Expert: Market Downturn Has Improved Apartment Amenities and It May Stay That Way
According to Igor Habal, a board member of Uus Maa, Estonia's largest real estate agency, the quality of newly completed developments and the range of additional features included in the price are currently better than ever before, which could become a new standard in the real estate market.
According to Igor Habal, the selling prices of new developments have not fallen much on paper, but developers are offering significantly more for the same money than people have been accustomed to receiving. "The asking price for new developments has statistically fallen by up to 10%, but when transactions are concluded, the price also includes so-called free additional equipment, which means the actual price has fallen more than it appears on paper. Apartments are expensive, but people also get more for their money than before. For example, if a new development costing 200,000 includes a free parking space and storage unit in the price, this effectively means an additional 5-10% real price reduction," said Habal.
"Free storage units and parking spaces, proper finishing, and kitchen furniture are now included in more contracts than before. In some cases, we are also already seeing five-year building guarantees. Every market downturn also brings positive developments, and it appears that extensive additional equipment is becoming a new standard in the real estate market," described Habal.
"In Latvia and Lithuania, quite a lot of new apartments are still sold as a so-called bare shell, but this is unthinkable in the Estonian market. We are moving towards Nordic standards with our finishing and overall quality level, where kitchen furniture in the price is already standard. Currently, most Estonian developers show the kitchen separately in the price list, but rather, it is agreed that it remains in the apartment's final price. Actually, this makes sense too, because ordering a kitchen is expensive, and for the buyer, it is often cheapest and most convenient when it is included in the apartment's price and can be financed this way with a home loan," said Habal.
According to the board member of Uus Maa, sales of more expensive apartments are currently going better, with buyers who have money in their account and are simply waiting for a suitable project. "There is also a market for the cheapest new apartments at 3,000 euros per square meter, where the most important factor is price. Due to the low price, there is an opposite trend with the cheapest new developments – developers are trying to keep the final price as low as possible and use corresponding materials – for example, laminate parquet is installed instead of wooden flooring," added Habal.
"Since the economic downturn hit the purchasing power of the middle class harder, it is precisely the sale of apartments in the mid-price and mid-quality segment that is suffering the most – there is the most room for negotiation on both price and equipment for these apartments. Currently, it is those developers who are more flexible than others who are managing to sell their apartments," added Habal.
