"Construction did not stop." How to keep the real estate market during the war - interview with Avalon Developer
As a company, during the war, she made promises to 810 families and gave the keys to apartments, as well as the new realities that the real estate market will have to face - Yaroslav Wozniak, Director of the Avalon Department, said. After Russia's invasion of Ukraine, developers stopped their work. What is Avalon's reaction? In the first days after the start of the war, no one understood what was happening now and what was waiting next.
Like we were all forced to suspend work on all construction sites and offices of the company. Residents of houses located near our office or construction sites have asked us to turn off the illumination of our facilities for safety reasons. Of course, we agreed. Our customers are our investors, so first of all it was necessary to ensure an uninterrupted process of communication, while not forgetting about the safety of employees. It was very difficult to combine these two tasks.
We have set up contact centers for online work that allowed employees to work from anywhere in the world. Communication with clients is very important to us, because clients have worried that with construction, how to serve contracts with delaying payment when the work of offices, etc. would be restored. There were really many questions. To most typical questions, we have prepared answers together with other departments of the company.
They placed this checklist on our site, additionally made a newsletter with reference to customers' answers. The next task was to restore the operation of sales centers. Customers really wanted to be able to talk to offline. This also raised additional questions about how to protect visitors to sales centers and company employees. Unfortunately, air anxiety is still sound.
We also collided with such a concept as "optimization", since real estate sales have fallen significantly and we needed fewer employees. The purpose was that all processes work as before, and customers did not feel any changes in the service. During the period of military aggression, we were able to perform a huge amount of work and transfer the apartments to their owners, that is, we succeeded. When did Avalon restore construction work? In fact, the construction processes did not stop.
In addition to construction work, there is always a paper process and a conciliation. Therefore, some of the process closed to the market did not stop at all. Everything was analyzed - open contracts, logistics, unfortunately, even things such as destroyed warehouses and production capacity of our counterparties. We were interested in whether our general contractors had enough employees, as some men with military experience were mobilized.
Some of our colleagues also joined the ranks of the Armed Forces of Ukraine, and we support them. Realities led us our way, we try to adjust and set up the company's work in all conditions. In the first stage, the work was restored, where the degree of readiness was very close to completion. We consider it our great merit. This change of focus and concentration on individual projects allowed to transfer to customers about 800 apartments in June. It is more than 42 thousand square meters of housing.
We consider it a huge Avalon achievement. In the second stage, the construction of objects that we plan to put into operation in 2023 was restored, their degree of readiness on February 24 was approximately 50%. We understand all the responsibility to our customers and it is very important that it understands the whole market. The third stage will be all new construction. They are not yet built, but paper processes have already been started. Let's talk about them in the near future.
Are apartments for sale now? So. However, there is no primary real estate market in Lviv. Many players behave inert and situationally. This has a negative impact on trends, trends and the concept of fair price. Therefore, it is very difficult to call the primary real estate market. Many companies have chosen a very fragile way, selling square meters with large discounts, sometimes even at prices below cost. It is clear why they are doing it now is a large lack of working capital.
But it is unclear what will end for their customers and for them. The most important thing is what impact it will have on the market. To what extent did sales fall compared to the pre -war period? At times. But it is normal, how scary it would not sound. And everyone adapts to that. It should be understood that the flagship is now the secondary real estate market. Yes, everything has changed. In the pre -war period, everything was built on the basis of the investment market in new housing.
It was the largest segment. Developers set the concept of fair price and the secondary market quickly picked it up with its adjustments. What is the problem that the flagship becomes a secondary market? It is its bias and emotionality, especially during such a period as it is now. The client in pricing is influenced by many emotional factors, one of which is the desire to quickly sell and leave the country. It is very important here to choose a "right" broker.
Unfortunately, some realtors are trying to scare the seller of real estate to interpret events around and the possible development of hostilities. This is necessary for the seller to lower the price again. Therefore, we always ask our customers to study the market and analyze everything that is happening now with prices. Have you already raised prices? Yes, prices have increased. But this is not a classic uplift during the war. It is a company's reaction to change in currency.
In fact, prices increased in national currency. In dollars, they almost did not change. How much did prices in UAH increase? From 25% to 40%. But again, it is not a whim of companies, but a reaction to new realities. Developers are one of the first to feel any fluctuations, because they are at the center of a huge industry that responds to all events instantly. Before the war, payments were very popular.
