What is being built?

Functionality and people-centredness in Újbuda's newest living spaces

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He has adapted his major investment Bayer Property in the XI district to our daily lives. Elite Park focuses on families.

We spoke with Ákos Balla, sales director of Bayer Property, about one of the company's most important developments, the new Elite Park in Újbuda. In the area bordered by Budafoki út, Barázda utca, Szerémi út and Galvani utca, close to the Danube, two blocks are being built next to a former building in the style of the Bayer Construct Zrt., between which the huge plot of land will allow for the creation of numerous playgrounds and recreational areas.

The development will build 464 apartments

There is no car traffic in the garden, so children are really free to let off to play, creating an enclosed, safe environment between the nine-storey apartment buildings, whose true height is barely perceptible due to the optical play of the façade that is set back from the sixth floor. These fractures appear on all sides of the buildings, making them appear to be only six-storey buildings, which gives them a more welcoming feel than similar scale projects - a fact reinforced by the colours on the façade. The space provided by the setbacks has been used to create larger terraces, where each roof section is the slab of the apartment above, but none is oversized. An effort was made to avoid creating huge terraces of 200 square metres.

This was also possible because the buildings open up the useful spaces to the outside, while at their core there is space for circulation and storage.

"The focus is on apartments with different floor levels for greater intimacy"

- emphasised Ákos Balla.

The raised ground level of the blocks of Elite Park provided the opportunity to create garden-connected apartments, with a garden sunken from the ground level, separated from the common garden by a wall instead of a hedge.

As the sales director pointed out, "it should be remembered that this is a metropolitan development, which has the advantage of infrastructure to the city and motorway, and easy access to shopping and entertainment; in return, a large number of apartments are being built, so the project is not comparable to a 4-6 apartment suburban development".

Many of the prefabricated elements have been delivered to the building: slab panels or balcony support structures have arrived ready for construction, which is an important part of the Bayer Property property development strategy. With 464 apartments being built, prefabrication was a huge help during the construction phase.

Responding to a price-sensitive market

Although the product is in many cases of better quality than its competitors, the company strives to provide housing at a lower price than its competitors, which is achieved through a number of efficiency and cost-cutting measures. The Elite Park properties are district-heated because they are cheap and environmentally friendly, simple and easy to use, and the fact that they offer customers only two different combinations of finishes helps to maintain their price advantage.

"This is a restriction in some respects, but at the same time," the director pointed out, "it gives us the opportunity to sell properties with, among other things, fitted kitchen appliances and air conditioning."

The energy classification of Elite Park buildings will be BB, which is the current standard. Only very few exceptions have more to offer than this - Balla cites the example of Bayer's Zugló City Centre project, where thermal water heating is being installed. However, special solutions are also reflected in prices.

The BB means that the house is well insulated and has good windows and doors. Not related to the rating, but important for customers, we learned, is the fact that district heating is a state-subsidized and Budapest-wide form of heating, so it is very reliable. The state will protect homes with district heating from both a supply and financial point of view, which is a big advantage.

The buildings of course meet all the standard values; they also try to provide more than the average in terms of thermal and acoustic insulation: the partition wall between the apartments has extra soundproofing, which, although it takes a little space, means a lot in terms of comfort. They also put a similar amount of effort into the built environment: they want the house and the garden to be a pleasant living space for their clients. While they try to use the best quality materials in the walls and slabs, instead of ceiling cooling-heating in this project they are providing radiator heating, as ceiling technology would significantly increase the construction cost and therefore the price.

Pleasant living spaces

Importantly, they do not build penthouse-style luxury apartments. Of course, large apartments for families are being built, with terraces large enough to serve as living space. A particular feature of this project is that the apartments are delivered with kitchen and hallway furniture, so that the client gets a higher level of finish. The installation of a kitchen in an apartment is a 5 to 6-step process, as it involves calling in a carpenter, selecting the kitchen appliances, etc., which can take months. In the company's experience, the kitchen and hallway wall offers customers objective value: two major problems are reduced and the homes can be occupied much sooner.

