Unconventional Marketing for Real Estate

“Trade-in” apartments and other measures to support the housing market in Russ

In December, the Russian housing market faced a major setback with the announcement of the cancellation of concessional mortgages by the government. This news caused concern among industry players and worsened expectations for the upcoming year.

Concessional rates were introduced earlier to support construction during a difficult period, but according to relevant ministries, the market has stabilized and public resources to subsidize the reduced rates on housing loans are no longer necessary.

However, the developers had a different opinion and united in their stance, citing figures and forecasts from experts to argue that the removal of subsidies would lead to another downturn in the housing market, affecting both builders and buyers.

As a result, their concerns were heard, and the head of state made a firm commitment to extend preferential mortgages for new apartments for at least another six months until July 2024. He also announced plans to expand family mortgage opportunities, making it available to all families with two or more children under the age of 18.

Life Itself Inspires the Creation of New Mechanisms

Another mechanism is the so-called “trade-in” scheme, which allows homeowners to exchange their old apartments for new ones with additional payment. This approach is gaining popularity, especially in large cities, where the cost of old housing is relatively high, and many homeowners are interested in buying new housing. In this case, developers provide discounts for new apartments, and the buyer gets the opportunity to save money and upgrade their living conditions.

In addition, developers are actively using digital marketing tools to promote their products, such as virtual tours of apartments, online consultations, and the ability to reserve an apartment remotely. This approach allows potential buyers to get a comprehensive understanding of the product, without leaving their homes, and it significantly reduces the time and costs associated with traditional sales methods.

Finally, developers are paying more attention to creating multifunctional living spaces that can meet the needs of modern residents. This includes the integration of advanced technologies, such as “smart home” systems, energy-efficient solutions, and eco-friendly materials. Such solutions not only increase the attractiveness of the product but also help to reduce the cost of living for residents in the long term.

In conclusion, it is worth noting that the housing market in Russia is facing a number of challenges in the coming year, but there are also many opportunities for growth and development. The experience gained by developers in the past year, as well as the implementation of new mechanisms and approaches, will play a crucial role in shaping the future of the industry.

The next potential solution involves offering long-term interest-free installments to buyers. This approach is already being actively implemented in many large cities, such as St. Petersburg. For instance, a prominent developer in the northern capital, Euroinvest, offers an installment plan of 20-30-50.

According to this plan, the buyer only needs to pay one-fifth of the total cost at the time of purchase. The following 30% must be paid to the developer’s cash desk only after the completion of the residential complex in which the apartment was purchased. And the remaining half can be paid over the course of another year, easing the financial burden on the buyer.

Another promising approach is housing leasing, which involves leasing a property for a long-term period, during which the buyer will gradually redeem it. This mechanism has already garnered interest from the authorities, which increases its chances of success. However, there are some limitations to consider. For the client, the leasing agreement will eventually be more expensive than a traditional mortgage agreement, and the seller may be hesitant to receive payment for their property over an extended period of time.

Unconventional Promotions and Digital Tokens

Market players have come up with some unconventional ideas that could potentially have a significant impact. One such idea is the use of digital financial assets, or tokens, specifically designed for home equity transactions. It’s rumored that business structures associated with Vladimir Potanin are planning to launch such a mechanism, in part to facilitate the purchase of apartments in remote regions like Norilsk.

Tokens are expected to simplify access to the housing market and lower the entry barrier. Buyers will not need to purchase an entire apartment but only a certain portion of the property from a specific developer. Once a sufficient amount of property is accumulated, it can be converted into a real apartment.

Another area that’s currently experiencing rapid growth and is expected to continue to do so next year is a variety of special offers, including trade-in housing schemes. Big developers are already buying back old housing from buyers and reselling it in the secondary market. In some cases, they even accept cars as part of the payment towards the cost of new apartments, resulting in a noticeable decrease in housing prices.

However, trade-in offers are just the tip of the iceberg. Developers are coming up with a plethora of marketing actions, such as discounts for referred clients, additional apartments with the purchase of one, advanced bargaining on the final cost, and more.

Potential mechanisms to stimulate demand in the housing market in 2023 include a preferential mortgage for secondary housing, the organization of long-term interest-free installments, housing leasing, the use of digital tokens for home equity transactions, and various special offers such as trade-in housing, referral discounts, additional apartments, and advanced bargaining on the final cost. 

Developers like Euroinvest are already offering compensation for part of the increase in the cost of an apartment arising from the use of a mortgage credit, with the amount of compensation set at 15% for certain residential complexes.

• Preferential mortgages on the secondary housing
• Long installments
• Leasing
• Digital financial assets tokens
• Special offers, including trade-in

What benefits Limassol may also benefit St. Petersburg.

It remains unclear whether the measures taken by the Russian government, such as extending the concessional mortgage loan and other support programs, will be sufficient to ensure growth or stability in the real estate market. Experts have expressed doubts and pointed to foreign experience, such as Cyprus, where serious systematic efforts are made by the authorities and local businesses to support housing sales.

The Russian authorities may need to further strengthen their support for the construction sector if they want to avoid negative consequences of a recession in this key sector of the economy. Builders themselves will also need to work hard to maintain their reputation and reliability, as this is a crucial factor in negotiating long-term mortgage contracts with potential buyers. Euroinvest, for example, emphasizes its reputation for delivering high-quality apartments on time, which allows them to maintain prices and continue developing.