Business news from Ukraine

Business news from Ukraine

Things that really help developers to sell apartments in new buildings – expert opinion

28 November , 2023  

Alyona Piskunova, conceptologist at DIM Group of Companies

Three things that really help developers sell apartments in new buildings today

Since the beginning of the full-scale war, Ukrainian developers in the primary real estate market have faced two extremely difficult challenges. The first was to survive and maintain their positions, i.e. the team, to support those who went to the army to defend the country, to defrost the sites in time and not to lose the pace of construction. The second is to survive in conditions of limited demand, and in particularly difficult periods of almost zero interest in buying apartments.

We all remember well the first half of 2022, then the period of massive rocket attacks in the fall and winter of last year – when the volume of demand fell significantly, and the number of transactions was measured in units, at best dozens of apartments, provided that you build liquid projects on time and quickly and the concepts of the residential complex fully satisfy the buyer’s request today.

Fortunately, since the spring of 2023, to be precise, since the end of May, after the end of the missile terror on the capital, the capital’s real estate market has been experiencing a period of restrained optimism: sales in the comfort+ segment, provided that the project is actively under construction, are growing by 5-6% per month. For example, we have managed to return more than 40% of the pre-war sales volumes.

However, there are three things behind these figures. First of all, there is noticeable construction activity on the sites, which is now one of the priority selection criteria. Over 95% of buyers, according to our observations, over the past six months, have cited construction activity and the developer’s reputation as important for making their final choice.

The second key point is the liquidity of the format and complex. It is important for people to see not imaginary renders, but the concept of living space, where zoning and filling the territory with functions and infrastructure meets all their everyday needs, and planning solutions are ergonomic and comfortable for life.

The most liquid formats are multifunctional cluster, eco-city and multifunctional complex with the concept of a 15-minute city. The most popular are the European layouts from 45 to 85 sq.m., necessarily a large kitchen-living room of 20 sq.m., isolated bedrooms, and two bathrooms for 2-3-bedroom apartments.

And the third point that contributes to the gradual recovery in demand is the company’s willingness to make concessions and offer flexible purchase terms. In fact, today, sales are sufficiently high for those who, thanks to a sustainable financial model, can offer a long-term installment program of 3 years or more.

Understanding the request for financial leverage from the developer, we have developed an installment program for 7 years at 0%. At the same time, the so-called “stability year” with fixed minimum payments ($300/month for 1K apartments;
400$/month – for 2K apartments; 600$/month – for 3K apartments), and then installments without overpayments for up to 4 years. Down payment from 30%.

Such programs are becoming a financial incentive to buy today and increase the volume of effective demand. For the buyer, this is also a signal that the developer’s financial model is stable enough for the company to be ready to share the burden with him. After all, it is clear that it is more profitable to sell for 100% payment and receive funds here and now. However, challenging times require difficult but significant decisions: today it is extremely important to support each other and be in partnership with the buyer.

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