Over the last few years, residential units were selling at earlier and earlier stages of completion, not infrequently before the construction actually started. The recess in the residential market has caused a reversal of the trend. It should be expected that over the following dozen-or-so months, apartments will be sold at later completion stages, including after their construction is completed.
REAS's analyses have shown that although the pace at which dwelling units are sold has definitely dropped over the recent year, the number of completed-but-unsold units is increasing slowly. This is due to the fact that customers, having to make a choice between completed units or units under construction, mostly opt for the former. As the accommodation offering increases, their possibilities to make a buy at the final stage of completion tend to increase as well.
Customers making their decision to buy a housing unit based upon a layout and information provided by the investor lack an opportunity to fully compare the offering options. Visualisations shown to prospects often neglect the surrounding burdensome elements (dense developments, noisy streets) to the benefit of greenery areas. Finishing materials and ‘tiny architecture' items not infrequently tend to be modified or replaced as the project unfolds. Even in case that data offered by the developer is complete and reliable, only very few prospects can support themselves with spatial imagination enabling them to fully foresee the size and proportions of a specific accommodation or the view from an apartment they might be interested in buying.
Moreover, the buy of a unit at its final completion stage allows for definitely reducing the period of waiting for an accommodation. This is translated into faster improvement of comfort of life as well as reduction in costs ensuing, for instance, from the need to rent a flat.
Lowered trust between market players, caused by the financial crisis, provides an extra impulse for purchasing ready-available units. Customers and fund-providing banks alike can be afraid, and on a well-informed basis so, of whether a given developer is in fact capable of completing its once-commenced investment project. Hence, some banks resolved recently only to credit completed residential units. The exception to this rule is units constructed by the largest, and therefore, the most reliable developers: and such developers are obligated to have a project completed in at least 30% to be granted a facility. Even if a customer uses their own funds to buy an apartment or prefers taking advantage of a bank that would not impose such restrictions, they would nonetheless prefer to limit their risk at stake.
It should be expected that housing units will, as a general trend, be sold at a later construction stage. This is what developers, as they are building plans today for marketing and sale of their projects, should take into consideration. Some of them may resolve to delay the launch of a project for sale, thus limiting the cost of running their sales offices in a low-efficiency period. This will also change the attitude to promotion offerings. Promotional instruments such as show-houses will regain popularity. It may be expected that product placement tools or events will be used a greater deal, along with use of modern techniques such as aroma-marketing. Those developers which may be willing to sell units at early project construction stages will have to attach more attention to become even more reliable: multi-aspect public relations activities are key to this end, particularly with regards to customer relationships, for developers will now be squared up with on account of promise-keeping - to a larger extent than ever before.