All apartments have a balcony or terrace as well as built-in air conditioning. The three-bedroom apartments for families, around 85 square metres, have two bathrooms, all with windows and light. The balconies are large enough to comfortably accommodate a dining table for four, but the one-and-a-half-bedroom apartments also have enough space for a small table.

"Here, of course, it was not possible to build terraces of the usual size for family houses, but we tried to create terraces with a depth of 180 centimetres, and from the 6th-7th level, from the setbacks, we could create much larger terraces" - Ákos Balla emphasised.

Smaller one-and-a-half bedroom apartments make up the bulk of the housing stock, as they are seen to be the most in demand in the market; however, they are around 48 m2, which shows that they are designed to provide comfortable living spaces for private buyers - a distribution that can be as high as 38 m2 in other projects.

"Of course there are one-bedroom apartments of 60-65 m2," he added, "but we see that people are no longer paying for the extra square metres. We have adjusted the apartment sizes to the purchasing power of the 11th district."

Families in the spotlight

The economic situation in this country has been peculiar, which is perhaps also the reason why this huge residential unit is mainly bought by private individuals. Although one large investor has bought 30 investment-ready one-and-a-half bedroom apartments in the buildings, and there have been cases of families buying 5-8 apartments, these are the largest purchases to date; investors typically buy one or two properties. The largest majority, however, are customers who are buying homes for their own use, typically with cash, as bank loans have soared. Commenting on the changes, Ákos Balla said:

"We now see bank loans have come to a standstill at around 8% APR. These loans have already attracted the interest of customers, but still only 30-40% of the value is financed by banks."

In this project, only domestic investors have bought, which is also reflected in the volume (although it is important that there is a solvent class), as it is not uncommon in Europe for entire houses to be taken over by investors. At the moment, the proportion of investors is low, because those who have the means to do so have sought opportunities in the financial markets. Now, with government bond yields going down, they are explicitly expecting investors to come in at the tail end.

"We don't expect anyone to buy property in bulk right now," the director outlined the future, but at group level we are ready if an investor wants to buy the whole block or a percentage of it. If somebody wants to buy, say, a whole staircase, in this project they won't have the opportunity to do so because of the sales strategy, but in our other projects, of course, there is an opportunity."

Rational investment for more affordable housing

Újbuda has seen an explosion of development, and demand is where it is good to live: there is typically good public transport, schools and jobs. As a result, the 13th district - particularly because of the office corridor on Váci út - and the 11th district have developed most dominantly over the last 10 years. From an investor's point of view, districts 8, 9 and 10 can be seen as a hub, but districts 11 and 22 have not been able to develop together in the same way. While the 13th district has attracted investment from the 4th district, the 11th district has no such alternative, so it remains an affordable pull area for the housing market in Buda.

The properties in districts 11 and 13 are at the same price level, typically ranging from 1.1-1.2 million to 1.5-1.6 million per square metre. From this price range, the Bayer Property is hanging out on the market, and there is a conscious reason for this: for years, the vision of the company owner, Attila Balázs, has been prefabrication and mass production. As Ákos Balla sums it up, "we are, if you like, producing flats.

They try to give their customers rational but viable solutions, but they don't offer anything excessive, so they can keep their prices lower than the competition. Closely related to this is the fact that they use a specific financial model.

In the past, it was common for buyers to have to pay 201TP1835K of the value of the property upfront and 801TP1835K at the time of delivery. This meant that the investor had to rely on external funding for the construction, but bank loans are now very expensive, which also makes the apartments more expensive.

"We will at least finish the house ready for construction," he elaborated, and we will consider this as a calculated equity. And when buyers come in, they pay 50-90 % depending on the stage of completion."

Of course, as investors, they were prepared for the possibility of slower sales, but this was not the case. The buyers accepted the financial model, which allowed the group to make the investment without a bank loan. This is advantageous for the customers, as they are buying a property free of debt and the cost of the loans does not increase the purchase price. While many are struggling to sell, for them the optimistic scenario seems to be materialising, as the sales director pointed out:

"This project, with its current content, is at 60% in sales and I am confident that by the time it is completed, it will be at 80-90% in sales".

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