Developers follow the lead of buyers: people are not ready to purchase luxury because of the wild cost
Premium-class housing usually implies luxury and comfort, but many people are not ready to buy large apartments area due to the extremely high cost. Instead, they are looking for alternative options that fit their budget and needs.
Over the past five years, the structure of supply in terms of the number of rooms in apartments and apartments in premium class projects has noticeably changed. In mid-2019, apartments with four or more rooms dominated the market. They formed 36% of the supply. They were followed by two- and one-room apartments (25% and 20% respectively). Three-room apartments accounted for 16% of the supply on the market, and studios – only 3%.
In 2024, two-room apartments (34%) began to predominate in premium new buildings, followed by one-room (31%) and three-room apartments (23%). Previously, the predominant apartments and apartments were “4+” became fewer than studios (7%), – only 6%. Thus, developers have redistributed the supply from four-room apartments and apartments to more compact housing options.
Since mid-2019, there have been 73% more premium new buildings on the primary housing market in Moscow, their prices have increased by 37%, and demand has doubled. The geography of the offer and the designed premises themselves have changed.
Since 2019, Moscow developers have increased the supply of premium class apartments from 3.4 thousand to 5.9 thousand, which is 73% more than five years ago. At the same time, the number of projects has not changed: as in mid-2019, in the second quarter of 2024 there were 58 complexes with apartments and apartments on the primary housing market in Moscow.
According to the authors of the study, analysts at Metrium, this may be due to both the growth in the scale of premium projects and the attempt by developers to expand the choice of premises in a single project. If in the second quarter of 2019 there were only 10 projects on the market where developers offered more than 100 apartments or flats at the same time, then in the same period of 2024 there were 20 of them. This sales policy is due to both the quantitative growth in demand and the expansion of the circle of potential buyers with different needs.
Premium new buildings are now sold mainly outside the Central Administrative District of Moscow, although in mid-2019 the Central Administrative District accounted for 54% of premises in this segment. In 2024, the “center of gravity” will be The market for premium new buildings was located in the Southern Administrative District (SAD), where 24% of apartments on the primary market are concentrated. This is followed by the Central Administrative District (19%), Northern Administrative District (14%), Western and Northwestern Administrative District (12% each), Eastern Administrative District (8%) and North-Eastern Administrative District (6%).
Five years ago, the market map was different. In addition to the unconditionally leading supply in the Central Administrative District (54%), developers sold many premium new buildings in the Closed Administrative District (18%), Northern Administrative District and North-Eastern Administrative District (10% each), and North-Western Administrative District (7%). It is noteworthy that in the current leader (Southern Administrative District), five years ago developers offered only 1% of premium apartments and apartments.
In the regional context, the geography of the supply of premium new buildings has expanded over five years from 22 to 28 locations. However, the leading area in terms of market volume has not changed – they were left with the Presnensky district.
— Over the past five years, buyers’ demand for an integrated living environment has increased, – says Optima Development commercial director Dmitry Golev. — From the advantages of intimate club houses, buyers have refocused on the advantages of large-scale development, where in one residential complex they have access to all possible services and also have their own private territory. It is already difficult to implement such projects in the Central Administrative District due to limited land plots, so premium gradually moved to other prestigious, but more open territories.
The market for premium new buildings is still dominated by unfinished apartments, but developers have shifted their supply from fully finished premises to pre-finished (white box) ones. In mid-2019, 54% of housing options did not include furnishings, almost the same as in 2024 (59%). However, five years ago there were more fully finished apartments and apartments on sale, whose share was 34%, while white box options accounted for 13%. In 2024, developers are relying on pre-finished premises (26%), while the share of fully finished apartments has dropped to 13%.
Premium residential and apartment complexes have risen noticeably in price over the past five years. The average cost per square meter in them increased from 508 thousand rubles in mid-2019 to 696 thousand rubles in the second quarter of 2024, thereby adding 37%. At the same time, the average room area decreased from 103 sq. m up to 79 sq. m. The most noticeable increase in price in five years has been for premium apartments and apartments with four or more rooms – by 69% to 150 million rubles on average (their average area also increased by 17.5 sq. m to 166 sq. m). This is followed by one-room premises, whose average cost increased by 62% to 32 million rubles (the average area decreased by 5 sq. m to 50 sq. m). Three-room apartments and apartments became more expensive by 60% (78 million rubles on average, and their average area increased by 3.6 sq. m to 112 sq. m). The average cost of two-room premises increased by 57% to 51 million rubles (the average area did not change), and studios – by 54% to 20 million rubles (with a decrease in area by an average of 6 sq. m to 31.7 sq. m).
Buyer activity in the premium new buildings market grew faster than supply. Demand in the segment has tripled over five years.
— The premium segment of the new buildings market has become one of the most dynamic, – says the director of luxury real estate management at Metrium Premium. Anna Radjabova. — Developers in this niche were able to accumulate the demand of buyers from higher segments, as well as attract new groups of buyers, for example, regional investors, recipients of IT mortgages and other clients.