Elite housing has lost buyers

According to the results of this year, the number of apartments sold in elite new buildings will be reduced by one and a half times. The reason for this is the outflow of some wealthy clients abroad and the reorientation of the remaining buyers to the secondary market. Developer activity in the segment is still maintained due to the availability of funding, but it will not be easy for developers to sell expensive housing. Investors have no incentives to invest in elite new buildings in Moscow. It is difficult to sell such lots later, and it is unprofitable to rent them out, the consultants explain.

According to the results of 2022, 620-640 lots will be sold on the high-budget new buildings market in Moscow, which is 48% lower year-on-year, Intermark Real Estate predicts. The company estimates the total value of these transactions at RUB 93–95 billion, which is 23% less than a year ago. The total area of ​​sold lots will decrease over the same period by about 40%, to 76-78 thousand square meters. m.

Metrium Premium indicates that from January to November, the number of transactions with elite new buildings in Moscow decreased by 55% year-on-year, and by 50.7% in total area. In value terms, the turnover of this segment shrank by 32.4% to RUB 42.8 billion. NF Group believes that the number of transactions this year will be 44% lower than last year, and their total value will be 40% lower, to 100 billion rubles.

The fall in demand for elite new buildings was last observed in 2017-2018, recalls Dmitry Khalin, managing partner of Intermark Real Estate. According to him, several factors negatively affect the segment this year. “Some potential buyers have left the country, others have abandoned the idea of ​​investing in elite new buildings, preferring to transfer money into foreign currency or pick up assets abroad, others have reoriented to the secondary market, considering it more attractive in terms of prices and guarantees,” lists Mr. Khalin. Anna Radzhabova, director of elite real estate management at Metrium Premium, believes that many clients in general have decided to postpone the decision to purchase real estate until the situation stabilizes.

The volume of supply of high-budget new buildings, according to Intermark Real Estate, at the end of 2022 amounted to 1.5 thousand lots, having decreased by 1% over the year. During the year, according to analysts, 12 new projects entered the market compared to seven a year earlier. The construction of another ten projects has been put on hold this year, and they will enter the market in 2023, Mr. Halin adds. Metrium Premium says that if a year ago sales were carried out in 55 elite projects, now they are in 63. NF Group partner Andrey Solovyov speaks of an annual increase in exposure by 37%, up to 1.8 thousand apartments and suites.

Maxim Leshchev, managing partner of the Meta group, assumes that development activity in the segment, despite the decline in demand, will continue. According to him, banks are now lending to development projects in the mass and elite segments, while they are ready to finance business-class housing to a lesser extent.

The weighted average price of transactions in the fourth quarter of this year, according to Intermark Real Estate forecasts, will be 1.2 million rubles. for 1 sq. m, an increase of 9% year-on-year. The consultants note that the declared average market value of expensive housing at the same time increased by 27%, to 1.6 million rubles. for 1 sq. m. But buyers chose lower prices. At the same time, many developers in the fall were forced to meet buyers halfway by selling real estate on favorable terms (see Kommersant of November 25).

The activity of buyers at the beginning of 2023 will depend on the pricing policy of developers, namely on the starting cost of sales, Dmitry Khalin is sure. The consultant is convinced that “developers will find a way to boost demand.” Andrey Solovyov also draws attention to the dependence of the market on prices: “We will continue to live in the realities of the buyer’s market and the search for a balance of supply and demand in the new conditions.” Anna Radzhabova expects that the activity of buyers will also be supported by the effect of pent-up demand and the difficulty of investing in foreign assets.

Mikhail Burmistrov, General Director of Infoline-Analytics, sees no incentives for potential investors to invest in elite new buildings in Moscow. “Many wealthy people have left Moscow, the secondary supply against this background has reached a record volume – it is now impossible to sell something without a big discount, and rental yields have dropped sharply,” he explains.

The expert points out that there are no prerequisites for a reversal of these trends yet. Investors who decide to invest in housing, according to Mr. Burmistrov, will rather pay attention to the markets of the UAE, Turkey or the post-Soviet countries. He does not wait for a revival in demand until the stabilization of the geopolitical situation.

Alexandra Mertsalova