Kazan self-build market expecting new price rise

Kazan self-build market expecting new price rise
Photo: realnoevremya.ru/ Maxim Platonov

The countryside real estate market in Russia is having a construction boom — self-build delivery reached 57 million squares metres (+16.5%) last year. The interest in this housing format in Kazan also rose significantly, especially on the eve of the new season, experts claim. By their estimates, country house prices are going to climb up soon because if big demand and appreciation of construction materials. Significant progress has occurred in this sphere in the last few years — buyers’ requests and developers’ operational format have changed. Read more about new trends in the Kazan countryside housing market in Realnoe Vremya’s report.

Developers with outdated views started to sink

The demand for countryside real estate has been growing for the third year in a row in Russia and in Tatarstan in particular. According to social surveys, 65% of the population would like to live in a house today. Most experts surveyed by Realnoe Vremya noted that the Kazan countryside housing market had big development potential thanks to launching preferential mortgage programmes, construction project financing.

“It isn’t very correct to compare the spring of 2022 with this year. Of course, last spring’s events led to a fall in the number of deals. Moreover, countryside real estate did better than urban, and the demand already recovered by June,” noted Vice Director General of Bogatyr development company Maria Kulakova.

The self-build market has become quite active in the last three months, notes President of the Tatarstan Guild of Realtors Anastasia Golyashova:

“Interesting projects from development companies have appeared this year — it is houses in private settlements with comfortable infrastructure whose number is growing more and more. Construction companies of the republic have focused on the erection of entire country house villages, invested in networks, created their own management companies for such facilities for many years now, not targeted build-up.”

Other experts also say that construction companies are starting to follow European trends. So Director of Countryside Real Estate at Etazhi-Kazan realty agency Lyutsia Khasanova, the countryside housing market has dramatically changed in Tatarstan in the last year:

“We already start talking about civilised countryside housing, not like previous chaotic housing development — one is bent, the other is oblique, a castle standing next. European-like private countryside cottage villages, communities are appearing now, that’s to say, there has been a significant breakthrough in this area of real estate.”

The pool of market players specialised in the construction of country houses is also changing, a competitive fight for the buyer is aggravating. Those who started to follow development trends and the consumer’s requests are at an advantage:

“If there were about 20 companies that built about tens of houses a year in Tatarstan five years ago, now we say that there are about 50 companies of this kind. They have already built houses, they can show what from and how they build. Also, it was said a meeting of the Tatarstan Ministry of Construction that the self-build market as well as equity market was going to switch to escrow accounts soon. We all are waiting for this to happen. But I think the list of 40-50 developers will be shorter then, only the most reliable ones will stay. The market has grown so much that we can choose,” the head of the Tatarstan Guild of Realtors explains the new tendencies.

Photo: Roman Khasayev/realnoevremya.ru

Her colleague Lyutsia Khasanova also says that trends influenced the construction business: “Talking about big developers, there haven’t appeared new players — the old ones continue their development. But those who still have outdated views on this market started to sink — it is mostly old, big and bureaucratic companies, in other words, those that haven’t adapted to the new young and active market.”

The option of delivering finished homes is one of the expected novelties in self-builds. Today this issue is discussed in the Russian Ministry of Construction at government level. If this programme is approved and launched in the short term, it will heat up the demand for self-builds even more, thinks Golyasheva:

“If the loan can be included these improvements, a buyer can get a home to move in in three or four months, not just a finished house — this will seriously reduce the expectation period. But this condition will naturally influence the price tag — finished home’s value will increase by 600,000 rubles as minimum, while the maximum number will depend on the client’s wishes and financial possibilities. The client can make a choice at the beginning: for instance, low-cost improvements and costlier ones — comfort, luxury or invest endlessly.”

According to Marina Kulakova, the buyer’s choice has shifted towards one-storey projects: “In our latest survey (December 2022), 60% of the clients want a one-storey house for themselves and their family. Houses at 100-130sqm (24%) are the most popular. 86% opt for the white box. The presence of centralised networks is important for 82%, improved territories matter for 91%. One in two wants one architectural style of the complex. The client also started to understand the importance of having a management company in the settlement. If having a management company was important for 43%, now this percentage reached 65%.”

