Apartments in ready-made houses began to be sold cheaper than at the excavation stage

Until recently, the difference in the cost of housing in Moscow, which was just beginning to be built and already put into operation, reached 40%, that is, if 2–3 years ago a buyer purchased a finished apartment for 10 million rubles, then a promising one for 6–7. Now the situation has changed dramatically. Developers refuse to give serious discounts on housing, which is literally only in the project.

According to Dmitry Golev, commercial director of Optima Development, mass new buildings at the excavation stage are 6.5% cheaper than those commissioned, premium-class complexes by 14.2%, business class by 10.6%. Moreover, residential complexes have appeared in which already handed over apartments are cheaper than those under construction.

– On the heels of “pitted” new buildings comes the second housing that has fallen in price over the past year, and not only in the killed Khrushchevs, but also in modern houses, – says Oleg Repchenko, head of the analytical center “Real Estate Market Indicators”. – Developers do not like to reduce the cost of housing and are ready to keep a high price tag even for apartments hung up for sale. And it is easier to negotiate with private sellers, they are more willing to make concessions.

— Indeed, the market now has a paradoxical, at first glance, the situation. It can be explained by several factors, – comments the President of the Regional Association of Appraisers Kirill Kulakov.

First of all, developers are trying to win back the market subsidence that happened in mid-2022, when demand for real estate fell by 50-60%. Therefore, in the second half of the year, many special offers appeared, stimulating the sale of already built housing. By the way, developers invest the lost profit as a result of such actions in future construction – today’s foundation pits. This is the first reason for their rise in price, says Kirill Kulakov.

The second is that new construction begins in conditions of economic uncertainty. The cost of banking services throughout the construction cycle, the inflation rate, the availability and price of building materials are not clear. This forces developers to include risks in the cost of future square meters. Finally, an analysis of new sites shows that construction volumes are declining, which means that in 3-4 years the supply will decrease and the price will increase.

All these reasons create a trend in which the purchase at the stage of excavation is more expensive than in finished new buildings. As the sale of housing already put into operation, such a bias will disappear. But a square meter of new buildings will inevitably rise in price.

“It has become much more difficult for developers to dump at the start of sales,” says Andrey Serdyuk, a real estate expert at the federal company Etazhi. — The reason is that they have a financial model of the cost of selling apartments at different stages of construction agreed with banks.

Of course, in most projects, apartments at a higher stage of construction are more expensive, but there are exceptions, especially when, in the wake of high demand at the start of sales, the price per square meter was overestimated. Plus, it all depends on which apartments were displayed at different stages of construction. For example, some developers try at the initial stages to sell the most illiquid objects, the price per square meter of which is initially lower, while others, on the contrary, postpone such apartments for a later period.

The scheme with a decrease in the price of objects as the readiness of the house grows is illogical for the market, so it is unlikely to take root, Andrei Serdyuk continues. Developers understand that there are much more target buyers for apartments at the final stage of readiness than for those with a commissioning period of 2-3 years. Some buyers are forced to rent a house, or they need to sell their existing property to buy a new one.

“In the primary real estate market, there is such a phenomenon as “closed sales”, when developers offer the lowest price at the start of sales,” says Dmitry Dolgov, CEO of the real estate brokerage agency DOLGOV PRO. – In this case, the price per square meter is minimal and cannot compete with sales of new buildings in projects already underway.

In expensive housing classes, the situation is even more pronounced. In the luxury real estate market, prices in new projects are 20% higher than in complexes with a commissioning permit. This situation in prices is affected not only by an increase in the cost of construction, but also by the use of escrow accounts, Dmitry Dolgov continues.

With the introduction of amendments to Federal Law No. 214 “On Participation in Shared Construction of Apartment Buildings and Other Real Estate and on Amendments to Certain Legislative Acts of the Russian Federation”, banks began to take part of the profits from developers. And if earlier the developer received money directly when selling apartments, now project financing and the use of escrow accounts are initially included in the financial model of projects.

Of course, there are exceptions. For example, in one of the residential complexes in the north-east of Moscow, apartments of the first stages in houses already commissioned are much cheaper than apartments that will be built by 2025. “It depends on the fact that the infrastructure of the region is developing, transport interchanges are being built. Add the rise in prices for building materials, labor, project financing – and you will understand that apartments in such facilities simply cannot be cheaper, – explains Dmitry Dolgov. “In addition, we should not forget about the dumping of owners who want to exit the project in the current geopolitical conditions, and therefore sell apartments below their market value.”

“Some developers have been faced with the task of selling the leftovers for several years. For example, a residential complex, where apartments are cheaper than those under construction, was built without escrow accounts and was commissioned back in 2015-2016. In the current realities, his proposal is assessed as a “business minus,” says Yana Glazunova, CEO of VSN Realty.

Dombook Managing Partner Irina Dobrokhotova says that within the old boundaries of Moscow, the average cost per square meter in projects where construction has not yet begun is 475 thousand rubles, in projects on the zero cycle 467 thousand rubles, in projects at the stage of installation of middle floors 432 thousand (apartments and apartments of all classes, according to bnMAP.pro). This difference is due to the fact that new projects are launched already in the new economic conditions, they are financed by financial models designed for a less stable economy. The higher price is also explained by the increased cost of building and finishing materials, elevators, etc. What until last year could be imported directly, now comes at best through parallel imports.

“Many owners of ready-made apartments agree to sell them much cheaper than similar objects in houses that have not yet been commissioned,” says Danila Savchenko, CEO of Apple Real Estate. “They have either already left or are about to leave the country and are ready to significantly reduce the price for quick deals. We predict that the situation will remain unchanged in 2023, as consumer demand, although it has begun to gradually recover, has not yet reached the level of 2021. In addition, the volume of supply is a multiple of the demand. Plus, we are heavily dependent on mortgage rates: so far, they are much more profitable on the new-build market than on the secondary housing market.

“As a result, the logistics schemes will be redone,” Irina Dobrokhotova is sure. – What can be replaced by domestic materials will be replaced. But so far it is extremely difficult to make any forecasts, too much is tied to foreign economic conditions.