Recently, the volume of supply of housing with finishing has been growing in the Moscow market as a whole and has increased 11 times in eight years. The buyer’s interest in finishing from the developer has also generally grown, and, according to experts, will not fade even in the current difficult conditions
An apartment with finishing is more expensive and with not always predictable quality, but you can include the cost of finishing in a mortgage loan and stop by immediately after receiving the keys. An apartment without finishing is a long hassle with repairs, which almost always costs more than from the developer, but the purchase amount (and therefore the monthly loan payment, if any) is less, and an individual design can be made exclusively to your liking. So the buyers of housing in new buildings suffered: What should I choose? However, as evidenced by the results of a recent study by the Aquilon group, Muscovites, for example, did not suffer so much.
Using data from the analytical platform bnMAP.pro The company’s experts compared the interest of metropolitan buyers in primary apartments of the white box format with both finishing and apartments offered in the draft version. For comparison, two periods of a year were taken (July 2022 – June 2023 and July 2023 — June 2024) and residential complexes that went on public sale during these time periods. At the same time, only comfort and business class projects were considered and only those located within the old borders of Moscow.
Here are the conclusions the analysts shared with BFM.ru . During the first period, 2,728 lots for 137.9 thousand square meters were sold in Moscow, while the lion’s share of transactions (2,093 — 76.72%) fell on apartments without finishing, 456 — on white box and 179 — on finishing lots. Over the same period, a year later, 3151 DDU for 153.3 thousand squares were concluded in the capital, but the alignment turned out to be completely different: rough finishing and white box almost equaled in popularity (1198 and 1119 deals — 38% and 35.5%), but the share of finishing options increased significantly — to 834 DDU.
It is extremely important to note what happened to the supply during these periods. “In July 2022 – June 2023, in the old borders of Moscow, sales in the classes under consideration began in ten projects for 7,038 lots with an area of 372 thousand square meters, of which 5,387 lots (73.7%) were presented in shell & core format. In 2023-2024, 29 residential complexes with 21,862 apartments with an area of 1.2 million square meters went into open sale, that is, the supply has almost tripled in the number of projects and even more than tripled in square footage. Rough apartments, however, already accounted for only 40.8% — 8926 lots. The white box occupied almost the same share with them (38.8%, or 8,486 apartments). There were 467 finished lots in 2022-2023 and 4450 in 2023-2024,” the Aquilon group says.
And they emphasize once again that the structure of the offer has changed significantly from year to year. “If in the new projects of 2022-2023 the white box was completely absent in comfort-class residential complexes, and the finishing was almost completely in the business segment, then in the 2023-2024 season the market already offers all types of finishes in projects of both classes. At the same time, in the “business”, for example, the white box has grown almost six times: from 1,184 to 6,627 lots,” experts specify.
It is worth remembering that almost the entire 2022 and part of 2023 were spent by developers on import substitution, searching for new suppliers, building new logistics chains, and so on, so at that time most apartments were put on the market without finishing. Then everything or almost everything was replaced, found and lined up — and the proportion of the finished product immediately increased. And the buyers, as can be seen from the calculations, immediately reacted to this.
Mikhail Rogatykh, Head of Sales Development at Aquilon Group, Moscow, “We believe that the increasing demand for white box and finishing is associated with an increase in customer awareness. With the development of the development product, customer experience, and the real estate market in general, people come to understand the advantages of buying ready-made or almost ready-to-live apartments. Finishing reduces the time from the moment the keys are received to the immediate move, and also minimizes damage to public spaces during repairs. This is also a significant saving: prices for finishing materials are constantly growing, and by purchasing an apartment with finishing at the construction stage, the client “fixes” the cost of repairs and, as a result, spends several times less than in the case of the draft version. Therefore, the Aquilon group, within the framework of the ideology of reasonable development, uses white box by default in all new residential projects currently under construction in Moscow.”
“Over the past eight years, there has been a qualitative change in the supply and a multiple (more than 11 times!) the growth in the number of objects with finishes on sale. In 2017, among all Moscow apartments and apartments, only 2.3 thousand lots (4.6% of the total supply) could be bought with finishing. In 2020, the share of such lots in the exposition was already 29% (8.1 thousand). And currently (as of August 2024) the volume of the finished offer is 50.2% or 25.8 thousand lots,” Lyudmila Gerlitz, Director of the analytics department at Nikoliers, continues the topic.
