Real demand for vacation homes fell by a third





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24.05.2008 00:00
Real Estate Market Analysis | Real demand for vacation homes fell by a third Liquidity crisis, provoked the tightening credit policies of domestic banks, said at the Kiev market suburban housing. Over the past two months, the number of transactions it has fallen by 25-30%. The first to suffer from the unpleasant tendency of newcomers, which account for 40% of all announced projects.

They will be forced to either freeze them or sell to foreigners. Others will have to lure customers lower prices, which until the end of the year may fall by 15-20%.

No buyers

Recent years, suburban housing market in Kiev pleased working in this sector developers. According to consulting company SV Development, if in 2006 the area was sold about 700 homes in cottage settlements, in the past - 1,25 thousand in the research company said that in 2008 this market had to grow up to 2 , 2 thousand, and in 2009 - up to 3,4 thousand now, probably, these predictions have to adjust. The reason was the sharp fall in the interest of buyers to the countryside home. According to realtors, when in February this year they sold about 60, in March, despite the start of the season - not over 47, and in April and did 34. According to Director General, Academy of Sciences Alliance Brock Andrei Sokurov, a decrease in the number of transactions and increase the activity of said company managers, realizing cottages. "If earlier we are looking for new projects and offered their services to their owners, but now there was the opposite situation," - says Mr. Sokurov.

The main reason for reducing the number of transactions is the lack of and high cost of credit. According to chief of department of development of individual business UkrSibbank Ivan Istomin, since the beginning of this year, the cost of borrowing has increased by 2-3%. In addition, decreased loyalty and bankers to borrowers who choose to build or buy a country cottage. Head of Marketing Department of Real Estate Solutions Andrew Borsch said that many potential buyers because of tighter lending conditions have frozen their purchases. "They are afraid to take long-term loans, for example for 30 years, because after a certain period, they may offer to reduce the credit period," - he said. If one considers that about half of them have resorted to loans, changes in banking policy immediately reflected in the market.

According to observations by Andrei Sokurov, suffered less than other developers who are selling houses at the Obukhov and Borispol directions. In these villages the number of transactions decreased by only 10-15%. "In my opinion, this is due to good location of houses - such as access to the Dnieper River and its tributaries. Such sites are always in demand ", - said Mr. Sokurov.

IN AN Alliance Brock "note that the least popular are the Odessa and Brovarske direction, where the number of transactions decreased by 30-40%. "The problem is Odessa's workload and constant traffic jams on Moscow Square, and Brovarske only gaining in popularity", - says Andrey Borsch.

Builders lure foreigners

Experts say that the current situation - it is only the beginning of future difficulties in the suburban real estate market. According to forecasts by Ivan Istomin, this summer loans to rise by another 1-2%. "In my opinion, there will be prerequisites for their cheaper, and this fall," - he says. With the financial problems faced primarily company-novices. According to Real Estate Solutions, today to 40% of the announced projects implemented by agencies who have not worked before in this segment. Start-up capital, most of them small and does not exceed $ 10.5 million, the lion's share of these funds is to purchase land. Due to ever-stricter credit conditions for businesses beginner can count on the third or at best half of the value of the collateral. "But even in this case the project is risky, and not all banks are willing to allocate funds for its implementation", - says Andrey Borsch.

Experts estimate that today the number of reported but unrealized projects reaches 15-20% of the market, and is not excluded that this summer their number will increase to 30% of the total. This will be facilitated and a great offer, which is now eight times greater than demand. "According to our data, in the Kiev region was built about 32 villages, which include more than 1,7 thousand villas and townhouses. During the construction phase is 46 towns with more than 7.4 thousand houses. In addition, the projected order of 25 villages with 11 thousand houses, "- says the director of marketing company SV Development, Vladimir Stepenko and adds that the concept of an additional 20 townships.

Left without any bank loans and buyers, small businesses will be forced to leave the projects and sell them to foreign investors - the Russian, Chinese, Israeli or European companies, has repeatedly stated its intention to work on the Ukrainian market of suburban real estate. "They are attracted by high profitability cottage building was 40-60%, and in some cases and all 100%", - say in real estate development companies. Some analysts say that the individual projects in the Kiev region already for sale.

According to Mr. Istomin, developers have to attract customers who decide to still stay in this business will be forced to adopt more flexible pricing policy, giving customers discounts. At Real Estate Solutions told that some companies already did it. "There are proposals confined to the festivities discount, the amount of which reaches 5-10%", - says Andrey Borsch and predicts that if credit conditions do not change, year-end price per square meter dropped to 15-20%.

Fair to say that the situation would not affect large developers - Kyivmiskbud »,« XXI Century "," T. MM ", etc. Some of them have access to external capital markets and diversify risks. They can afford to freeze the funds and suspend the implementation of projects in the hope of stabilizing the situation.
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