Let’s not miss out on the buyer! Ákos Balla on down-to-earth property development

Whilst the Bayer Construct group is active across the sector – from design through to construction, manufacturing and sales – its property development company maintains direct contact with homebuyers and adapts its offering to market demand based on their feedback. We spoke to Ákos Balla, the Bayer Property sales director, about the background to a strategy that has been consistently implemented for several years and is now yielding measurable results that are outstanding even on a national scale.

They have had a price advantage for years, and they pass this on to homebuyers

Why have we been successful in recent years? Because, essentially, we were already building Otthon Start Programme (OSP) flats back when the programme didn’t even exist! – says the head of Bayer Property, setting the tone for the conversation. „I don’t like to use the phrase ”we build cheap flats’, because it conjures up the idea of some sort of major compromise. I’d rather say that we offer good quality at an affordable price.”

It also highlights what lies behind this: „The more work processes are managed by a single entity, the cheaper the product can be. This is typically why large property developers work with main contractors, and what the Bayer Construct group does is very rare: it forms a complete value chain. This encompasses not only the production of raw materials and construction, but also design work, in-house sales, operations and everything else that enhances efficiency.”

He adds that, thanks to the above, they have always been able to build flats at a cost advantage, and have passed this cost advantage on to their customers year after year. „We had to pass it on, because, if we look at the last six years alone, the property market has been hit by a great many negative developments – including Covid and the energy crisis.”

Completion times that are faster than average are also more cost-effective

The extensive use of prefabrication and a number of other innovative methods play at least as big a part in keeping prices low. „These elements and technologies are essentially hidden from view; customers do not necessarily notice them, but they play a major role in delivering good value for money.”

Another equally important factor in terms of costs is the speed of construction, an area in which the group is also ahead of the market (as we highlighted in this interview with Márton Koprás, Director of Investment in this interview, we shed light on the background to this exceptional speed – the editor).

„If the house is built more quickly, it needs to be financed for a shorter period, and the workers themselves spend less time on the building site, so a smaller proportion of their wages is factored into the property’s value.”

For those looking to buy their first flat, the gym isn’t exactly a big draw…

In addition to the cost factor, he emphasises that another key to their success is that they do not only address a problem when it arises, but are already prepared to deal with it.

„This is because the group maintains a very close relationship with its customers: we don’t use third parties to build or sell our products; instead, we are in direct contact with the customer ourselves, so we know exactly what they need.”

In their experience, these customer needs are not exactly the ones on which property developments„ marketing messages are based. ”We have competitors who offer saunas, gyms, mother-and-baby rooms, yoga rooms and the like. We, however, have found that for someone looking to buy their first home, a gym is less of a selling point than being able to buy the flat they want at a good price. For someone taking out a 50 million forint mortgage today to buy a home, whether there is a yoga room in the building is of less importance.”

Buyers pay very close attention to how the housing association will spend its money

He points out that they believe that, in the lower price range, there is a greater need for affordable products rather than the items mentioned above.

„We therefore provide services within our buildings that are closely linked to residential living. At the same time, high-quality interiors and fittings – such as the letterbox, the lift lobby, the aesthetics of the internal corridors, or even a small mural – are a feature of all our buildings, just as every flat has a balcony. Furthermore, in every one of our buildings, we provide a communal space of varying sizes, a small playground or an outdoor area where residents can go to rest, relax or even work from home.”

 „Many people view sustainability solely from an energy perspective, yet our running costs consist of more than just heating expenses. Buyers very carefully examine the expected monthly costs expressed in forints per square metre, and they pay close attention to how the block of flats will spend its money once it is in use.”

The customers’ views must not be ignored!

He pointed out that not everyone would necessarily be happy if the costs of maintaining the facilities mentioned – such as the mother-and-baby room, the yoga room, the gym and the sauna – were included in the service charges, especially if they did not actually make use of them.

The expert also highlights the importance of common sense in the fields of planning and building regulations. „We often see that the homes envisaged by architects or key figures in the building authorities are more spacious, more aesthetically pleasing and more comfortable than what the average person can afford. The reality is different. People are generally satisfied with a smaller, sustainable home – one in which their children have their own rooms. So it is very important that everyone has their own space, and this will inevitably result in smaller living areas. We know from experience what buyers need, and we strive to find the optimal solution. Buyers” perspectives must always be taken into account!”

