Apartments do not find buyers – Newspaper Kommersant No. 206 (7407) of 11/08/2022

The sharp decline in the supply of Moscow new buildings, observed at the height of the pandemic, was replaced by overstocking of the market. Over the year, the supply of flats and apartments increased by 30-50%. The current market situation allows to keep prices for buyers. But developers are already facing lower rates of return, the need for discounts and changing project financing terms.

The volume of supply in the primary real estate market within the old boundaries of Moscow in October amounted to 47 thousand apartments and apartments, which is 34.3% more year-on-year, Irina Dobrokhotova, chairman of the board of directors of Best Novostroy, told Kommersant. This is the highest figure since January 2021. According to the expert’s calculations, the supply volume exceeded the pre-pandemic level by 9.6%: in January 2020, 42.9 thousand lots were available on the Moscow market.

VSN Realty CEO Yana Glazunova estimates the total volume of supply in Moscow and the Moscow region at 96.9 thousand lots, which is 36% more year-on-year. Natalia Kuznetsova, CEO of NDV Real Estate Supermarket, says that 4.2 million square meters are currently being sold in Moscow and the region. m of housing in new buildings, which is 29% more year on year. The most significant increase in supply is in New Moscow, where 440.6 thousand sq. m. m, which is 76.7% more than last year.

The increase in supply is changing the trend in the housing market that has developed since mid-2020. Then the volume of supply, on the contrary, decreased, and demand grew after the start of the preferential mortgage program, says Vladimir Morebis, commercial director of Est-a-Tet. Now demand has noticeably dipped: according to Cyan.Analytics, for the three quarters of 2022, 33 thousand equity participation agreements were concluded in Moscow and the region, which is 12% less year on year. Many projects were brought to the market, the implementation of which was postponed by developers during the COVID-19 pandemic, notes Irina Dobrokhotova.

The growth of exposure is forcing developers to reduce the price level, says Natalia Kuznetsova. Thus, in the mass segment within the old boundaries of Moscow, the average cost of new buildings in October, according to her, decreased by 2.9%, to 275 thousand rubles. per sq. m. Irina Dobrokhotova adds that this year the market as a whole is experiencing price stagnation. Over the month, the weighted average cost of supply in the primary market of Moscow, excluding the elite segment, she said, decreased by 1.1%.

Ms. Kuznetsova calls the current situation favorable for buyers: “A wide range of offers has appeared on the market in terms of price and planning solutions.” Although developers are not happy with the situation, the expert adds. Developers have reduced profit margins, it becomes more difficult for them to regulate demand and carry out further pricing, explains Natalia Kuznetsova.

Market overstocking and growing competition may force developers to provide additional discounts, admits Yana Glazunova. Many of the projects that entered the market were designed for high demand, she adds. According to market participants, they now have to renegotiate the terms of already approved project financing with banks, preparing for a longer sales cycle.

Sergey Nyukhalov, Deputy Sales Director of Granel Group of Companies, believes that developers have recently been trying to bring out fewer new projects. He does not exclude that for this reason another imbalance may arise in the market – a limited choice of objects with an increase in demand. But judging by the forecasts of consultants, this should not be feared in the short term.

Natalia Kuznetsova expects that the volume of supply will continue to grow at least until the end of this year. Ms. Glazunova also suggests that in the face of uncertainty, buyers may take a wait-and-see approach at the end of the year. But Olga Guseva, CEO of Key Capital, expects that seasonal growth in demand may still occur on the market before the end of this year.

Alexandra Mertsalova