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by gxs
3262 days ago
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My dad is in construction and I thought I'd chime in with another practical reason. Once you're building at larger scales, the cost of materials between a luxury condo and a subluxury condo are different, but not astronomically so. Developers will go to China, Mexico, etc. and source some really nice stuff very cheaply. Sure, there are exceptions, i.e., materials that are expensive no matter what, but once you figure out a way to use cheap labor, the actual building materials are cheap. It's similar to luxury cars - the "luxury" part doesn't necessarily cost a lot more (but yes does cost a bit more) but it can be marked up a lot, lot more. |
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This is also correct, but there is an additional twist to it.
Non-luxury may be not marketable (besides bringing less margin).
It is a curious market, I have seen more than one case of building companies that were put on their knees by the lack of buyers because they built "too basic" houses, believing that the relatively low price would have procured lots of willing buyers and this simply didn't happen, and they had to apply rebates over rebates, thus losing money in real terms to be able to sell them (if/when this actually happened).