by Oliver Knight
Developers active in the prime residential market are increasingly looking across the globe for ideas, inspiration, and opportunities. In our new Global Development Series we are assembling a number of focused insights which will shed light on the most important market trends.
In this edition we have worked together with cost consultants Core Five and MSMR Architects, to gauge how important specification is for new home buyers.
Some 88% of respondents to our survey said that specification was an important factor in their decision making when buying, while 64% said they would be willing to pay more for higher quality finishes and better specification
As such, an important task for developers is to weigh up the additional costs associated with higher specification against the premium for purchasers.
Indeed, looking in more detail at heating and cooling apartments, the need to strike a balance between cost and specification is clear. Some 63% of respondents said they would like to have some form of cooling in their properties.
Having cooling in an apartment will lead to a higher purchase cost of the property.
Moreover, accommodating the cooling units in the design without compromising layouts or ceiling heights is frequently challenging.
Similarly, a total of 55% of respondents would prefer to reduce costs by having underfloor heating only in the bathrooms, with radiators or forced air heating in the remainder of the property. This is particularly relevant given the current focus on avoiding overheating in modern apartments.
A useful exercise is to consider how important each amenity is.
Respondents placed their internet usage, television, heating, cooling and security as more important than built-in speakers and tablet integration.
More than 43% said super-fast broadband is the most important technology for them. Broadband is the most used technology for 63% of respondents, and the least used is built-in surround sound speakers and full home automation systems.
Fit-out costs
As specification becomes more complex and bespoke, fit-out costs understandably increase as higher quality materials and finishes are applied.
In recent years, overall fit-out costs have averaged between 10% and 15% of blended sales values. However, with the increase in the volume of high-quality residential projects in London, we are seeing this model change dependent on price point.
Core Five has looked at the fit-out cost range at different price points for a ‘typical’ 2-bedroom property.
The analysis reveals just how much fit-out costs can vary dependent on specification, ranging from around £125 per square foot to more than £450 per square foot. Generally, the cost of upgrading specification is concentrated on just a few items including heating, kitchens and technology.
