Expert: The Sales Dynamics of New Developments Have Changed Significantly
Over the past five years, the sales periods for new developments have noticeably lengthened, and now apartment sales can continue for several years after the building is completed, comments Tanel Tarum, head of 1Partner Real Estate Group.
The head of 1Partner recalls that about a decade ago, new developments were mostly completely sold out even before the building was completed, and five years ago, most apartments found their owners by the time of completion. Today, the picture is different. "Since COVID, changes have happened quickly, and today developers must be prepared for the possibility that it may take another couple of years after the object is completed for all units to be sold," says Tanel Tarum and gives as an example the recently completed Kalevi Maja development in central Tallinn, where one third of apartments were sold before construction began, one third during construction, and one third are finding their owners now that the building is fully completed.
According to the head of 1Partner, there are several reasons for the changes in purchasing behavior, and in addition to general economic uncertainty, buyers' attitudes have also changed more broadly. "Feedback from real estate agents shows that today's home buyers are more informed than ever before. They take more time to consider different options and typically have calculated their budget down to the smallest details by the time of purchase," explains Tarum, according to whom the market today lacks the FOMO feeling, or the fear that something will be snatched from under one's nose, and therefore emotional purchases are practically not made.
The head of 1Partner adds that a large portion of today's buyers want to see and touch their home with their own eyes before making a purchase decision, which the sales activity of new developments in the past couple of years has also enabled. "There is, however, clear signs of revival in the market in recent months, as in the face of continued inflation, decisions that have been postponed for a long time finally get made," summarizes Tarum the latest changes in the new development market and adds that sooner or later, the general increase in input prices will also reach new developments that have long maintained their price level.
1Partner is a leading real estate group in the Baltic region with more than 20 years of experience, with offices in Tallinn, Tartu, Riga, and Vilnius. The 1Partner group provides real estate brokerage, valuation, construction, development, management, and investment management services. 1Partner real estate group is the official cooperation partner of JLL (Jones Lang LaSalle), the world's largest commercial real estate consulting company, in the Baltics.
