Residential real estate market experts discussed the purchasing power of the people

On May 19, 2011 URE Club held a business breakfast on the topic: Residential real estate market in terms of purchasing power of people.

During the event, real estate experts discussed the dynamics of sales of residential real estate over the past couple of years, price fluctuations, additional opportunities for the buyer, provided by the developer (installment, mortgage), as well as provide market forecast for residential and suburban real estate in terms of demand, supply, prices on objects in the short term.

The event was attended by representatives from the following companies: A.B.C, NBK, DIO Group, Rustler Property Services, Vercon Development, KPD Consulting, Contact-Invest, YUZTS, TMM, Ektornet Management Company, Tiko Construction, FSK Pagoda, Ukrsotsbank.

Moderator of the business breakfast was Vladimir Bandura, development director of Intergalbud Company.

During the discussion of trends in the market of residential and suburban real estate, all the experts agreed that the purchasing power of the population decreased significantly during the crisis. Portrait, psychology and geography of the buyer were changed. If previously significant layer of consumer is the so-called middle class, now the buyers of such categories are virtually absent. A portrait of the buyer has changed. If before the crisis 90% of housing in the capital was bought by residents and 10% - non-resident, now, 80% of purchases made by nonresident citizens, while 20% of all purchases form people from Kiev. Experts also noted that the modern buyer is more cautious. If earlier in the priorities of buyers has been the stage of home construction and commissioning, and now he wants to get the full package of documents to protect him from unforeseen situations.

The modern buyer, said Oleg Dunda, director of the Prestige Hall, A.B.C. Company, now makes demands a higher level of residential real estate projects, than, for example, in 2007. «Today's buyers need a minimum number of tenants at the site, with a maximum lift with the descent into the basement, a good entrance, security, quality engineering and good house territory. Residents want to live in a bright and spacious room with large windows, as in Europe. Low light is no longer suitable», - shared his observations Oleg Dunda.

Aleksey Govorun, Deputy Director of Strategic Development and Marketing, TMM, sounded interesting point with regard to buyers of economy housing, which the company operates: «If in 2009 the ratio of sales of the housing being built and there were about 70% to 30%, in 2010 60% sold in buildings under construction and 40% in the already constructed. Interestingly there is a development of economy class housing in the suburbs of Kiev, especially on the right bank. Very high level of competition is in the primary market buyers of apartments in 4-5 storey buildings in the vicinity of Kiev (Irpen, Vishneve, etc.)».

Demand for residential real estate is different depending on the target audience and class of the object. In the economy segment of the one-and two-bedroom apartments are in high demand in business class, prefer to buy multi-room apartments and the construction of one-bedroom apartments unprofitable.

Sharp debate was caused by the issue of home sales in installments. Most market experts are using this tool of sales. For some Companies installment helped to survive in a crisis. Said Oleg Homko, CEO DIO Group, cottage city Severynivka. «We have to provide installments from the first day of work since 2006 for a period of two, three years. We provide installments and for 10 years also. Of the more than 200 homes sold, only about 10% redeemed immediately, and with 100% payment. If we had not signed contracts with deferred payments in 2006 - 2007 years, the existence of many of our projects would have been called into question. Of course, part of the installments (but no critical mass) proved to be problematic. Nevertheless, over the past three years the number of sales with 100% paid down to zero. Today's customers, who purchase a home in installments, are able to provide the payments».

In TMM installments offered to customers, but very careful for choosing clients that can provide a similar service: «I know companies that focus on lending, but half years have a 10 problem contracts of installment. From the developer there is value for money, so the installment plan is not always successful path of development for the builder».

Also expert opinion was differed about the market and on delivery of premises with a full finish. Many buyers prefer to make individual improvements, and the level of training of modern architects and designers is poor. Therefore, often yield to the buyer is the order of the individual project from the developer, who will make it according to the specifications and take the necessary alignment.

An important issue was the question of management of already prebuilt objects. Housing offices (ZhEKi) are no longer satisfy the needs of tenants and do not provide the required quality of service buildings. In the TMM it is one of the priorities. «This issue was devoted to the two boards of directors to discuss the rates, volumes of services. We have a problem with buyers. They require a reduction of tariffs. We have reduced tariffs, but, accordingly, reduced the volume of services. There are no miracles. In our country there is no understanding of property and interest in its operation. The buyer often does not understand the benefits that its guard, ensure smooth operation of utilities, etc.», - said Alexei Govorun.

Sergei Bukhanets, director of real estate management company Rustler Property Services, shared his experience in management of ready living objects: «In creating of housing offices we took the example of Austrian asset managers. To date, we serve homes on system of hourly jobs. It makes no sense to keep many specialists in the state. Hourly pay cheaper fares on the service and arrange our staff. Such an approach is economically justified for the tenants.
With the new housing we are also working on a similar scheme. When we form the staff at the facility, it provides for a standard unit as a technician who is constantly on the object and can perform a number of minor works. Mobile brigade demand for more skilled problems and solve them on demand. At each site is formed a state, depending on needs. Rates fixed and developed individually for each object. Rates vary in area from 4 to 6 hrn per sq.m. and agreed with the developer, builder. Ultimately, we are obliged to coordinate with each rate tenants, and be accountable for every penny».

Summarizing the discussion, all experts agreed that the housing market is going through a stage of stagnation. 2011 may be indicative of - if not economic disasters, there is a chance to increase sales of housing, to the extent that the market may experience a lack of quality supply.
Developers prefer to develop small projects due to lack of demand, investment and the normal system of bank financing. «In reality, the company says about the construction, but it's a small projects or infrastructure. The implementation of a more or less significant residential complex demands of tens of millions of dollars that banks are willing to provide for that credit, which makes no developer, and equity. In addition, infrastructure costs are not reduced in any new projects, especially the central part of town», - suggested Alexei Govorun.

According to market experts of residential and suburban real estate at the moment may generate the following predictions:
• Continued stagnation and insignificant increase in sales.
• Improving the perception of the primary residential real estate market end users.
• Lack of development of residential properties in the regions.
• Lack of growth of prices in the short term.
• Increasing demand for residential property in the suburbs with good infrastructure.
• Precise positioning of objects, depending on the target audience of buyers.
• Open and a more holistic communication among market players.

Photo report on the results of the event can be viewed at the following link: http://www.ureclub.com/merop/view/98/

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