It is unlikely that investors who are players in the same segment are able to completely “bend” it for themselves. But the serial companies are still forming their own requirements and approaches, and developers working outside the mass market cannot ignore this.
Continuing the conversation started last time about investors choosing a “serial” strategy and repeatedly investing in objects of the same format or even the same development company, Nikita Kornienko, CEO of the commercial real estate investment platform Simple Estate, notes with obvious regret: “Can we say that serial investors have requirements, rules, approaches that developers willy-nilly begin to take into account, looking at the “serial investors” as a kind of litmus test? Unfortunately, no, but it would be good.”
Nikita Kornienko, CEO of the commercial real estate investment platform Simple Estate, “When you have 20 properties, you understand the market: technical and legal features, rates, classic problems. Such investors can immediately assess the value and attractiveness of the facility. However, the mass buyer does not understand the intricacies and follows the advice of developers, and the presence of such investors blurs the influence of professionals. Developers focus on mass sales, ignoring professional requirements: now, for high sales, developers just need to draw a beautiful render and promise high returns.”
But Konstantin Martynychev, CEO of West Wind Group, emphasized in an interview with Business FM: a developer working outside the mass market needs to understand that over time, serial investors really develop their own approaches and requirements. And not only of a material nature.
— For example, a premium location is important to someone, someone fundamentally does not consider lots on low floors, someone is only interested in objects that generate income from the first day. And someone buys only on condition that a trust management is organized so that the income is completely passive. There are more and more such individual requests, and in order to keep a serial investor, it is important for the developer to take them into account. An important aspect is the emotional component: the investor must literally “fall in love” with the object. Many experienced investors appreciate an original approach to design and architecture. They understand that they are not getting a standard product, but something special with a well-thought-out concept. In such cases, profitability does not always become the main criterion, more important is personal “sympathy” for the object and the confidence that among a certain circle of tenants there will be those who will also appreciate it.
— Do you have a sense of responsibility for those whom you have tamed?
— Of course, it does. We value our loyal customers very much and understand that with each new project, the level of trust and requirements increases. But high expectations are an incentive for development. And I won’t hide the fact that serial investors can count on certain bonuses. First of all, these are special prices and purchase priority before the lots are put on the market.
— Probably, the presence of serial investors is an indicator of the high class of the company and its projects. Are there any negative aspects in the existence of such an investment category?
— The presence of serial investors is a plus for us. Thanks to them, we can sell lots at the presale stage, when there is still no complete information on the project. Some regular customers are willing to buy almost “blindly”, showing confidence in our experience and reputation. Such cases are especially motivating to maintain a set level of work. We do not note any serious disadvantages. The only caveat is the additional responsibility we feel towards our regular investors. Redevelopment (and we work in this field) is not always a predictable process, sometimes unexpected difficulties arise, but we try to solve them. Besides, our partners are no longer just customers, but connoisseurs of conceptual projects. They expect us to implement new non-standard ideas, and we need to meet these expectations without relaxing.
Mikael Ghazaryan, member of the Board of Directors, Head of the Capital Markets and Investments Department at IBC Real Estate, notes among the advantages of the serial investment approach the improvement of the quality of expertise by increasing the portfolio in a particular segment, developing managerial competencies, increasing brand awareness and expanding the sphere of influence on the market. But at the same time, he recognizes that focusing on one segment increases investment risks in the face of economic changes. “It is for this reason that many real estate market players are betting on diversification today,” the expert recalls.
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And, according to Nikita Kornienko, for the investor himself, the obvious advantage of the serial approach is the accumulation of experience and real knowledge about the market. Stone believes that market analytics is of particular importance for real estate investments, especially for novice investors, so the preparation of analytical reports, seminars, meetings with experts contribute to improving financial literacy and are important elements of the benefits program for regular buyers.
However, according to Nikita Kornienko, such serial investors are of greater interest to the developer only on large lots: it is much easier to sell a large object to a professional because of the high amount of investments. “However, real estate is often used to invest “gray” and “black” money. Those who wish to attach such cash are not too interested in the real price of the object. For developers, people with incomprehensible money who do not understand the market are more important. Among these, alas, there are also serial investors who regularly need to invest illegal money,” the expert recalls.
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