Kincsem Lakópark is attracting attention with some astonishing figures

At our request, Ákos Balla also agreed to outline the group’s most significant current development projects. „When it comes to the most significant projects, I usually highlight the Kincsem Residential Park, as it stands out in several respects. I can’t really recall a project where more than 2,000 flats were built on a single site in such a short time. What’s more, 1,500 of these flats were under construction at any one time. So, in just over three years, we’re building more than 2,000 flats, and of these, we’re continuously developing 1,500 under a single site management team at a single location – all of which demonstrates the efficiency of the group!”

At the same time, this development stands out in the market not only because of its size. „It is also significant that last year, in the space of a single year, we sold nearly 1,500 flats in a single project: this is considerably more than what our biggest competitors often sell in total over the course of a year. This figure clearly demonstrates the success of this project.”

The Kincsem project once again demonstrates that Bayer Property is striving to respond precisely to market demands. „We have tried to design one-and-a-half-bedroom flats with a floor area of up to 43–44 square metres, because we realised that customers are very happy when their one-bedroom-plus-living-room flat is of this size, and this is the price per square metre they have to pay. For them, this provides a housing solution for around 70 million forints. By way of comparison, in the same district, the price of a prefabricated flat of this type is 50 million forints: a second-hand, energy-inefficient flat built in the 1970s, where you have to compete for parking spaces.”

Sizes and aesthetics may change, but they never compromise on quality

In contrast to the project described above, the Harmat Liget residential complex offers properties of a distinctly premium standard in Újbuda, in the 11th district, compared to Kincsem. „Here, the same one-and-a-half-room flat measures 57 square metres: everything is proportionally larger, as if we’d blown up a balloon to make it bigger. The larger spaces and the higher land prices in Madárhegy result in a higher purchase price, which ranges between 105 and 110 million forints. In addition, greater emphasis is placed on aesthetics in the façades, and the distances between buildings are also greater. These larger dimensions naturally apply to two- and three-bedroom flats as well, which already offer splendid living spaces.”

Referring back to Kincsem, he adds that the quality criteria are the same for both residential developments. „At Kincsem, we sell flats at, on average, two-thirds the price of those at Harmat Liget, but there too – as with all our projects! – we strive for the best thermal and sound insulation, and ensure walls that are perfectly straight and precise to the millimetre.”

Debrecen’s dynamism has led to an investment on a historic scale

The Bayer Property development in Debrecen bears many similarities to the Kincsem project; it involves the construction of 550 flats in the Epres Liget Residential Park. According to Ákos Balla, this development is also one of the largest of its kind. „As well as being Debrecen’s largest property development to date, according to feedback from the Land Registry, it will result in the city’s largest blocks of flats to date.”

It is no coincidence that Debrecen was chosen for the Bayer Construct group’s largest provincial property development. „This is an extremely dynamic city, characterised by a vibrant university life, a large number of jobs and numerous new jobs being created. That said, I must point out that, based on our experience in Debrecen, the city cannot sustain just any amount of property development, and the same is true of other county towns. Even in the case of the second, third or fourth largest towns, the regional property market has a lower absorption capacity than a medium-sized district in Budapest.”

Astute buyers stand to benefit twice over at the Virágpiac Lakópark

In terms of superlatives and uniqueness, the Virágpiac Lakópark currently under construction in Budapest’s 13th district fits right into this category; it is being built on the site of the former flower market, next to Szegedi út. „I can’t really think of any other project in this district that is eligible for an OSP loan. It’s also worth noting that there are generally 30–40 property developers actively operating in the 13th district, which means significant competition; in other sub-markets, we have barely one or two competitors.”

It is clear from his comments that 299 of the 451 flats meet the 1.5 million forint per square metre price cap set by the Otthon Start Programme. „These are typical one-and-a-half-bedroom flats. In my view and based on my experience, when we sell these flats today, they are already worth 10–20 per cent more than this price in this location, but we have positioned them for the OSP scheme, so we are continuing to sell them at this price. Another interesting aspect of the project is that, as we have priced every OSP-compatible flat at 1.5 million, the more discerning buyers who come early can snap up the better-quality ones at the same price.”