Elite discount – Newspaper Kommersant No. 212 (7413) dated 11/16/2022
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The desire of developers to include all possible risks in the price of new buildings and the unwillingness of buyers to overpay during a crisis led to a record imbalance in the market of elite new buildings in Moscow. The average amount of real transactions turned out to be one and a half times lower than the average offer price. To keep buyers remaining on the market, developers have to discount lots.
According to the results of October, the average supply prices of elite new buildings in Moscow exceeded the average cost of transactions by 53.5%, according to Intermark Real Estate data. This is a record gap, analysts say. At the beginning of 2022, a similar gap was estimated at 11.6%, a year earlier – at 43%. NF Group partner Andrey Solovyov points out that the weighted average price of the exposition of elite new buildings is now 1.53 million rubles. for 1 sq. m, exceeding the selling price without discounts by 52%. “The difference between these indicators has always been, but not as high as it is now,” he notes.
According to Intermark’s estimates, the average supply price on the market of elite new buildings increased by 33.5% yoy in October to RUB 1.73 mln. for 1 sq. m, this is the peak value for the entire period of monitoring the market. At the same time, the average price at which apartments were actually sold increased by only 5% over the year, to 1.13 million rubles. for 1 sq. m. Alexander Kuzin, a member of the AREA Association, believes that the exhibited prices for lots in high-budget new buildings increased by 20-40% over the year, while the cost of transactions remained at the level of last year. Point Estate Sales Director Roman Amelin believes that the exhibited prices for new buildings have increased by 10%, and real – by 3-5%.
According to Anatoly Dovgan, director of the market monitoring and valuation department at Intermark Real Estate, the crisis encourages developers to increase their declared prices, adding risks, an increase in the cost of materials and an increasing cost of lending. At the same time, according to him, the most budgetary offers are being washed out of the market, and the share of more spacious apartments in the sales structure is growing, where the cost of 1 sq. m. m below. Anna Gurtseva, director of the elite real estate department at Est-a-Tet, also points to these changes: “Liquid lots are washed out of the exposition, and expensive penthouses, two-level apartments with terraces “hang”.
At the same time, the activity of buyers of luxury housing is now at a low level, now one transaction per month can be concluded for the sale of an apartment worth from 100 million rubles, says Alexander Kuzin. “Now the situation is good for buyers, developers agree to a discount, but there is no single picture. For some lots, discounts can be 20–30%, for others – 5–7%,” the expert explains. Anatoly Dovgan notes that the average discount for the year increased from 4.9% to 7.7%. Mr. Solovyov notes that the amount of discounts increases noticeably in projects that have been exhibited for a long time.
Low demand has already led to an increase in supply. According to NF Group estimates, there are currently 1.8 thousand flats and suites on display on the market of elite new buildings in Moscow. Since the beginning of this year, the figure has grown by 37%. According to Alexander Kuzin, another 10-12 projects are being prepared for the launch, which will enter the market as early as 2023. At the same time, Intermark states that a large gap between the cost of supply and sale so far rather indicates that buyers are not ready for a new significant price increase. This negatively affects the sales dynamics of developers, stimulating them to develop loyalty programs, analysts add.
Despite the negative market conditions, developers, according to Mr. Dovgan, rather maintain positive expectations, hoping that the market will recover in the coming years. The expert considers high inflationary expectations and forecasts regarding the growth in the value of currencies as indirect prerequisites for this. At the same time, Mr. Solovyov assumes that the market price for elite housing has not yet been established in principle: the market is in a state of turbulence, buyers and developers are testing various models of behavior.
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