The demand for luxury housing with pre-finishing in Moscow has increased by 6.75 times

Last year, the share of transactions with expensive apartments with pre-finishing in the primary market of the capital amounted to 27%. Two years ago, this figure was significantly lower — 4%

In 2023, in the market of elite new buildings in Moscow, 27% of transactions were made with apartments with pre-finishing (white box). This is 2.25 times more than in 2022 (12%), and 6.75 times more than at the end of 2021 (4%), according to a study by the Whitewill luxury real estate agency.

What is a pre-finishing

Pre-finishing (white box) involves the construction of interior partitions, the laying of communications (electricity, water supply), plaster, putty walls and ceiling, as well as the installation of a rough floor screed.

The largest share of lots with white box finishes is recorded in the luxury apartment segment — 58%. This is 8 percentage points more than in 2021, the study clarifies.

Whitewill also notes that developers are less likely to offer lots with pre-finishing and finishing finishes. First of all, this is due to the possible difficulties in supplying suitable high-quality materials, which the domestic market has faced against the background of sanctions, the company clarifies.

“Foreign materials are purchased for foreign currency, and in the conditions of the devaluation of the ruble, it is difficult to form the final cost of finishing, since the development cycle averages three years — during this period, the cost of materials changes significantly due to the difference in the exchange rate,” the study says.

How has the approach to premium finishing in new buildings changed?

Market participants attribute the decrease in the share of supply with finishes in the premium and elite segments of the real estate market also to Western sanctions. The number of European companies that are ready to work with Russia has decreased, says Dmitry Khalin, CEO and Managing partner of Intermark Urban Real Estate. According to him, more often we are not talking about Western partners, but about the Asian offices of various companies. In addition, recognizable and popular Russian designers have already appeared on the market, which in general can replace Europeans, adds Khalin, and individual developers cooperate with European design bureaus.

The expert confirms that developers are less likely to offer apartments with finishing in new projects. “It is not so often that complete finishing and equipping of apartments are offered in facilities today. If during the heyday of the elite real estate market, the share of apartments with finishes reached up to a third of the supply volume, today I would estimate it at 10-15% of the total volume,” says Dmitry Khalin.

Olga Shirokova, a partner at NF Group, notes that over the past two years, the share of lots with finishes in the structure of the high—budget offer has decreased by 12 percentage points, and over the past three years – by 19 percentage points. “In 2023, more than half (56%) of the sold apartments and apartments were sold “in concrete,” says the expert specifying that the finished lots accounted for about 44% of the total demand structure (minus 16 percentage points in annual terms). “Of this volume, 28% is finished, and 16% is finished with a white box,” Shirokova concludes.

The developers themselves note an increase in the cost of premium finishes against the background of a weakening ruble. “In de-lux projects, a significant percentage of imported components and materials, the price of which is linked to the dollar exchange rate. Parallel import works. Its prices have increased significantly: about twice as much as in 2021,” says Bulat Alimov, Deputy Chairman of the Board of Directors of Stylobat Group. “But there are almost no obstacles to the purchase of European materials, we try to keep our European suppliers.”

Leonid Savkov, Commercial Director of MR Group, notes that the market has been steadily increasing the share of offers with finishes until February 2022. “The events that have occurred have shaken the confidence of a number of developers in the sustainability of their business. This has led to the fact that many of them have simplified their business models and refused to sell apartments with finishes or significantly reduced their share,” the expert says, emphasizing that by the beginning of 2024, the industry has already adapted to changes and the share of offers with finishes will gradually increase.

“According to our data, if in 2021 the demand for apartments with finishes in elite new buildings reached 50%, now this figure has dropped significantly and is no more than 30%,” Olga Zyblaya, Sales and marketing director of Turandot Residences & Artisan club houses, shares her data. “Over the past year, among the elite new buildings that have entered the market, there are practically none where the entire volume is realized with finishing — there are few such projects. Now developers mainly offer a certain pool of apartments with partial or full finishing (white box or finishing) from the entire volume,” the expert notes.

According to the Metrium company, at the end of last year, there were 11.1 thousand lots with pre-finishing on sale in the primary market of the capital. This is 7% less than at the beginning of 2023. The reduction in the number of apartments with finishing in the company was explained by an increase in the cost of finishing materials.

See also:

  • Apartments with and without finishing: why the demand for renovated housing is growing
  • The supply of housing at the initial stage of construction has increased in Moscow
  • Pre-finishing in a new building: pros, cons and standards

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