It’s a question I hear quite often. And it’s a perfectly reasonable one. Because if we look only at the apartment itself, such a difference can be difficult to explain. Concrete is concrete, bricks are bricks, and workers have to be paid on any construction site.
But the price of a new apartment is not simply the cost of building it. In reality, a developer starts spending money long before the first floor of the building is completed.
So, where does all that money go?
If we simplify things considerably, the price of an apartment includes: land + construction + design and permits + infrastructure + common areas + financing + marketing and sales + risks + profit.
There is no fixed percentage for each of these components. And this is where it gets interesting.
Two projects built in the same city can have very different costs, even if the prices of the main construction materials are roughly the same.
A lot. And not only because land can be expensive.
Let’s take two plots of the same size.On one, a developer can build 10,000 m², while on the other they can build only 5,000 m². If both plots cost, for example, €2 million, the land cost per saleable square meter will be twice as high in the second project. That changes the economics of the project considerably.
Location also matters. A plot in a well-developed part of Chișinău, with access to roads, public transport, schools, shops and other infrastructure, has a different value from a plot on the outskirts of the city.
But cheap land does not automatically mean cheap apartments. If roads need to be built, utility networks extended, infrastructure problems solved or additional works carried out to connect the project, the initial price advantage can disappear very quickly.
This is the part that buyers see most easily. Concrete, steel, bricks, windows, insulation, façades, engineering systems, elevators, finishes and labor.
But the differences here can also be substantial. One building may use standard construction solutions, while another may use more expensive materials and more complex technical solutions.
For example, there may be differences in:
So when someone says: “How can an apartment cost €1,600/m²? Construction can’t possibly cost that much.”
The answer is simple: it probably doesn’t. But the €1,600/m² price is also far more than just the construction cost.
This is another common misunderstanding. A buyer purchases a 60–70 m² apartment. But the developer is not building only those 60–70 m².
The project also needs staircases, corridors, elevators, technical rooms, parking areas, basements, access roads, courtyards, green spaces and other common areas. All of these cost money.
You do not see them in the floor area of your apartment, but they are part of the project.
That is why a building with highly efficient apartment layouts and relatively few common areas can have very different economics from a complex with large lobbies, generous corridors, underground parking and many additional amenities.
There are quite a few. Before construction even starts, the developer has to pay for design, geological studies, approvals, permits and specialist services.
Then come the costs of project management, legal services, accounting, administration and sales. You do not see these expenses on the construction site. But they are real.
And ultimately, they have to be recovered through the project.
A building does not appear in one month. Between the moment a developer purchases the land and the moment the last apartments are sold, at least 3-5 years can pass.
During all that time, money remains tied up in the project. Salaries, interest, taxes, security, design and administration all have to be paid. And what happens if the project is delayed? The costs continue.
That is why an additional year can mean millions of lei in additional costs for a large project. Meanwhile, the market can change. Construction materials can become more expensive. Financing costs can increase. Demand can fall.
Or, as we have seen in recent years, the market can reach a situation where prices no longer rise as quickly, while the number of transactions falls by 10–30% in certain market segments.
For a developer, this is a real risk, and such risks need to be taken into account when the initial selling price is established. Without a sufficient margin to cover these risks, many developers could face insolvency, while projects that have already started could remain unfinished. And in such a situation, the problem is no longer only the developer’s.
Behind a residential project there can be hundreds, and sometimes thousands, of buyers who have invested their savings in a home that does not yet exist. A delay or a stalled project can mean years of waiting for a family, money being tied up and, in some cases, the risk of losing a significant part of their investment.
It depends on the project and how it is financed. Some developers use their own capital. Others work with investors or bank financing. In some projects, part of the financing also comes from apartment sales during construction.
But regardless of the source, money has a cost. If €10 million is invested in a project for three years, that is very different from having the same money available immediately for another investment. This has to be included in the project economics.
Because nobody can know exactly what the market will look like three years from now. When a project starts, the developer makes a financial calculation. They estimate the cost of the land, construction, financing and the time required to complete the project.
But then things can happen that were impossible to predict accurately. Materials become more expensive. Delays occur. Legislation changes. Financing becomes more expensive. Apartments sell more slowly. Or an economic crisis occurs.
A developer needs a sufficient margin to get through situations like these. Otherwise, a project that looks financially sound on paper can very quickly become a serious financial problem.
Because a square meter does not have the same value in every apartment. A lot depends on what you see from the apartment, how much natural light it gets and how it is positioned.
An apartment overlooking a park or the city may be more attractive than one directly facing another building. Orientation, terraces, layout, the number of bathrooms and the apartment's position within the building also matter.
That is why two 70 m² apartments in the same building can have different prices. And that is perfectly normal.
Because this is when the buyer takes on more risk. If you buy an apartment when a project is just starting, there is less certainty.
You cannot yet see the finished building. You cannot see the completed courtyard. You do not yet know exactly what the surrounding area will look like.
On the other hand, you may get a better price. As construction progresses, the risk decreases and, in many cases, the price increases.
For example, a developer may start sales at €1,300/m² and reach €1,500–1,600/m² as the project approaches completion. This is not a universal rule, but it is a common strategy. In practice, the buyer who enters at the beginning receives a discount for accepting more risk.
Because we are not buying just an apartment. We are buying the location. We are buying the land on which it is built. We are buying the quality of construction. We are buying the infrastructure around the project. We are buying the common areas. We are buying the project's amenities.
And, very importantly, we are also buying the developer's reputation. A developer who has completed several projects and delivered them on time may command a different price from a company that is just entering the market. In real estate, trust also has a value.
I would never look only at the price per square meter.
I would compare at least:
And, of course, how does the price compare with other similar projects in the same area?
The price of a new apartment does not start with concrete and it does not end at the apartment door. Behind every square meter are years of work, invested capital, land, design, permits, construction, infrastructure, financing and risk.
So when we see a new apartment priced at €1,300, €1,500 or €1,700/m², the question should not simply be: Why is it so expensive? A more useful question is: What am I getting for this price, and is this price justified compared with the market?
Ultimately, that is the difference between simply buying square meters and buying an apartment that genuinely justifies its value.
And in Chișinău’s real estate market, where the differences between projects can be significant, making the right comparison can be worth tens of thousands of euros.
Author: Victor Cernomorcenco
Realization of the analysis by Victor Cernomorcenco, specialist in real estate in Chisinau and representative of Acces Imobil.
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