Head of the Board of Directors of GEOS Maksim Barbash has spoken about the experience of the company in the foreign markets
GEOS as a developer successfully implements projects in the EU countries. On the peculiarities of working in the foreign markets and how such experience helps to improve projects in Ukraine, ABCnews talked with the head of the board of directors of GEOS Maksim Barbash.
Tell about the results of the company's work in the foreign markets over the past year.
We are pleased that since 2016 we managed to enter the EU market and for 2017 to strengthen our positions on it. The European market on the one hand is more complex, competitive, on the other - more understandable and accessible, with transparent legislation and affordable financing.
We have objects in Poland and Hungary. In Poland, we have implemented a small project near Krakow and have already successfully sold all apartments. We start another project in Lodz.. This city is now fighting for the right to hold the World Expo 2020 and there is a large-scale reconstruction, especially in the center. We will build 7-9 storey houses, altogether about 30 thousand square meters.
In Hungary, we are implementing two projects: ERKEL Residences and Raday Residence, in which we have already reached the first floors. By the standards of Kiev, these are fairly compact plots, each of 25 acres, but both are located in the city center . The total area of the projects will be 9 thousand square meters and 10 thousand square meters. The commissioning is planned in the spring of 2019 and 2020 respectively.
Why did you decide to build it in Poland and Hungary?
In 2014, we realized that there are certain problems in the Ukrainian market, and in order not to lose volumes, we began to feel the markets of European countries. It took us three years to reach the first area. This time was spent on studying the market, registering a branch, getting an area, designing and obtaining all permits.
Why do you choose the central sites in European capitals?
The city center makes it possible to make a mistake. In the suburbs a miscalculation on the cost of a "square" of 100 euros could become critical for the project, and in the center such errors are easily leveled, there is a tolerance of up to 20%. And since we did not have any experience of construction in Europe, we decided to start from the central areas.
That is, you provided for the possibility of adjusting the project budget. And what had to be corrected in the project in terms of architecture, technology, planning?
We work in the European markets as developers. In municipal bodies, we learn about potential sites and apply, and local authorities study the company and the concept of development. One of the principles of selection is to verify that the company is able to financially and resourcefully implement the announced project. In Budapest, we bought a dilapidated building and in its place erected a modern one. The project was ordered in the Hungarian architectural bureau Sporaarchitects. We were given three variants of facades, which we sent to the city council for approval.
City Council of the district?
Yes, each region is autonomous and can make decisions there . On the district City Council choose the best of the three options. If there are comments they will write what exactly needs to be corrected. There was a stage when we were told that it was necessary to coordinate the project with UNESCO. Naturally, we immediately assumed that the project was postponed indefinitely, but everything passed quickly and literally within a few weeks it was agreed upon. Although UNESCO's agreement is only advisory.
And in general, how long does the project go through all the harmonization procedures?
Not so fast, up to six months, but all the stages are clearly regulated. The harmonization procedures are not more complicated than the Ukrainian ones, but they are also more understandable and transparent. If you need a signature, for example, a fire safety officer, he will sign or give a reasoned comment, for example, to move the door. If in the building permit it is written that the height of the building should not exceed 34 meters from zero, then this figure can not be deflected.
What else is regulated in the building permit?
The number of usable areas that can be built on a particular plot is regulated. Each district and micro-district has its own coefficient. But at this point there may be slight deviations. For example, the city administration can allow to increase the building factor if the developer makes a small public garden or public space inside the complex.
In European countries, ly restrictions on altitude for each district of the city are prescribed very tight - somewhere is 31 meters, somewhere around 34. In the Budapest center, for example, you can not build anything higher than St. Basil's. István and the Houses of Parliament.
A huge plus of transparency procedures: when we bought the site at auction, we clearly understood what and in what volumes we can build.
It also happens that the permitting documentation already regulates the period during which the project should be implemented. Moreover, the administration is extremely interested in that the project was implemented in the shortest possible time, provides assistance, and we feel support from them.
Are you ready to work under similar conditions in Ukraine, for example, to provide three options for facades?
Theoretically we are. But it seems to me that in Ukraine commercial architects and designers are much more progressive than those people who have the right to evaluate and approve it. Active architectural bureaus look at the market much more modern and adequately assess the needs of the consumer. We recently, coordinating one of our projects with historians, faced with their wish that the facade was decorated exclusively in a pseudo-classical style, with columns and stucco molding.
You said that you work exclusively with local cadres. Was the opportunity to bring Ukrainian specialists?
Theoretically, this is possible, but the question is, would their services be cheaper than the work of local specialists? In general, the salaries of ordinary employees at facilities in Hungary are twice as high as in Ukraine. As for the architects, in Budapest their work costs from 25 euros per meter, if the big project is from 20 euros. In Ukraine, you can find many good specialists on average twice as cheap. But we also need to understand that for example Hungarian experts are more informed about various features, local requirements and further harmonization. Thus, you understand that you can work with Ukrainian specialists, and you will get high quality of the services provided, but there is a possibility to lose some time in the reconciliations and completions.
Are the working conditions more rigidly spelled out in Europe?
They are more regulated. For example, on Sunday you can not work, on Saturday you need to get permits. Another example is the coordination of movements of large-sized equipment, for example, the crane's arrival on the site. The receipt of such documents lasts two weeks and it is necessary to post ads in the neighboring streets, it is easy to coordinate such things.
