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Falling prices a 'healthy correction'

10.06.2015
Falling prices a 'healthy correction'
Apartment lease rates fell 2.4% while sale prices decreased 1.5% in first 6 weeks of Q2.

Falling rents and prices may be a sign of strength, according to sector experts.

“The ongoing erosion of sale prices is a healthy correction,” said Jesse Downs, Managing Director of Phidar Advisory. "The more significant concern is the scale and nature of the upcoming, launched and announced projects."

Residential rents and prices continue to decline in the first six weeks of second quarter compared to first quarter 2015, reveals a new report. Apartment lease rates fell 2.4%, while sale prices decreased 1.5%, leading to a marginal tightening of yields to 7.2%, Phidar Advisory said in its mid-quarter, Q2, 2015, report.

“If we consider only under-construction and launched projects, the majority of the development pipeline is justified due to sufficient total demand,” said Downs, adding, “Overbuilding in the mid-high income segment likely will increase competition and lead to supply reordering.”

The consultancy stated that even a bullish scenario of 4.1% average GDP growth rate cannot absorb all potential supply expansion, including under construction, launched, announced and stalled projects. “The risk of an oversupply appears to be minimal, given the expected growth in population of just under 400,000 over this period. However the supply-demand equilibrium is likely to be maintained as the population grows in tandem with the rising number of completions,” it said.

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Lease process (Rent out)
Contract of the lessee and agency.

1 hour

Contract of the lessee and agency.

Required documents:

  • copy of the passport
  • copy of the certificate of ownership
Ad placement

1 day

Ad placement:
  • 20 real estate portals;
  • client base of the agency;
  • profile exhibitions, etc.
Signing of the lease agreement

Up to 2 days

Signing of the lease agreement
Expenses of the seller:

None

Additional services:

Property management

Lease process (Rent)
Contract of the lessee and agency.

1 hour

Contract of the lessee and agency.
Real estate search.

Up to 5 days

Real estate search.

Selection of optimal options.

Signing of the lease agreement

Up to 2 days

Signing of the lease agreement
Expenses of the lessee:

-5% agency commission of the annual contract price

Additional services:

None

Purchase process
Contract of the tenant and agency.

1 hour

Contract of the tenant and agency.
Property Selection

~ 2 weeks secondary

~ 3 weeks new building

Property Selection

Selection of optimal options

Registration of the contract of purchase / sale

1 Week

Registration of the contract of purchase / sale
Customer charges:
  • 2% from purchase at transaction
  • 4% - registration of the transaction at registration
Additional services:

Property management

Sales Process
Contract of the lessee and agency.

1 hour

Contract of the lessee and agency.

Required documents:

  • copy of the passport
  • copy of the certificate of ownership
Ad placement

1 day

Ad placement:
  • 20 real estate portals;
  • client base of the agency;
  • profile exhibitions, etc.
Signing of the lease agreement

Up to 2 days

Signing of the lease agreement
Expenses of the seller:

None

Additional services:

None

the management process
Contract of the owner and agency

1 hour

Contract of the owner and agency
Rendering of management services

1 year

Rendering of management services
Reporting

1 day

Reporting
Expenses of the owner:

5% of the annual rental price

Additional services:

None

Investment Process
Contract of the tenant and agency.

1 hour

Contract of the tenant and agency.
Selection of optimal investment options

From 3 days

Selection of optimal investment options
Registration of the contract of purchase / sale

1 Week

Registration of the contract of purchase / sale
Expenses of the investor:
  • 2% when investing in the secondary market
  • 0% when investing in a new building
  • 4% - registration
Additional services:

Property management