Crisis has changed market of the cottage real estate

13.10.2009 17:21
Real Estate Market Analysis | Crisis has changed market of the cottage real estate
Beautiful house with big windows and balconies pretentious, estates with a silky lawns, happy people, happy and carefree stay at the fresh air ... All of this - the attributes of suburban life, introduced into the realities of our American movies and then carefully cultivated. In the period 2006-2008. developers literally get rich, when the support of banks to sell the idea of a new style of life rich compatriots. Financial and economic crisis has made some corrections in this rosy picture, and now developers cottage towns are experiencing is not the best of times. However, some of them are reluctant to turn off the activities, relying on post-crisis profits.

Frozen towns

Related article: Cottage house in Kiev and Kiev region: trends and forecasts

Unavailability of mortgage loans has led to the paralysis of the cottage market. In the Kiev region, according to Commercial Property, of the hundreds of applications, there are no more than ten villages, which are actually being built. Other frozen until better times. Perhaps, many owners try to sell its wholly failed projects? According to the Head of Department for Strategic Development of the Finantek Ivan Guskov, because of high risks and low demand is hardly feasible.

Consumers are offered various options for discounts and installments. And although the special offers have not yet revived the market (it can be conducted only on the individual transactions that are not representative), the developers do not intend to significantly reduce prices. They say that working with a minimum profitability and sell items at a loss will not. So few buyers still eyeing proposals on the secondary market. Often it is ready at home with quality repairs, while fallen in price for the year by an average of 40% (in cottage towns offer price fell by only 30% compared to 2008).

Experts believe that to survive the crisis and wait for new clients, many operators of the market can not solely their own fault. "Reducing the demand for cottage real estate started long before the crisis, - says Ivan Guskov. - Despite the fact that the market was overheated in part, the errors of development (low-quality concept, the failure of developers pledge on social infrastructure, low level of engineering services and construction , unreasonably high prices) led to a decrease in consumer activity. This sad list could add another very common mistake. "Some companies are often acquired land-promoted in areas where land cost is very expensive, which automatically led to a substantial increase in the cost of the project still in the early stages of its implementation. Our company has adopted a different solution: to build a town in the not very prestigious at that time, Zhytomyr direction and make maximum efforts to popularize it, "- said Sergey Eliseev, CEO of DK Europe (Project Olimpik-Park").

Correct the mistakes almost impossible, so such fashion to determine how "rekontseptsiya" or "change of strategy of development of" applied by some operators in the market as a possible panacea to the crisis - not more than words. "On what rekontseptsii can we talk?" Initially, marketing, planning and architectural concept of the village are designed to ensure the most comfortable environment people of the town. If you once could not guess what the consumer preferences, then where is the guarantee that the second time hit the target, - mocks Sergey Eliseev.

From this it follows that in the future will be able to make only those who have not made a miscalculation in the beginning of the project and, despite the crisis, was able to find funds for its completion. Thus, in several towns continues to build cottages, to which developers spent their own money. The calculation is done on the effect of pent-up demand. The crisis can affect reality, but not a dream, in this case - a dream of many people about the nice suburban life. Pent adverse financial circumstances demand sooner or later turn into a buzz around the surviving towns, which are likely to be a little bit. And, of course, the special popularity among buyers will be able to count only those who offer shelter, ready for at least 90%.

Experts say that the crisis will survive, not all development companies. "Real estate cottage on the post-crisis stage, reformatted, - believes Ivan Guskov. - Weak and small players will leave. Fundamental to the professional approach in project implementation: developers to submit proposals to the market will carry considerable preparatory work (providing engineering services), projects on quality characteristics (area of detached houses, the size of land, infrastructure, quality and so on.) will focus on the real demand. "

Options transformation

Acute problem of cottage construction in Ukraine, which became evident even before the large-scale economic cataclysm - the high cost of infrastructure development towns. Many buyers have experienced disappointment to discover that their campuses are not yet available promised advertising leaflets kindergartens, schools, sports complexes and shops. The crisis delayed construction of these facilities to an even more distant prospect. "None of the village near Kiev claimed infrastructure fully implemented will not, and if they will be, will not survive more than a year - says Eliseev. - In the village of 50 houses and a children's sports complexes will be very expensive for the residents. An exception may be a shop or cafe, if the number of houses rose past a hundred. Moreover, in order to create a full (and relatively inexpensive), a network engineer must have at least 700 households. And in the Kiev region of such towns almost none. But when a radius of five seven miles there are several cottage communities, their developers to create infrastructure can and should agree on the equity participation.

It is possible that, in addition, the market will have until recently been very popular proposal. Such, for example, was considered a sale of land without a contract, which had previously been popular in the elite segment. "This segment is characterized by high standards and breadth of the differences in consumer preferences, more focused on individual approach to his estate. For the developer, this strategy is attractive because it reduces the amount of investments needed for the project and consequently increases the rates of return and payback," - says I. Guskov. Sergey Eliseev also notes the theoretical attractiveness of such options for the sale, believing that it is very profitable to buy up cheap land and resell it had conducted with engineering networks. "Most companies that own land and have not started their projects do not have the funds for engineering work," - he believes, although it does not preclude the implementation of such schemes sales.
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