Russian Developer Bankruptcies Signal Deepening Financial Collapse

Russian developer bankruptcies are emerging as a defining crisis inside the country’s already strained economy. The combination of falling demand, extreme interest rates, and financial resources diverted to the war against Ukraine has pushed a large share of construction firms to the brink. This downturn exposes structural weaknesses long hidden by state subsidies and artificial demand.

Mortgage Demand Collapse and Construction Gridlock

By mid-2025, about 20% of Russian developers were already close to bankruptcy, and analysts warn the figure may soon surpass 30%, especially among companies focused on mass-market housing. These firms depend heavily on mortgage sales, yet banks rejected more than 50% of mortgage applications in June, according to Reuters (https://www.reuters.com). Even borrowers with stable credit profiles face annual mortgage costs exceeding 25% once commissions and insurance are included—effectively shutting millions out of the market.

Meanwhile, more than 19% of developers have officially postponed project completion dates, with delays lasting longer than six months placing them in the “problematic” category. Construction freezes are spreading across multiple regions as companies run out of liquidity.

Corporate Debt Surges as Investment Evaporates

Corporate overdue loans hit 10.4% in Q2, totaling roughly $111.9 billion, with the real estate sector experiencing the sharpest deterioration. At the same time, real estate investment fell by 44% in the first half of 2025, a collapse attributed to tightening credit conditions and reduced state support. Reports from RBC (https://www.rbc.ru) and independent analysts confirm that war-related budget pressures are starving the sector of financing.

Kremlin Considers Emergency Measures

Facing a systemic crash, Russian authorities are evaluating a moratorium on bankruptcies, external restructuring of major developers, and the creation of temporary state funds to complete abandoned projects. These steps mirror crisis-era interventions, underscoring the severity of the downturn and Russia’s shrinking economic resilience.