How does this tool work now? And what happens to existing contracts, how do customers respond to regular payments? The service of existing treaties was one of the most pressing and relevant issues in the first days of the war. Everyone was waiting for the decision of the Chamber of Commerce and Industry regarding the recognition of the fact of force majeure. At that moment, our lawyers worked most actively.
Their task was to give the most effective explanation of clients on the basis of all official decisions of the state. Now we communicate with all customers. On all contracts we understand what is happening. Do everyone pay? No. But 96% of payment contracts continue. As for those 4% - we are in contact with customers. They have objective reasons why payments do not pass in time. Our ultimate goal is to satisfy the client, so we are looking for ways to solve the problem.
Many of them went outside the region, the state. Someone lost their work, mobilized someone. In this regard, we always ask customers to inform us about any problems to think together how to solve them. Installments are interested in many. Especially those who want to invest in housing. There are several factors here: customers are not ready to give to developers all their savings, the exchange rate fluctuates, news from the front is changing. We always had good installment conditions.
We did not cancel them with the beginning of the war. Are customers ready to invest in real estate? Oddly enough, but yes. If you analyze the requests for housing, then half of the investment. On the first day of the war, we had a request for investment in about a dozen apartments and this trend is actually very stable. Especially among clients who have moved to Lviv from other regions and want to go back. Everyone saw how popular in Lviv is the rent of apartments.
It was for the work with investment a few years ago that we created Avalon Brokerage service. It can be rented and sold. Moreover, we have already reached the level of the secondary market. The only restriction, and it is fundamental, Avalon Brokerage works exclusively with Avalon's projects. Avalon put into operation the LCD despite the war.
How do customers behave? They became less nervous after building work? This is a huge job, we have again confirmed our reputation with a reliable and responsible company. These figures should be repeated: 42 thousand square meters; 810 apartments. This is a large number of our investors to help preserve and multiply their assets. Many families have already started repair work in their apartments. All of this was perceived very positively.
And some of the clients told us that they understand, now nothing would be put into operation. But the company concentrated all business processes on this. Avalon has a unit that deals with the company's residential and commercial complexes. How was it possible to save the service of this unit? Our Avalon Facility Service (AFS) unit is a continuation of the company's service that the customer receives as a resident of the house.
During the transfer of apartments to clients, the management company occupies one of the most active positions - it is its forces that pre -inspection of apartments for possible shortcomings. Only after their agreement is we inviting customers. Also, AFS accepts all equipment of the complex, all communication units, public places, elevator equipment, etc.
If the client perceives the transfer of the apartment as the period of completion of the company, then with the help of such service - this is only the next stage of our interaction. Every day, management company specialists are worried about cleanliness, responsible for the integrity of the building, heating, air conditioning, ventilation, lighting and water supply. AFS provides concierge services and is responsible for the safety of all residents.
The work of a management company with the beginning of hostilities has become crucial. After all, adjusting all safe zones in the complex is the priority AFS. How did AFS have safe places? These are places in underground parking under complexes. During one of the aircraft in February, we got into one of these objects and spent more than two hours there. It was cool, especially for women and children.
After that, the company's experts identified the safest areas in underground parking lots and began to equip them. For example, in the Avalon Up LCD, where the area was warmed, water and a coffee machine were installed, there can be more than 100 residents. In those residential complexes of the company where the house is managed by ACMH, we have allocated parking spaces that have not been sold to arrange such zones.
How will the requirements for new company projects change? There are prerequisites that the requirements for the arrangement in new areas of bomb shelters will be provided at the legislative level. But the market should understand that this added value will find itself in prices by square meters. The cost of the apartment can increase by one and a half times if you create a bomb shelter in the apartment itself. Such a room will be autonomous, it will have all communications.
The reinforced area in the house should also be equipped. We analyze such opportunities, apply them to the various segments offered by the company-from comfort to premium classes. We have ideas, but we are waiting for decisions that will be made at the legislative level. The main thing is that the market perceives the added cost of such changes.
What projects are the company concentrating today? Is the start of new projects is being considered? We are currently active in active work and continue to build our Avalon Yard and Avalon Holiday complexes. For example, the latter potentially has about 90 thousand square meters, the project is sold by only 30%. Therefore, there is something to work with and what to get into the market. Undoubtedly, we are still working on launching new projects. And we will talk about it later.
But at the moment, it is important for us to continue working, because we are responsible to existing and potential investors, before our team, and even before the country. We want to give people who choose Avalon, a home in which they will feel cozy and safe. We strive to save jobs and provide our team with support. And of course, we, like everyone, believe in the victory of Ukraine, and do our best to support the economy, give people jobs and help those who need it most.