Every third transaction is for the purchase of real estate not for living, but in order to increase the return on investment in the purchase of an apartment
The percentage of purchases for investment purposes depends on many parameters — the class of housing, location, transport accessibility, infrastructure, characteristics and features of the project. In comfort and business class complexes, where small “cuts” predominate, that is, a large number of studios and one-room apartments, the percentage will be higher. Most buyers of premium residential projects mainly make a purchase for personal residence, while in “cheaper” projects, especially at the start of sales, 40-50% of transactions are concluded for the purpose of investment.
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Analysts from the Neginsky Bureau, at the request of MK, shared five criteria for a “reference lot” for investment in Moscow .
The first criterion is location. The definition of “standard” is influenced by the characteristics of the residential complex, unique offers and accents placed by the developer. For example, if we consider proposals near a park area, we can see that most developers indicate the proximity to the green area as a strength of the project.
Location and infrastructure are one of the key criteria for a “standard lot”. The presence of shops, schools and kindergartens, clinics, cinemas, cafes and restaurants will be a good support for investment in an apartment, and upon resale, developing or already formed infrastructure will play a role.
Promising areas are considered territories where there is a comprehensive development and reorganization of the industrial zone. Relatively speaking, this is the Big City, the ZIL and Technopark development, the area near the Paveletskaya metro station. As a rule, new infrastructure facilities are built there: sports centers, walking areas, and transport links are being developed.
Secondly, bright views, unique layouts or architectural solutions.
For example, apartments with a pleasant view (not window to window, not railway tracks, not garages, but, for example, the city or the courtyard) will be the most profitable from an investment point of view. A bad view reduces the liquidity of the property, and for a good view (for example, on the river) you often have to overpay (in some projects the difference between apartments with a river view and a courtyard view can be 30%). On the secondary market, the cost of apartments is almost equal regardless of type characteristics.
Third. A clear target audience for subsequent rental or resale. Unique offers from developers are aimed at a specific target audience. Therefore, from this point follows an understanding of the target audience to whom the offer on the market is aimed.
For example, the head office of a large company or a large business center may be built next to the project. Future employees of this office will consider renting or purchasing an apartment within convenient transport accessibility from their work.
Fourth. Planning decisions, housing area. According to analysts, the most popular area of apartments purchased in Moscow for investment purposes is from 30 to 50 square meters.
— The area indicator is influenced by the features and infrastructure of the location: in “family” areas the greatest demand will be apartments of a larger area, and in the environment, for example, of higher educational institutions, apartments of a smaller area will be most popular, notes Andrei Neginsky.
It is worth paying attention to the layout. Euro-format planning solutions (combined kitchen-living room) are in greatest demand. Such apartments will be more liquid. But the most liquid options will be those that are few in number. For example, in one entrance the developer makes 20 Euro-format one-bedroom apartments and 5 Euro-format corner apartments with one bedroom. The corner option will most likely be more liquid, because there are few such offers. But you still need to take into account the specifics of the planning decision regarding a specific lot.
Fifth. Construction readiness. The most popular and understandable option even for a novice investor. Largely because it is the most affordable option. During construction, the cost of the apartment will increase, there will definitely be an opportunity to earn money, but one of the fundamental factors for a successful investment is exiting the project.
The more competing investors there are, the more difficult it is to exit the project, because high competition is formed, which, in addition, can lead to price dumping. A large crowding of projects in one location with plus/minus the same construction completion dates can lead to the need to compete not only with investors, but also with the developer, who has his own volume left for sale. Often, due to mortgages, subsidies, shares or installment plans, offers from the developer may turn out to be more attractive.
Taking into account these five criteria, we can describe the “reference lot” for investment in real estate in the capital market: a one-bedroom apartment at the start of sales in an area with green areas and developed infrastructure or with prospects for its development. There should be a minimum of competitors around in terms of new buildings. This is a finished lot, ideally in a project with a small number of apartments (500-700). It is on the middle floor and has a nice view from the windows. It doesn’t have to be a panoramic view, but it also doesn’t have to be window to window or a view of the industrial area and garages, industrial premises or the railway.