The business class was sent for sale

The sharp decline in demand is forcing developers to attract buyers with discounts. Discounts of up to 20-30% are already offered in half of business class housing projects in Moscow. Market participants believe that massive discounts above 20% may indicate both the initially inflated selling price by developers and the financial problems that companies have encountered.

Discounts for the sale of business class new buildings, where the average current price is 485 thousand rubles. per 1 sq. m, have become widespread, writes NF Group in its report. At the end of September, discounts were offered in half of the projects on the Moscow market, and their average size was 10-12%. Olga Shirokova, director of the consulting and analytics department at NF Group, explains that earlier discounts were present on the market on an individual basis. According to Valeria Tsvetkova, managing director of Bon Ton, discounts are now provided in the primary market of Moscow in 78% of objects, the size of which varies from 5–7% to 30%.

Dombook Managing Partner Irina Dobrokhotova talks about the increase in discounts from 18% to 25% per year. “There is a greater number of projects than ever where they are ready to reduce the price by more than 20%,” she says. Nadezhda Korkka, managing partner of Metrium, notes that a year ago, discounts in new buildings in Moscow amounted to 1-2%, but now promotions with a discount of 10-30% have spread. The number of such proposals has also grown: some developers have begun selling the entire pool of real estate at discounts, although previously they reduced prices only for individual lots.

Nadezhda Korkka connects massive discounts with the desire of developers to restore the demand that was shaken after September 21st. Although in general, the entire current year is pessimistic for developers. According to Est-a-Tet, in the third quarter, the volume of realized demand for business-class apartments in Moscow amounted to 224.3 thousand square meters. m, which is 39.2% less year on year. According to bnMap.pro, in September, only 4.4 thousand transactions were concluded in the primary market in all segments of housing, which is 43% lower yoy. In business class, the decline was 49%.

Ms. Tsvetkova explains that under the current conditions, the business class segment is more vulnerable due to the fact that mortgage programs with state support are generally not covered by it. Against this background, discounts remain the main tool for developers to maintain demand, the expert explains. Igor Sibrenkov, Commercial Director of Osnova Group of Companies, believes that in many projects discounts are used as a marketing tool.

Valeria Tsvetkova warns that developers are unlikely to sell housing at a loss: “The financial model of the project always includes the weighted average price approved by the bank for project financing.” Therefore, the discount, in her opinion, is often given on the initially inflated price. Irina Dobrokhotova adds that, despite the revaluation of individual projects or lots, many companies are not ready to reduce prices for all objects, as she determines the value of the collateral.

Kommersant’s interlocutor from among developers doubts that discounts of 20-30% fit into the financial model of the project, suggesting that they indicate either the presence of initially inflated prices in the project, or financial difficulties for developers. “Only a small number of flats or suites in each project can actually be sold with a discount exceeding 15%,” he believes.

Sergey Nyukhalov, Deputy Sales Director of Granel Group of Companies, notes that the percentage of price reductions can vary greatly depending on the object. In November, the expert expects a slow recovery in buying activity, in particular, due to special offers on the market. Although Olga Shirokova doubts that in the near future the market will be able to get away from the practice of mass discounts. According to her forecasts, discounts will continue until the end of this year, and in the future the situation will depend heavily on the balance of the market, the general political and economic situation.

Alexandra Mertsalova