Allan Saunderson is managing editor of Property Finance Europe and a contributor to GlobeSt.com.

MOSCOW-Nearly 85% of all Moscow commercial real estate projects are frozen and 78% for St. Petersburg, while the number put on hold is increasing every month in both cities, according to research by the magazine-portal the Bridge.

The development stop is mainly caused by the sharp slide in demand and lack of available funding, particularly from banks. For developers, loans are nearly out of reach and annual interest rates of 20% to 25% prove absolutely unprofitable for developers. As well, the number of companies able to go through the procedures necessary for getting a loan has decreased by a factor of about 10 this year.

Veronica Mann, director of Strategy Consulting with the Bridge commented: "The projects that prior the crisis were at the blue-print stage or at the stage of foundation works are generally selected to be frozen and companies are using capacities freed up in this manner to finish projects near or at the closing stage. They are trying not to announce that they are freezing the projects, still nearly everyone has canceled the so called paper projects."