QUESTION: New buildings: how to choose a developer and assess risks?
New developments attract many buyers with modern layouts, well-developed infrastructure, and legal transparency of the property, since it does not yet have a history of secondary owners. However, purchasing an apartment at the excavation or construction stage involves certain risks, which can be minimized by a systematic approach to choosing a developer. Start with a clear goal in terms of numbers and deadlines, determine an acceptable level of risk, then break the selection process down into clear steps and lock all information into your investment budget. Review your plan and monitor the developer's status about once a month to catch any deviations from the schedule in time.
The first step in choosing a developer is a comprehensive analysis of their reputation and history in the real estate market. Study the portfolio of the company's completed projects, check whether they were delivered on time, and assess the quality of interior finishing and utilities in the built houses. Reliable developers openly publish permit documentation, project declarations, financial statements, and bank accreditation conclusions on their websites.
The second important aspect is the financial stability of the construction company and its operations within the current legal framework. Today in Russia, most new buildings are constructed using escrow accounts, which significantly reduces the risks for equity holders, since the developer receives the buyers' money only after the building is commissioned. Make sure that the property you choose is financed by a large, reliable bank ready to support the project even during periods of economic instability.
The third step is to assess the legal transparency of the land plot and construction permits. The land for development must be owned or leased on a long-term basis by the developer, and the designated purpose of the plot must comply with the construction of a residential multi-apartment complex. The absence of legal disputes between the company and government authorities or contractors is also a good sign.
The fourth stage is the assessment of infrastructure risks for a specific new building. Check the transport accessibility of the area, plans for the construction of schools, kindergartens, polyclinics, and roads, as the pretty picture in the sales office brochure often differs from the actual pace of urban development.
To systematize the developer selection process, use this step-by-step guide.