Most of the trends characteristic of the residential real estate market in the second half of 2017 will remain relevant in 2018. Market experts who talked with the Property Times believe that competition will intensify, prices will rise, and developers will fight for the buyer by expanding and improving services. Reputation vs innovation
"There is still a large number of players on the market," says Olesya Perchak, Commercial Director of Obrium. "On the one hand, those that occupy a significant market share have a success story and the confidence that they have generated, that they will have everything wonderful, no matter what. On the other hand, young players with innovative approaches, faster and more flexible response to consumer demands. " When choosing an apartment, the buyer "weighs", compares and chooses what is closer to him: a history of success and reputation or creativity, flexibility combined with high responsibility, and openness. "This will increasingly affect the structure of the market and its change," the expert predicts.
To be successful in a highly competitive market, a developer needs to come up with his "chip", offer the customer a unique service.
"If before, everyone sold square meters, now, with increasing competition, investors are increasingly paying attention to the content of the product, the idea," comments Andrey Vavrysh, CEO of Riverside Development. "The buyer should not only understand what he paid for, but also feel all the benefits of living in the most thoughtful and quality built project."
Focus on services
The supply and demand are gradually shifting towards comfort-class housing, which combines the affordability of an economy with an extended range of services.
"The comfort class is already more than half of the starting projects," explains Elena Shirina, an analyst with the marketing department of the development company City One Development. "In order to maintain the falling market value of housing, developers will continue to position their complexes higher, trying to add some advantages to them without significantly increasing the cost price."
The location, quality of technologies and materials in determining the class of the project gradually go to the background - services are the determining ones.
In 2017, several large-scale integrated development projects began to be implemented - this year they will constitute a significant market share. Developers are interested in the possibility of implementing the maximum number of functions within a single project - this reduces costs for a single house. Investors receive a modern quality space for life. In new projects, more attention is paid to places for communication and leisure, qualitatively, taking into account the needs of future residents, the infrastructure is being worked out.
"This trend begins to form a new consumer segment - some people who bought apartments in new buildings 4-5 years ago already understand that their housing does not provide the desired quality of life, and again move into a group of potential buyers," comments Alexander Panfilov, the head sales department of the mini-city SVITLO PARK.
Functionality instead of smallness
Demand for smart apartments is declining, functional housing of medium size is gaining in popularity.
The fascination with smart apartments in the past years provoked a deficit of two-room apartments, so this year their share will grow. Also, the demand for so-called apartment-transformers will increase, says Svetlana Lyubimova, head of the sales department of the residential complex "Petrovsky Quarter".
The layout of apartments will also change - they will become more functional and comfortable. "Among the main trends in planning solutions can be allocated competent zoning, the maximum use of square meters for a harmonious life, the reduction in the area of corridors, the allocation of wardrobe rooms," comments Olesya Perchak.
Modern technologies have taken a firm place in consumers' lives, and home buyers are no exception. Realizing the existing demand in the society and following the world trends, developers gradually introduce new technologies in their projects. These are the "smart house" and "smart apartment" systems, electronic systems for access control, air and water purification.
"Owners of apartments in which smart home systems are introduced not only receive a higher level of comfort and security, but also can more efficiently use heat, lighting and electrical appliances, which minimizes the cost of utilities," said Anastasia Marauli, director Marketing Edelburg Development.
Simultaneously with the request for manufacturability, a request is made for better services. "ZhEK with the standard set and quality of services to the consumer is no longer interesting. We need a management company with a modern service that will provide a wide range of quality services, "explains Ruslana Grabko, director of sales and marketing at Royal House.
The rise in prices is inevitable
After the relative price stability of 2017, this year experts predict an increase in the cost per square meter in new buildings.
"Prices will grow commensurately with the growth in the cost of energy carriers, components and depending on the dollar exchange rate. Therefore, the forecast for buyers is disappointing - the prices for today are marginal, they have nowhere to fall, it remains only to "push off from the bottom" and fly up, "commented the press service of HC Kyivmiskbud.
Growth indicators will largely depend on the exchange rate of the national currency. According to Elena Shirina, in the case of a significant strengthening of the hryvnia, it is possible even to reduce the hryvnia prices. However, the expert believes such a development of events is unlikely.
In the company DIM group are confident that even in the most pessimistic scenario, when the hryvnia exchange rate drops sharply, real estate prices will not increase in the corresponding equivalent. "With a low purchasing power, developers can not adequately respond to course jumps, because a sharp, even if completely justified, price increase will lead to a decrease in sales," - says Pavel Podrany, Director of Sales DIM group.
"According to our forecasts, the growth in prices in the hryvnia equivalent in 2018, compared with 2017, is expected to be at the level of 20-30%," Olesya Perchak said, emphasizing that in addition to the exchange rate, the growth of the minimum wage and inflation.
Without a mortgage, but with installments
"The market is waiting for large-scale and inexpensive mortgage lending. However, banking rates, taking into account all risks, do not allow long-term loans to customers in national currency. Because at an effective rate of the order of 20% for 5-6 years the apartment becomes more expensive in price twice. This becomes at least not interesting, "- says Andrei Vavrysh.
Experts do not yet see the preconditions for lowering mortgage rates - most likely, they will grow. Among the reasons called the increase in the discount rate of the NBU, the depreciation of the hryvnia and the uncertainty of the future tranches of the IMF.
"The growth of interest rates will negatively affect the development of lending in general," said Elena Dmitrieva, deputy chairman of the PAT "CB Globus". - Mortgage lending is most sensitive to the interest rate, therefore most banks now do not work in this direction. I think that this situation will not change significantly in 2018, we do not expect the emergence of new players. "
To reduce the cost of credits, system changes are needed in the country, Olesya Perchak explains. "The growth of the number of solvent borrowers with officially confirmed sources of income is important. Legislative changes are needed that increase the guarantees of banks in the event that the borrower does not repay a mortgage. According to optimistic forecasts, interest rate cuts can be expected not earlier than the second half of 2019 ", - the expert comments.
But developers will continue to use their own financial and credit mechanisms.
"According to the results of the last year, it can be assumed that in 2018 about 50-60% of apartments in the primary market of Kiev will be purchased at 100% payment of their value. About 40% of the apartments will be purchased on installments and not more than 4% with the help of bank lending, "predicts Alexander Panfilov. In his opinion, the terms of installments will become more attractive to the buyer: the terms will grow to 7-10 years, and the down payment will be reduced to 10%.
Win and retain loyalty
An important mechanism for attracting customers will remain loyalty programs. Approximately 80% of developers use discounts in various formats: just discounts, special price offers or additional preferences for repeated purchases. The traditional discount at 100% payment is 5-10%, in some cases its size reaches 15-25%. The type of promotional offer depends largely on the class and starting cost of housing.
"The discount from the cost is the most common option for economy and comfort class," explains Andrei Vavrysh. - A pantry or a parking-place as a gift will be well-claimed for elite and business class. - Depending on the class of the object, gifts and various bonuses will also be offered in the form of travel, home appliances, a set of "smart home" or a design project. "
To traditional discounts and gifts, non-financial mechanisms are gradually being added, allowing to obtain and retain customer loyalty. "Non-price loyalty programs are used to build communications with investors not only before and at the time of purchase, but also after the customer made money," Olesya Perchak comments. - The consumer should feel the attention and care of the builder and after purchase, regularly receive feedback. This is a necessary condition for increasing loyalty, which, as you know, is a two-way road. "
Earlier we informed that it would be with the real estate market in Ukraine.