According to Nikoliers calculations, according to the results of the first half of 2024 in Moscow, 47% of transactions fell on lots with finishes, but in St. Petersburg, apartments with finishes accounted for 75% of the total number of primary residential real estate transactions, due to the market structure (in St. Petersburg, 76% of the supply are comfort-class lots, in Moscow their share is only 42%). “Among the curious trends, it is possible to highlight the preference that business class customers give to white box finishes in both Moscow and St. Petersburg, while in other segments (including high price segments), customers choosing finishes prefer the finishing option (finishing),” adds Lyudmila Gerlitz.
The statistics of the Ricci | Residential Real Estate company also says that the share of apartments without finishing in the Moscow exposition has been steadily decreasing lately. If we compare this August with last year, the decrease will be 4.5% compared to December 2023 — 9.5%; even compared to this July — minus 8.9%.
Ekaterina Lomteva, CEO of Ricci | Residential Real Estate, “The statement that the higher the real estate class, the less interest its customers show in finishing is ambiguous. It’s just that in the premium segment, the buyer is traditionally demanding and places higher demands on quality and materials, so he often resorts to individual solutions. In business class, the interest in decoration also remains, but the price-quality ratio, as well as functionality, plays a big role: aesthetics is important to the buyer here, but he is unlikely to go for excessive and sometimes irrational luxury. In the comfort segment, as a rule, due to a limited budget, interest in high-end finishes is low: the priority is the accessibility of the housing itself. The attitude to finishing can vary greatly depending on the personal preferences of customers. Some people certainly want to do the finishing themselves in order to take into account all their wishes, others may look for ready-made solutions. In short, there is no universal formula here.”
But Lyudmila Gerlitz believes that the dependence in the pair “real estate class — the share of lots with finishes in the exhibition” is still there, and direct. It is no coincidence, according to her estimates, in Moscow the share of lots with finishes in comfort class is 62%, in business class – 37%, in premium class – 35%, and in elite class – 27%.
Photo: Vladimir Novikov/press service of the mayor and the city government
Lyudmila Gerlitz, Director of the analytics department at Nikoliers, “The current offer base is formed by work experience in previous years, when developers tried to do finishing only in separate buildings, sections or directly in the apartment optionally, but in general developers are gradually moving away from such mechanics of work. In recent years, sharply negative reviews on the quality of the finish have been heard less and less often. Developers have accumulated expertise on this product, so today there are rather minor flaws, but we are no longer talking about a systemic problem. The current quality of renovated housing makes it possible for the owner to enter the apartment, make adjustments to the color solutions of the walls or plumbing and update the repair in five to seven years. Premium market players make really high-quality finishes, not wanting to bear image risks, paying close attention to details. For example, in the Brodsky house, the name of the LCD was even applied to the handles of the oven — the product was so carefully branded.”
However, according to Ekaterina Lomteva, some developers were reluctant to rent with finishing due to a number of factors. “For example, due to the lack of necessary competencies: after all, finishing is, in fact, a separate business. The second point is the inability to “pack” this product, plus customers (especially in business classes and above) preferred the white box and made repairs “for themselves”. But in the current difficult conditions, the buyer, on the contrary, chooses housing in which there is no need to invest extra,” the expert believes.
But here’s a good question: right now, in the absence of preferential mortgages for new buildings and prohibitive rates on standard bank mortgages, long—term or short-term, but in any case noticeable sagging sales and everything else, what will developers do – hold, increase or reduce the volume of supply with finishing? As Lyudmila Gerlitz reminds, finishing is an additional obligation for the developer, but also an additional source of profit. By shortening the supply chain (direct contracts with manufacturers), the developer and the client are in a win-win situation: the developer earns, the client saves.
“For affordable price segments, the finishing included in the DDU allows you to immediately get two significant advantages: include the cost in the mortgage payment and fix the price per square meter of finishing work. Due to the rising prices for both finishing materials and the services of crews, finishing from the developer is a high-quality alternative. In a scenario where the client does not fall under the terms of preferential mortgage programs, a certain proportion of potential buyers who do not have enough of their own funds to buy real estate with finishing are more likely to temporarily shift their focus to the rental market and capital accumulation than to buy a lot without finishing,” Lyudmila Gerlitz is sure.
Maybe so, let’s see. The August (that is, conducted under new conditions) survey of the analytical center “Real estate market Indicators IRN.ru ” it says*: 57.1% of respondents are not ready to buy an apartment with finishing from a developer. And 15.3% argue their reluctance precisely by the fact that the price of an apartment is extremely important to them, and repairs increase it.
However, 42.9% of the survey participants said that they are ready to buy an apartment with a fine finish, but there are reservations. So, 19.5% could consider buying if the renovation increases the purchase price by a maximum of 5%. 11.6% of respondents are ready to overpay no more than 10%. But 11.8% agree to pay for repairs and more than 10%, just not to bother yourself.
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