In a context of uncertainty linked to both the war in Ukraine and the government crisis, inflation continues to rise, leading to significant changes in the costs of building materials. All in a post-pandemic scenario that had already changed the needs of living. What does this mean, especially for those who want buy a newly built home? We talked about it withCEO of Abitare Co., Giuseppe Crupi.
What is the situation of the new construction real estate market to date?
Abitare Co. specializes in newly built residential building in Milan: this year, the first quarter of the city was extraordinary with 7800 transactions, +36 percent compared to 2021, – underlines Crupi. – But also in Italy the results were very good, with 182 thousand transactions and an annual +12 percent. However, the second quarter saw a slowdown very much linked to the crisis of the war in Ukraine which greatly affected costs, materials, transport, etc. We note one always very strong demand but the supply of new buildings is scarce, while the sales and negotiation times have lengthened. For us, for example, it was usually easy to place 70 percent of construction sites in the first 90 days; today we are at 180 days.
What do these changes in the new real estate market depend on?
The cost of materials and inflation, in addition to rising interest rates, they will soon bring some changes in terms of home buyers’ targets, especially new builds. For example, a new construction in Milan costs between 4 and six thousand euros per square meter; customers will have to bear higher costs and higher mortgage rates, and this will make a difference. In the short term, I do not see solutions unless the war in Ukraine brings about a change towards greater geopolitical stability.
What is the link between geopolitical uncertainty and home buying?
The link between uncertainty and buying it is linked to the economic situation. Let’s take the case of Abitare Co. which deals with construction sites usually delivered within two years: not everyone is sure of their financial availability and their ability to meet expenses within that period. All the more so in the face of inflation and rising rates like today’s. A model that also affects society: you don’t even know if your work situation will be the same over time, and therefore you tend to wait before buying. But right now it’s a latent concern because we still have very strong demand.
How has the demand for housing changed after the covid?
After the covid a lot has changed in the home application. Change the required layout, for example: the buyer looks less at the location and more at the square meters, he also moves from the city center as long as the house is more livable and with adequate services. The house is seen as an asset to be kept for a long time, the idea of a house to be taken and changed after a few years no longer exists, even for young couples. You want a home where you feel good so it’s important lightwindows, security, the use of also ecological materials. After the covid, a home where you can breathe well is also important, with adequate systems ventilation and green areas. And then there is the aspect of services.
What services are required in particular?
There sociability even inside an apartment building, the covid reminded us, it is important. The shared services in the condominium are therefore important, such as the wellness and fitness area, the play areas for children. And then the delivery and storage area to receive your parcels purchased through ecommerce. It’s about services both for those who buy and for those who rent. In any case, the customer seeks this type of service, the houses of tomorrow must be thought of in this way, otherwise they will not respond to the trends that are emerging at this time.