Delyus Sirazetdinov: ''They understand that they invest in Russia, they are ready with us – to jump in feet first''
A residential house will be built in Kazan with the money of pensioners from Europe
The investment fund KGAL from Germany has become interested in investing in the Kazan real estate. The company has returned to Russia after 18 years and decided to resume business starting from the housing market in Tatarstan. The Germans concluded the first deal with the developer KamaStroyInvest. What their joint project, the residential complex Tiffany on the shores of Kaban lake, represents itself — read in the material of Realnoe Vremya.
Instead of the money of housing equity holders — pensions of Germans
A ten-storey house with a source of funding from Munich will be built on the shores of Kaban lake on Khadi Taktash Street near Suvar Plaza shopping centre. It is noteworthy that it will be the first residential complex in Tatarstan, for the construction of which it will spent foreign investmens, not just the money of housing equity holders, banks or own funds. The Western investors usually do not risk to have deals with the Russian real estate market — until now it was filled mainly by Chinese and Turkish companies. That is why the coming of the Germans, who have chosen Kazan for their pilot project in the development sphere of our country, is noteworthy.
The investment fund KGAL concluded the first deal with Kazan developer KamaStroyInvest. The memorandum was signed with the mediation of the Tatarstan Investment Development Agency. ''This is not just an empty memorandum for the public. Just yesterday, there was a working meeting, the representatives came from Munich, and we discussed in what direction to move,'' CEO of the company-developer Delyus Sirazetdinov stated in late January and told our edition the details of the project:
''An investment agreement has not been signed yet, currently the transaction is being structured. This is a European investment fund, after all, they will work through a Russian company. It has remained to solve only technical aspects. I hope that this year we will start the house construction. We are agreeing on the concept of the waterfront of Kaban lake, where our house is included. As soon as the issue is resolved, we will be able to agree on a draft project. It has already been preliminary agreed with the chief architect and the ministry of culture, they have no questions left,'' Sirazetdinov said.
''They do understand that they invest in Russia''
The house will have 88 apartments and underground parking for 112 cars and offices on the ground floor. It is a business-class housing, which will organically fit into the environment, they promise in the company. ''The most important thing — schematic designs are being agreed not separately, but within the overall concept of the Kaban waterfront improvement. Because it creates the single public space, where each object has its own functions.''
Initially, the residential complex was called Tan Zhille, but later the working name was changed into Tiffany — due to the colour scheme of the upper floors. There are 45 two-room apartments in the house, 34 three-room ones, and only 9 one-room apartments, apparently in connection with the changing structure of demand, when the apartment is mostly bought to live with family. According to the developer, the fund representatives do not particularly interfere in the project:
''For them, the most important thing is financial conditions, which we have already agreed on. They fully trust us. We thought that the less risks there are, the better it is for them, because they understand that they are investing in Russia. But after some meetings they said: ''We see everything — what you think, what you do. Therefore, we easily take these risks,'' and they are ready to jump in feet first with us,'' Delyus Sirazetdinov retold the communication with the partners.
''We were surprised by a high degree of their trust,'' says commercial director of the company Antonina Darchinova. ''Because we are accustomed to the fact that in Russia not the entire market is stable, constructions are often unfinished, and many are trying to protect themselves. But here, on the contrary — they invest their own funds, they treat this project with a great deal of confidence, which, of course, is pleasant.''
However, needless to say about the carelessness of investors: major customers of KGAL — European pension funds. Therefore, the company carefully studies projects for investments. The fund mainly operates in Bulgaria, Hungary and other European countries. It is interested in investments in energy, aviation, agriculture.
More expensive than in a bank, but more profitable
The developer is not ready to discuss the terms of the deal — ''it is a commercial confidentiality.'' He only said that the house will be erected using the money of the fund and with the involvement of private sources of KamaStroyInvest. KGAL will allocate money in several tranches, as necessary.
The German investments will be costly, they admitted in the company. But they explained why these funds are more profitable than credit ones. In addition, given the upcoming rejection of the shared construction, the cooperation with investment funds gives developers additional opportunities:
''It is more expensive from the point of view of interest burden, but more profitable for other reasons. Soon we will be blocked the access to work on DDU [equity participation agreement] and we will be offered banks. Banks require a lot of documents, give money only after obtaining a building permit and when there is already a site. But we still need funds for design and purchase of land. For construction in the center, we have to conduct very large survey works, incur high costs. When we attract third-party investments, like with the fund, they are ready to invest in the project at an earlier stage. From this point of view — it is more favourable for all developers, our hands are freer, we can start new projects,'' Darchinova explains.
KGAL will increase its volume of investments in the housing market of Kazan
In the Tatarstan Investment Development Agency they told our publication more details about the KGAL project, its interest in Tatarstan and plans. The first working meeting with the representatives of the fund was held during one of the visits of the agency delegation to Germany in Munich. Already that time, the parties identified the main sectors in which the company was ready to invest and found out priority areas for development in the post-Soviet space.
Then the agency sent to the fund Tatarstan projects, which met its requirements. They came to a common decision — to build a residential house in Kazan. They considered different developers, but in the end, for the first transaction the company chose the company of Delyus Sirazetdinov.
''The fund was satisfied with the business model of the company and the concept of the objects that were proposed. The houses are very similar to what is being built in Europe, when the concept of walkability is implemented. Rapid decision-making of the company's management played its role here,'' they explained the choice of the developer in the Tatarstan Investment Development Agency.
If the project is successful, KGAL intends to increase the volume of investments in real estate in Tatarstan. At the next stage, it plans to invest in light industry and agricultural products processing.
''Earlier, we lacked competences to attract foreign funds''
The agency decided not to disclose the terms of the deal between KGAL and KamaStroyInvest: ''But it can be noted that the deal suits both sides. In the future, when the company takes its bearings on the Russian market and implements the requirements for developers in accordance with the new legislation in practice, the issue of equity construction can be solved,'' they consider in the agency. ''Our goal — to further attract cheap long money to Tatarstan.''
When asked whether the situation with deceived housing equity holders in Russia repelled the investor, in the agency they responded that the contract, which was signed between the developer and the fund, took into account all possible risks and was checked in accordance with the requirements of international legal expertise. For KGAL, the project in Tatarstan has become the first in Russia since the early 2000s. The fund did not previously work in the market of the republic.
The agency emphasizes that foreign investment funds offer opportunities not only for developers, but also for other projects: ''It is, first of all, long and quite cheap money.'' Such sources, taking into account the difficult economic situation on the market, are quite attractive for Russian entrepreneurs. Therefore, the agency puts high hopes on this project:
''Earlier, we did not always have enough competences to attract foreign funds because, as a rule, they work either under the rules of the English law, or they have restrictions according to European and international standards. We are making our first such attempts, hoping that they will be successful.''
The construction of the residential house on Kaban lake is a pilot project of KGAL in Russia. If it benefits all participants of the transaction, a branch of the German investment fund may be opened in Kazan.