largest residential developers in Russia, operating primarily in the Moscow region. The company builds mass-market housing using industrial methods, relying on its own prefabricated housing plants. Its shares trade on the Moscow Exchange under the ticker PIKK.
A developer earns the difference between the cost of construction together with the cost of land and the price at which the flats are sold to buyers. The cycle is a long one: years pass between the purchase of a plot and the handover of the keys, and the money is invested long before the revenue arrives.
The way payments are settled changed after the reform: the money of buyers in a building under construction no longer goes to the developer but to special accounts at a bank, and it is released only once the building is commissioned. Construction, meanwhile, is carried out on bank credit. Hence the direct link between the key rate and the economics of a project — and a second link, through mortgages: almost all flats in the mass-market segment are bought on credit.
The industrial approach — in-house production of panels and standard building series — lowers the cost per square metre and speeds up the cycle, but it confines the company to the mass-market segment.
Mass-market housing in the Moscow region and the other cities where the company operates.
Prefabricated housing plants that manufacture structures for standard building series.
Management of completed buildings, interior finishing and related services for buyers.
Strengths and weaknesses describe the business itself. Opportunities and threats describe what may happen around it.
It designs and builds residential buildings, mainly in the mass-market segment, and sells the flats to buyers. The company owns prefabricated housing plants that produce structures for its own construction sites.
They are special accounts at a bank that receive the money of people buying flats in a building under construction. The developer gets the money only after the building is commissioned, and until then it builds on bank credit. The mechanism was introduced so that a buyer does not lose money if construction is not completed.
From two sides at once. The buyer takes out a mortgage — and at a high rate the payment becomes unaffordable, so demand falls. The developer builds on credit — and servicing that credit becomes more expensive. The rate hits revenue and costs at the same time.