Cottages on the southern coast of Crimea

08.10.2009 16:04
Who buys elite housing in the Crimea and how to better manage this housing in times of crisis?
Cottages on the southern coast of Crimea

Southern coast of Crimea is unique not only for its microclimate and recreational opportunities. This is a special region, where the laws operate, and the cost of housing capital outdid price. Who is buying luxury apartments in the Crimea, and how it is better to dispose of housing in time of crisis?
Developers believe the present time very successful in order to look after the new land, but a viable investment - the construction of premium housing. Thus, CEO of development company "Europe" Sergey Eliseev notes that "it is very advantageous situation for the acquisition of sites. We are looking for. For a chosen part, on which they can build interesting characteristics of residential facilities.

Related article: In the cottage setlement Green Hills put into operation the first street

However, pick up something worthwhile is easy. And not even because the crisis poorly cheaper land on the South Coast. And because the land offered in the Crimea, as a rule, are either surrounded by a chaotic urban development, or have serious problems with engineering, or are not satisfied with the developers of aesthetic positions. The same problem encountered, and the buyer. On the Crimean coast, it is not insured, that the promised view of the Cote d'Azur in half-year closes building, or in the neighborhood would be public toilets ...

Objects ready for sale

And yet, it feels Crimean real estate market during the crisis? According to the consulting company Knight Frank, in 2007 the market ARC "left" 21 object class "elites", from this number 5 projects presented in the format of cottage settlements. Since the beginning of 2008 until the end of the first quarter of 2009 the volume of proposals in this class has grown by 1 182 flats and apartments, as well as 60 homes in the cottage communities. At the same time last year at the Crimean resort real estate market, the number of deals decreased by 74% compared with 2007, but its value has declined over the period of crisis for more than 20%.

Analysts of "Europe" noted that in the process of selling on the South Coast there are 25 as placed in service and under construction, is positioned in the elite segment. In particular, this number of "survivors" of the Crimean projects before the end of 2009 - in 2010 it is planned to be commissioned eight complexes, and all the rest have already been built. Objects are located in Yalta, Gurzuf Koreiz, Livadia, Miskhor, Yalta, ie in a fairly prestigious Crimean resort towns.

Despite the fact that the luxury housing, typically bought for their own means and not in need of loans, developers are offering buyers hire from one month to six months, as well as request 30% down payment.

Thus the cost of 1 square meter apartment near the sea varies from 1,3 to 10 thousand dollars (as of April this year, housing proposed for 1,5-12 thousand dollars / sq ft), depending the method of payment, location, floor, availability of infrastructure and positioning of the object. As a result, the average apartment will cost at "the primary" in $ 500 thousand in the light of repairs and furnishings.

The company "Europe" say that apartments are often positioned as the elite do not have the characteristics of the species are located in noisy environments with the adjacent old buildings or construction sites, and even to require repair monuments. Some facilities lack the infrastructure, parking, not thought through doorways. And sometimes what passes for luxury housing, the layout resembles an ordinary hostel.

Eliseev believes that one year the premium segment of housing in the Crimea will be assessed an average of 4-5 thousand dollars per "square".

According to experts, now apartments in unfinished objects are sold, or rather, not sold because of the high cost (they had to build to peak value of the land, construction materials). And at a time when other sites objectively reduced the cost of housing, the price of their sales were overstated.

Refreshing of concept as a chance to return the investment

Often the developers, knowing that the apartment (house ownership) is carried on the site are not available, try to revive the project. Some hide behind the crisis to justify their failures, and someone decides to rekontseptsiyu, now firmly came into the vocabulary developers. Again, good asset in time of crisis for those left without work of designers and marketers.

Why not make developer to get at least hope for return of the project in the next five years. Investors lucky if construction has not begun, or is not built apartment building, and, for example, home ownership in the cottage house, because such projects are the easiest to restart. The essence of the rekontseptsii is to find the optimal ratio between the size of the land and area homes for cottage towns "to get to consumer demand and offer a decent quality apartments at attractive prices while revenue fell and the increased demands for housing buyers.

In this market players say that the main problem - the concept, and only then the question is the location of the land. Inadequacies in the design solutions and engineering support "brought under the monastery" of many developers. "Many projects have become very expensive, because there is a high cost because of engineering. People starting a project, thinking that they would sell for 200-300 thousand (dollars per household - Ed.). I thought it was some demand that they take. When they began to build, they realized that the engineering network is so expensive that it is cheaper than 500 (thousand dollars - Ed.) They can not sell. And it worked mismatching of price and quality ", - explains Eliseev.

At the same time, Knight Frank believes that since the construction of elite housing requires high-quality materials that are not readily available in Ukraine, the import of these products increases the costs of elite project. "So talking about lowering the cost of elite housing does not make sense, because the factors are offset by the reduction factors for its improvement", - believed in the company.

How not to speak, but only the lucky ones that have passed the test of crisis, can count on sales and returns. It should be noted that in the case of the Crimean property they do not lose. If you follow the arithmetic of developers, it turns out that investment in the 130-apartment complex under construction can pay back, even without completing the construction. When the value of the "square" 3-4 thousand dollars and costs about 1 thousand dollars per sq ft for the return of investment is required to sell less than half the luxury apartments. In the worst case, the project (with correct positioning) will be repaid after completion of construction, as the credibility of the unfinished undermined.

Lost profitability of elite estate

Market participants say that buyers of luxury housing are the Crimean Ukrainians and people of neighboring countries. Although the developers have a particular interest only from the Russians.

At the same time, as noted in Knight Frank, if the pre-crisis market of about 25% of housing are purchased for resale, today the percentage of such purchases is minimal. The owners of luxury apartments there are several ways to dispose of the property: "buy-rent", "buy-sell", "build-sell". Meanwhile, in the period of record growth in prices for resort real estate (2004-2007 gg.) Dominated two types of operations. Investors, who had available funds and are ready to invest in this segment, using the simplest option: acquiring a liquid asset and, after a certain period has already sold at greatly increased cost. "This approach is the most justified in terms of costs. After all, in fact, the investor does not invest in the development and improvement of the asset, and embody it in the form in which both gained, but at a cost 40-50% more than the original ", - the Knight Frank.

Another type of operation - buy - rent "was used if the resort real estate was viewed as a long-term asset that generates some income. In this scenario, the investor's costs were higher (acquisition cost plus the cost of apartments for the repair and finishing work). At the pre-crisis market average market rate of return from renting the apartments was about 15-20%, and you should take into account the spa feature - seasonality.

The most lucrative was the construction of the facility with the subsequent sale. The internal rate of return resort real estate development project (IRR) of at least 60%. But as a result of the financial crisis residential real estate, including the resort, has lost its attractiveness as a profitable investment tool.

Konsaltery not undertake to predict the current rate of return from the rental or sale of luxury housing in connection with the fact that its price is still subject to fluctuations. If you believe the developers predicted that half of the complexes can elevate and will never be completed, in 2010 the offer luxury housing on the South Coast will be represented, at best, several new projects.

According to general director of "South Beach" Gennady Zhiltsova, especially hard objects will have the setback location, which is difficult to attract buyers.

Reducing the rate of construction, price correction and deferment of delivery of projects, which was traced by the end of 2008, will not contribute to rising demand and stabilize the market in the near future, experts are predicting. We can only count on easy money visiting millionaires who suddenly want to spend the summer is on the shore of Yalta ...
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