How different are the requirements for technology?
There are strict requirements for the availability of parking spaces in Budapest, therefore, in all our nine-storey buildings are equipped with three-level underground parking. To build them, we plunged literally below the Danube. In this regard, our projects used a very complex and very expensive technology - a "wall in the ground". It not only separates the moisture-saturated grounds, but also helps to keep neighboring buildings.
For the implementation of which Kiev projects can this technical solution be applied?
"The wall in the ground" can be used to build a parking lot near Lvov Square. And there is nothing shocking in this choice. Do you remember there was a scandal over the idea of building a parking lot near Sofiya Square? But under the Golden Gate we already have a metro, and at Lev Tolstoy Square the house is simply hung over the metro for years, and there are no problems, because the work was done correctly. In Vienna, for example, the parking lot is built directly under the opera. The centers of cities should develop, and it is the new technologies that make this possible, increase the comfort of living and the price of real estate.
By the way, about the center. Is it possible to apply the Budapest approach in terms of harmonization procedures for the restoration of the center of Kiev, where, alas, too many dilapidated buildings?
In Ukraine, the price of real estate continues to fall, especially in the center. And the reason is not only in the general economic situation. In Europe, there is an understanding of how much and how type housing can be built in cities and these quotas allow maintaining the quality of projects and a certain cost - in the centers of European capitals it is within 2-3 thousand euros per square meter. In Kiev, quality is supported by the market, as competition is high. But Ukrainian cities should limit and more clearly regulate the development of central and historical parts, this will affect the cost of a meter, and as a result, restore order in the center.
And the rules should be the same for everyone. Anyone should go to the administration's website, see what kind of height and volumes can be built on this area.
But while the General Plan with zoning in the capital there.
Therefore, until now we see manual control: one developer can add a floor above the normative, the second - five. Because of this, the city suffers. The style of the building is a matter of taste, but all restrictions for buildings must be understood and strictly implemented. Then there will be no protests.
By the way, about the protests. Have you encountered them in your European projects?
One of the areas that we bought in Budapest, is in the yards. I asked the city authorities what would happen if people living in neighboring houses came to protest. The answer is: the police will come. But if many people come? A lot of police will come. In Europe, all information about potential projects is open, the procedure for allocating land is transparent and so there is no reason for protests.
How is the Ukrainian and foreign buyer different?
To our surprise, buyers of the premium segment are less demanding in terms of planning.
Before we started designing, we studied the market, watched ready-made objects live as potential buyers. We were surprised: the bedroom area of 18 square meters in Hungary is considered large, and the height of ceilings in new projects there is 2.55 m, while our standard of 2.7 m is used extremely rarely. They explain this: why does it need to pay extra money for heating. Also in any segment, Hungarians prefer laconic layouts. In two bedroom apartment normal is the total area of 45 square meters, in thethree bedroom apartment - 65 square meters.
Since our projects are in the center, 30-50% are investment transactions. By the way, among buyers a considerable share of foreigners. Forexample, theChineseabout 15%.
What is the share of investment transactions in Ukraine?
The share of investment transactions in our facilities in Ukraine is up to 30%. A priori fundamental demand is important, without it investment transactions do not work. Over the past few years, the eastern part of the country has provided a significant share of the fundamental demand, the second place in terms of the number of transactions was willing to improve their housing conditions, the third - the classic vital demand "married-divorced".
Does the share of the East have a tendency to decrease? After all, those of the immigrants who had the means, probably already chose their own housing.
Not at all, the share of this audience is still present in the structure of our sales.
Last year, GEOS started with two major projects, Family & Friends and Orange City. How do you assess the state of the market, is it ready to absorb the whole new proposal?
Commissioned last year in the capital of 1.7 million square meters of housing is a huge amount, the market does not need that much. In the best years, when the apartments were not bought, but distributed according to the line, 1 million square meters were considered an excellent result. This search must go somewhere. Those developers who will look at the situation too optimistically can get into an unpleasant situation when the constructed square meters will not be realized. Therefore, we have slightly adjusted our plans, for example, instead of three at the same time, we began to build one house on each site. But, despite the pessimistic forecasts overtaken from the middle of last year, the number of transactions has not decreased. Therefore, I admit: we were a little mistaken in our calculations. And although now we have no problems with the implementation, but it was possible to start more areas.
Tell us about your plans. Do you intend to start projects in the regions?
There is a possibility that GEOS will go to the Dnieper and Zaporozhye, while we are thinking about these projects. But if we go, then the best areas in the city.
In Lvov, there is no understandable price for a square meter. In Odessa, we were looking for an ideal site for us, but have not yet been found. We wanted to go in there with Kempinski, but they have huge requirements for location: the center, the sea, and a large area. If we start this project, it will partly be a hotel (40%), the rest will be occupied by apartments and accommodation.
Can you be attracted be the projects in the historical parts of the cities of Western Ukraine?
Speaking about the West, it is more interesting for us to develop our projects in Hungary and Poland. We are looking at Vienna - this is a very ambitious task, but difficult. Huge opportunities in Germany, especially in Western, there is a high cost of housing. We go to where everything is clear, where the projected stable growth of the market and transparent working conditions. As the Ukrainian legislation is harmonized with the European one in the framework of the Association Agreement, I hope that in the next few years the same transparent and understandable rules will be in the domestic market.