Today, developers have begun to change their attitude to discounts. Companies even began to compete, reporting the size of their discount. In the current difficult market conditions, this is considered a competent marketing ploy. The Level Group, founded by ex-senator Vadim Moshkovich and Kirill Ignakhin, had discounts that were higher than the market. Experts attribute the discount to previously inflated prices.
Let it be
Here, for example, is the new Level Group project of the Level Baumanskaya business class residential complex in the Basmanny district of the capital. The total area of the residential complex is 35 thousand sq.m. It includes three buildings with a height of 9 to 21 floors, designed for 351 apartments. It is conveniently located – Baumanskaya and Elektrozavodskaya stations are within a 15-minute walk.
The other day there was a start of open sales, the booking was still in the fall. But, as the Moskovskaya Nedvizhka telegram channel notes, Level’s marketers didn’t come up with anything better than how to start giving “discounts from a cape”. In terms of prices – since November, the average meter costs 410 thousand rubles, but with a discount – in fact, nothing has changed – 397 thousand rubles / sq. m. m. This is such a trick in the current conditions – to show a price increase at a discount and not change anything. The main thing is that the price has become more on the site, but how will it be there?
Experts believe that today serious and successful companies have changed their attitude to discounts. Today, it turns out that this is no longer an alarming symptom, but a “competent marketing ploy.” Moreover, companies even compete with each other, proudly reporting the size of their discount. But this does not come from a good life.
The situation in the real estate market is difficult: the volume of offers has reached record levels, and demand is falling, as the population is not getting richer. According to the General Director of the development company “SMU-6 Investments” Alexey Perlin,
So far, none of the developers expects a significant increase in demand due to the fact that we live in a situation of uncertainty.
In turn, Vladimir Shchekin, co-owner of Rodina Group, believes that a conservative forecast is most likely, in which the economy will continue to stabilize. “Demand for housing will continue to be lower than in 2020-2021, and prices will stagnate,” the expert believes.
Pricing logic
In such conditions, everyone, of course, survives as best he can. Level Group CEO and co-owner Kirill Ignakhin notes that due to falling demand, prices for new buildings in December 2022 decreased by 10-25% in the market. In some projects, when paid in full for cash, the final cost for buyers was even 30% lower than the declared price. According to him, the correction will continue this year. Ignakhin explains the situation with 20% discounts last summer and says that his colleagues in the market were skeptical about this decision. But then they themselves began to adhere to this practice. And the Level Group went further and moved to a 30% discount. “In our pricing logic, we have already included a forecast for a further fall in prices, so we see no reason to make a decrease in slow steps,” the top manager explains the company’s policy.
Statements of the Level Group about the desire to be the first in providing discounts were taken by other developers with irony. They asked if their colleagues in the market will also start giving a 30% discount, will the Level Group move to a 40% discount in order to maintain its leadership position?
hard business
It should be noted that the Level Group is notable for its ambitious plans and rather aggressive business conduct. Recall that ex-senator Vadim Moshkovich is the owner of a large agro-industrial holding Rusagro. It specializes in the production of meat and dairy products, sunflower oil, sugar, etc. The total area of agricultural land managed by the holding is 675 thousand hectares. The media noted how tough Vadim Moshkovich could behave with competitors.
Moreover, his methods of doing business have repeatedly raised questions not only in business circles, but also in law enforcement agencies. So, Moshkovich in 2000, not without connections with the leadership of the State Reserve, received an advance payment of 325 million rubles for Grechishkinskaya Grain Company LLC for the supply of grain to the state reserve. Then, as the general director of this LLC told the investigators, the money was transferred to other companies, including Rusagro.
It is worth recalling that earlier Moshkovich had already tried to gain a foothold in the construction market, but the attempt was unsuccessful. The companies “A101 Development” and “Augur Estate” created by him were sold to the owner of the Safmar Group, Mikhail Gutseriev. The media wrote that for assets, the value of which in 2007 was estimated at $7 billion, in 2015 the businessman received only $700 million.
The second attempt to enter this market was more successful. Three years ago, Level Group announced its entry into the elite segment of the capital’s development. Kirill Ignakhin then announced plans to enter the top 5 Moscow developers.
The results were even better than expected. According to a study by analysts from the Dataflat project, Level Group entered the top 3 ranking of sales leaders among developers for the period from the beginning of 2022 to September inclusive within Old Moscow.
However, Moshkovich also brought to the construction business the methods by which he lobbied the interests of Rusagro. Muscovites, for example, remember the Level Group for a number of scandals. As Nasha Versiya has already reported, persons associated with Moshkovich’s company tried by dubious means to free the site for the construction of the Level Profsoyuznaya high-rise building, which has long been advertised on the Internet, next to the Akademicheskaya metro station.
Two years ago, on New Year’s Eve, more than 30 young people in tracksuits brought heavy special equipment and began to push back the working pharmacy employees, installed concrete blocks and a high metal fence, blocking the entrances and exits to the premises of the 1st floor of the house where people were. At the same time, another group of 15 people began to destroy the roof of the building.
One of the witnesses of this pogrom, a resident of the Akademichesky district, tried to film what was happening on a video camera, for which he was beaten. They also wrote about the conflict between the equity holders of the Level Amurskaya multifunctional complex and the developer JSC Mosstroymekhanizatsiya No. 4, controlled by the Level Group, after the developer wanted to cancel the previously signed agreement, thus changing the area of housing. The Moscow department of the Federal Antimonopoly Service demanded that the developer of the Level Amurskaya residential complex in Moscow – Mosstroymekhanizatsiya No. 4 – not mislead equity holders regarding the area and cost of apartments.
The OFAS explained that citizens who in 2018 signed contracts for participation in the shared construction of the Level multifunctional complex on Amurskaya Street turned to the department. Shareholders chose apartments with finishing, agreed on their area, number of rooms and cost. “After putting the house into operation, the developer sent letters to the participants in shared construction with a request to conclude additional agreements to contracts for participation in shared construction. According to the new documents, the number of rooms has changed, as well as to a much smaller extent – the area of apartments,” the report says.
Returning to the discounts announced by the company, I would like to note that all market participants are well aware of how they are obtained. Developers explained the size of their discounting by previously “inflated” prices, and admitted that large discounts are a banal “swing”. Prices go up first and then down in the form of a discount.
Is there slyness in relation to buyers here? Probably yes. A win-win calculation is made on the fact that people love discounts. However, while it works, and buyers are satisfied. I wonder how long the developers themselves, including the Level Group, can hold out such a pricing policy?