Why is It Cheaper to Buy an Apartment Under Construction Over One in a Completed Residential Complex?

Real estate prices shift according to the stages of construction. In a project's early phase, an apartment's cost is, as a rule, at its lowest, and once construction is finished and the building receives Certificate of Occupancy, the prices rise considerably. The difference stems from several factors that are a constant for the real estate market, be it in Georgia or anywhere else.

In this blog, Maqro Development will try its best to explain how construction progress shapes apartment pricing and which factors drive the growth in a project's value.

How Does a Residential Complex Change Across the Stages of Construction?

Residential complex construction in Tbilisi breaks down into four main stages. The first is the design phase. Prior to this period the company has already obtained its construction permit and is now focused on developing the project's concept, though it’ll be some time before the construction work itself starts. The price per square meter is the lowest at this stage, since an apartment is sold on the basis of the project location and the plan alone. Also, the risks that construction could be delayed or halted are highest at this stage.

At the second stage, the building's frame goes up. As the construction progresses and the risks diminish, an apartment's value starts climbing above the early-phase level.

The third stage includes finishing the facade, installing doors and windows, and installing MEP (mechanical, electrical, and plumbing systems). By this point the complex starts looking close to being finished, which shows in apartment prices too.

At the final stage, the complex enters into operation and the apartments are handed over to their owners. The number of free units still available is likely to be limited by now, so their prices reach the peak.

What Factors Drive the Rise in Apartment Prices?

The chief reason value goes up is that risk comes down. At the early stage, the residential complex exists only on paper, so the buyer is, to a certain degree, investing money in a future project. As the work advances the dangers of not receiving a unit diminish, and with them diminish the concessions the developer offers early buyers.

Financial factors also bear on real estate prices. To get the project off the ground, the company needs additional capital for expenses such as the land, the project design and starting the construction. Early sales are often seen as a more favorable way to raise funds than a bank loan, which is why the apartments are sold on better.

Rising construction costs also play the part. As materials, labor, and logistics grow more expensive, this feeds into the final cost of the apartments. What's more, demand for apartments under construction in Tbilisi is high, while the number of land plots suited to multi-apartment projects is limited, which accelerates the rise in prices.

What surrounds the complex territory is no less important. Often, when a large project begins construction, the surrounding area catches many eyes and starts developing alongside. Retail and dining venues often open while the construction is still ongoing, more schools and kindergartens pop up nearby, and even the road infrastructure may improve and expand. Changes like these make a neighborhood more appealing and lift real estate value along with it.

There's another reason prices climb: the on-site assessment of a finished complex is simply easier. The buyer can plainly see the building's facade, the courtyard, the shared amenities, the elevators, and the complex's surroundings. Additionally, the apartment might be move-in ready, and not having to do additional work means the buyer can start using the space right away. These factors can all push up the final value of an apartment in a completed project.

Which Factors Increase a Project's Investment Value?

Not every residential complex rises in value at the same pace. The price difference is a matter of the project's location, concept, infrastructure, and the reputation of the brands partnered with the developer.

Location is widely considered to be the primary factor. A complex built in a developing neighborhood, close to transport hubs, is especially high in demand if the connection to the city center and the main highways takes less time. Maqro City Tbilisi which is currently being built on Noah Ramishvili Street, is a case in point. The complex sits near metro Samgori, and nearby are the East Point shopping center and Tbilisi International Airport. During off-peak hours, it takes about 15 minutes to get to the city center via car.

The complex's concept bears on the value of the property, too. Projects that fold in commercial and office zones alongside residential spaces draw more interest, from both a residential and an investment standpoint. Maqro City Tbilisi territory is spread across 100,000 square meters and has allocated space not only for residential units, but a business center, sports infrastructure, recreational zones, and a kindergarten.

An apartment's price shifts as construction advances, influenced by several circumstances. The risks tied to the project gradually diminish as the construction progresses, the associated expenses rise, the surrounding area develops, and the residential complex is easier to objectively assess once it’s closer to the final look.

Construction of Maqro City Tbilisi is currently actively underway, so apartments in the project can still be purchased via the developer’s 0% internal installment plan, on terms favorable for the buyers. The sales team will provide detailed information about the project's features and payment terms to all interested.