Photo: Irina Anisimova/realnoevremya.ru

Countryside housing can go 20% up

As for the main issue, the price, the average price for a shell and core house at 100 square metres with a land parcel of 0.6ha with all networks in Kazan suburbs is about 8 million rubles and more. “A house for 6-7 million rubles at 100 square metres an hour’s drive from the city can be found, even cheaper, but again, without interior improvements, though with all networks laid,” says Anastasia Golyasheva.

At the same time, all experts note that the price for country houses hasn’t increased notably over the year, while today the country house price is demonstrating stability. Though, talking about forecasts, real estate market representatives warn that the value of countryside housing is going to start rising considering the traditional appreciation of construction materials in April.

“It depends on the period we compare it with. Prices started to grow actively during the pandemic and they doubled for some locations. Our forecast is that the price will rise by more than 20% in 2023. We think it because of a bigger number of state support measures: the launch of preferential mortgage programmes, developers’ project financing, the mechanism of escrow accounts for self-builds. These are big pluses for low-rise housing development, which, in turn, will bring to a rise in the demand for land parcels and houses and a growth of marketable finished houses from developments. Now the share of mortgage deals in countryside real estate doesn’t exceed 10%. DOM.RF predicts that support measures can increase the number of self-build loans to 50%,” added Marina Kulakova.

“Private house prices will only grow. The situation in which a country house costs like a one- or two-bedroom flat won’t stay for long. I think the price can increase by 10-15% during the year, though the prices are in stagnation at the moment,” Lyutsia Khasanova expressed her opinion.

Buying a country house for Kazan citizens is much more profitable than purchasing a flat in the city, the newspaper’s interlocutors stress. To compare, the price for a square metre in a new block of flats in the capital is on average 160,000 rubles and higher whereas in the country house it is just 40-53,000 rubles for the same square metre.

Self-builds are often purchased through a mortgage and for different amounts of money, moreover, deals with banks are sealed not only with the middle class:

“Even houses for 16 million rubles are bought through a bank. It is mainly businesspeople for whom it is more convenient to pay, let’s say, 100,000 rubles a month for the house bought than withdrawing the whole sum from the account to buy a house.”

Today the market has three key countryside housing segment, says Lyutsia Khasanova: economy where the price is from 4 to 4.5 million rubles, then comfort — houses for 6-7 million and business — from 10 million rubles.

Photo: Irina Anisimova/realnoevremya.ru

Laishevo District is in the lead, but Zelenodolsk and Pestretsy are also trendy

As for popular locations to choose countryside housing, Laishevo District is still in the lead. Moreover, construction companies start to consider other locations too — Verkhny Uslon, Pestretsy and Zelenodolsk districts that have equally distributed traffic of buyers. Here the most important thing is to know where the city itself develops to have all the infrastructure next to the settlement in the future — schools, kindergartens, polyclinics, groceries and other facilities, they note.

Also, the self-build market in the suburbs of Kazan is in demand not only from other residents of Tatarstan districts but also neighbouring regions. People from Ulyanovsk and Kirov oblasts, Chuvashia, Syzran, Samara and other Volga regions willingly buy country houses for permanent residence.

European format and deluxe settlements on trend

Mostly people under 40 who prefer investing in a ready house consider a country house. Moreover, experts say that just 5-7 years ago the buyer was from 45 to 50 years and older, primarily functionaries or entrepreneurs who bought a house for cash.

“Also, the attitude to countryside housing as isolated from civilisation changed in society: earlier, people liked to buy a home in Kazan, preferably in the centre, now the suburbs are measured in travel time, preferring buying a 20-minute drive home, not in kilometres from the city. This is a Western mindset when the buyer refuses from distances but talks about time and comfort,” speakers of the newspaper say.

Vice President of the Russian Self-Build Association Ilyas Gimadov indicated another trend. According to him, people are tired of standard architectural styles choosing more interesting options with calm colours, those cottage villages with one architectural development style, one concept are often chosen:

“The potential buyer focuses on private deluxe settlements with ideal roads, playgrounds and sports areas, parks. Moreover, this is trendy not only in Kazan but also across Russia.”

Demands for countryside architecture are changing too: European roofs, a minimalist Scandinavian style or barn house are in fashion.

The Russian self-build market is still in embryonic form, experts note, but it is evolving, becoming more consecutive, though there are still many systemic processes that require settings, including the approach to construction quality.

Angelina Panchenko