Misconceptions about new-builds
Hamburg | 14.01.2015
Residential building is booming in Hamburg. House-building activity is now at levels not seen for decades. There is great demand for modern housing. But how trendy should a developer be? How many innovative building services do people want? How many “green” extras are tenants and buyers prepared to pay for? By no means everything that is technically feasible, environmentally sensible, or architecturally smart finds favour with customers. From talking to a great many clients interested in new-build houses and apartments, Grossmann & Berger has identified the biggest misconceptions that sometimes afflict project developers.
Progressive, environment-friendly houses sell well!
Wrong. People renting or buying a home are not prepared to pay extra for innovative waste treatment or the recycling of building materials. “Whether it’s a roof-top photovoltaic array or modern ventilation systems in the living areas with heat recovery or geothermal heat exchangers to heat or cool the incoming air - developers find that many of the extras they install in order to make more efficient use of energy, do not pay,” says Frank Stolz, head of the New Builds department of Grossmann & Berger. It seems that tenants and owners do not want to pay more for a clear conscience - especially since the costs of progressive environmental technology do not stop once the systems are installed. One often finds that technical maintenance costs push up the service charges in the new home faster than the price of energy.
Multi-generation houses are the future!
Wrong. For the everyday work of the project developer, this type of house is irrelevant. There is no demand, nor are any offers made gratefully accepted. Many first-time buyers in Hamburg are between 30 and 40; their parents are still relatively young and have no wish to move out of their homes. Moreover, residential property to buy or rent has become expensive in Hamburg. Any additional living space allowance for other members of the family would cost more than many people could afford.
Hybrid houses are the new trend in mixed-use areas!
Wrong. What are known as “hybrid houses” do indeed permit people to combine home and workplace, but there is little interest in the idea in Hamburg - neither to rent nor buy. “Project developers who promote the combination of housing and commercial business often return to the drawing board because the customers show little interest in their plans,” says Garlef Kaché, co-head of the New Builds department of Grossmann & Berger. “The clients who could potentially be interested in this type of home-cum-workplace are young creative people who rarely have the financial means to live this way.” Once someone has become established, he/she tends to work in an office with employees in locations which offer not only the chance to talk to others, but also local shops and restaurants.
Serviced apartments are the next big thing!
Wrong. Services such as a concierge, skilled workmen or cleaning services, on call kitchens or restaurants are only required and used by residents in expensive properties. People who live in luxurious houses are happy to buy extra services. But for most people, the rent or purchase price is the crucial factor. Their view is that they don’t want to pay more for extras they can do without.
Artistic architecture enhances a property’s value and image!
Wrong. The more progressive the architectural design of a new apartment building is, the more difficult it becomes to sell or let the units. Purist architects are currently very fond of façades without rendering or cladding. The buyers of apartments are equally put off by architectural concrete as they are by windows stretching the width of a room, which make it impossible to furnish in a traditional way. Open plan loft apartments without any clear divisions of space are also out, the value of an apartment depends on its floor plan and the area to room ratio. “Buyers want a property that will retain its value and be fairly easy to sell, so they are more inclined to buy the tried and trusted than the avant-garde,” remarks Stolz.
We need less and less car-parking space in Hamburg!
Wrong. The Senate of Hamburg has abolished the obligation to build parking space for every new residential building project. The motive was to reduce house-building costs. A Pyrrhic victory. In many districts of Hamburg tenants and buyers living in new buildings complain about the lack of parking spaces outside their home, for example in the new “Quartier 21” in Barmbek. Often there is not even one parking space per family, although many households in the area have two cars.
Subsidized housing makes living in Hamburg cheaper!
Wrong. That is not true for everyone. Now that developers are obliged to reserve 30% of a new building project for subsidized housing, the remaining 70% of tenants and buyers have to pay more for their new apartment. The affordable housing units that the Senate of Hamburg demands at rents which are fixed for long periods cost almost as much to plan and build as other apartments. “But because they generate lower rental incomes, the project developer has to make up the shortfall by charging the tenants and buyers of the other apartments a higher price,” says Kaché.
The priority of those in the business of letting and selling new build properties is to market them well as quickly as possible - which is only feasible at fair market prices. That is what the lending banks demand too. High acquisition costs and the tendency of owners to keep apartments for a long time boost the popularity of low-risk investments. Tenants and buyers do not want playful designs and technical “gimmicks”. People always question the value of environmental and technical innovations. The consequences for buyers can be quite considerable: they are buying the property as an investment or to realize the dream of living in their own four walls but know that a time will come when they want to sell. The risk is that architecture that evokes strong positive or negative reactions and relatively untested new technologies can deter future tenants or buyers and result in financial losses.