THE MARKET OF PRIMARY RESIDENTIAL REAL ESTATE ( III QUARTER OF 2017, Kyiv)
EXPERT OPINION
“The more new projects come out, the more “experts «appears broadcasting about the full collapse and soap bubble in the market. Well, it’s true, what is easier – counted, folded, redistributed, and cheers, a new sensation: the housing market is about to collapse!
From such “forecasts” everyone loses – and buyers who are waiting for a new market bottom, and developers who are losing sales.
Is there an excess of supply over demand in the market? Certainly! This is the result of a thoughtless massive building on the principle of «build more – sell cheaper” and complete lack of control from the city and punish unscrupulous developers for illegal construction.
On the other hand, I advise the “experts” to try to buy a small one-room apartment in the new buildings of the capital. Today apartments for sale are offered for sale, which will be put into operation not earlier than the end of 2018-early 2019. Therefore, there is nothing critical in such a variety of offer – the market has the time and the potential to absorb this proposal.
The third (three-dimensional already) side of this problem is the quality of the proposal. Complexes that go out today are a completely new product with absolutely innovative characteristics, which, of course, will be in demand among buyers. And with them the old concrete boxes will not be able to compete. But this is not a problem of buyers and low demand in the market, but short-sightedness and savings on projects of individual developers? “
Yaroslava Chapko,
director of CDS
NEW OFFER
The market is replenishing with new residential complexes, significantly increasing the supply. In the third quarter of 2017, sales were opened in 15 new properties, and in 21 residential complexes new lines were launched, replenishing the market with 19,000 apartments. Compared to the same period in 2016, the increase in the new supply increased more than threefold. As of September 2017, active sales are conducted in 268 facilities, which is 25% more than in September last year.
For 9 months of 2017 the housing market has replenished by almost 40 thousand apartments in 36 new complexes and 52 new lines of existing LCDs.
By the end of September 2017, the structure of the primary residential real estate market has undergone some changes: the share of complexes in the budget segment has decreased to 67%, and the complexes of the prestigious segment, in turn, have occupied 33% of the structure of the offer.
The structure of the supply of apartments in new buildings in the third quarter of 2017 is as follows: 43% and 42% of apartments are offered in economy and comfort classes, respectively, 13% of apartments are sold in business class complexes, and 2% in premium- class.
Structure of the primary residential property market in Kyiv by class, 3 square of 2017, %
The total supply volume in the primary market by the end of 3 quarter of 2017 amounted to 66 thousand apartments (including absorption).
Leader in terms of the volume of the new offer in the 3 quarter of 2017 is the Shevchenkivskyi district, which accounts for 29% of new apartments. Here, the new symbolic residential house “Faina Town” opened its sales, in which it is planned to build more than 8 thousand apartments.
The only area of Kyiv, in which there were no new objects in the 3 quarter of 2017 is Obolonskyi.
The structure of the new proposal for the districts of Kyiv, 3 quarter of 2017, %
NEW OFFER (CONTINUED)
Traditionally, developers are more actively developing the right bank of the capital – in 3 quarter of 2017, 79% of new apartments went on sale on the right bank of Kyiv.
Distribution of the new offer of the primary housing market in Kiev, 3 quarter of 2017,%
In the primary residential real estate market there is a tendency to the predominance of large-scale development projects. This is noticeable both in terms of the number of apartments in the new complexes, the average size of which was 460 apartments / complex, and for the active launch of new lines in already under construction objects.
In addition to the large-scale residential house “Faina Town” in the 3rd quarter opened sales in the first tower of residential house “Taryan Towers” – one of the most ambitious for the concept and architecture of residential complexes of the capital.
The share of 2 apartments in the structure of the new offer has reached 40%.
The structure of the new proposal by number of rooms, 3 quarter of 2017, %
The tendency to increase the number of 2-and 3-rooms apartments in the complexes is gaining momentum: developers are trying to take into account the changing structure of demand in the market, changing the balance of apartments in their complexes in the direction of 2-to apartments.
The share of 3-bed and multi-room apartments in the new offer also increased slightly and amounted to 17%, which is 2% more than in 3 quarter of 2016 year.
Least conservative developers are gradually moving to a new format for the Kyiv market, allocating apartments with 1, 2, 3 or more rooms, instead of the usual 1-, 2- and 3-room.
The average area of apartments, commissioned by the end of the 3 quarter of 2017 decreased to 65.1 square meters. After summarizing the results of 2017, this indicator is likely to be even lower – at the level of 62-63 sq.m.
The tendency to reduce the area of apartments continues. The average area of apartments in rented houses fell to 65.1 sq.m.
In the first half of 2017 there was a revival of the prestigious segment of the capital real estate market – new business and premium projects were activated, and prices (both hryvnia and dollar) for prestigious housing gradually began to grow. In 3 quarter, there was a downward correction in the segment.
“Developers are beginning to listen more and more to customers, facing inefficiency of exclusively price competition, which leads to the gradual appearance of complexes with an increasingly developed infrastructure, authorial facades and innovative “chips “.
Nevertheless, despite the positive reaction to innovations, for the buyer in the first place is the overall budget of the purchase and future payments for the maintenance of the apartment. The fact that part of new buildings in Kiev has chosen the comfort and prestige of living as the main competitive advantage is a good sign, but it is yet to find a balance between a beautiful life and reasonable prices. “
Roman Gerasymchuk
Consultant-analyst City Development Solutions
PRICES
Dynamics of average prices according housing classes, January 2017 – September 2017.
The level of hryvnia prices, depending on the class during 2017, had a multidirectional dynamics. The highest volatility was shown in the prestigious segment – by the end of July 2017, the growth in prices in the business class was 25%, in the premium class – 13.1%. The trend reversal occurred in the 3 quarter of 2017, resulting in hryvnia average prices in the segment again declined.
Projects of the business class have risen in price by an average of 17.8% since the beginning of 2017.
At the beginning of the year, the difference in average prices in the economy- and comfort-class complexes was 56.8%. By the end of the 3quarter in 2017, the price gap narrowed almost 3-fold – to 19.7%.
The price gap between housing of economy and comfort classes fell to 19.7%
Dynamics of average prices for housing classes, January 2017 – September 2017.
The reason for such changes was the overestimation of comfort-class complexes, formed by the end of 2016 – early 2017. In most cases, comfort-class complexes do not have objective competitive advantages, which led to a significant reduction in prices.
Complexes of economy class in these conditions were able to win back the fall in prices of 4 quarter 2016 year.
Thus, for the three quarters of 2017, multidirectional price fluctuations, recorded as early as mid-2016, formed into stable trends. Despite significant fluctuations throughout the year, by the end of 3 quarter premium housing has risen slightly – by 2.1%. The most demanded were the complexes of economy and business classes, in which the greatest increase in prices was noted, while prices in comfort-class complexes declined all three quarters.