Russia (bbabo.net), - We are discussing the prospects for small and medium-sized businesses in the construction industry, the need to support and developers, the prospects for the emergence of a professional Union of Developers - we are discussing with State Duma deputy, member of the Committee for Construction and Housing and Communal Services Sergey Kolunov :
- Construction is on the rise today. But there is a big "but": only big cities are built up. Why don't construction companies go to remote small towns and villages?
- Let's look at the situation with the development of small and remote cities from the side of supply and demand. The state is not involved in solving the problem. We look at the problem from a market point of view.
There is a demand. In small towns, people also want to live and can afford new housing. For them, under the category of elite housing, there is already one that simply does not fall apart. Thus, there is accumulated over the years and deferred demand. For a city with a population of up to 10 thousand people, the need for new housing is approximately 10-15 thousand square meters. And we understand that this volume will be sold, the apartments will not stand wait for tenants.
The second condition for the development of small and remote cities, in addition to small volumes, is a limited number of storeys. High-rise buildings in such cities are a priori not needed. We are talking about an average of 3-4, maximum 6 floors, about a blocked building.
So, who can build new housing in small and remote cities? Large or medium builder? Answer: no.
The average developer builds 30-100 thousand square meters per year. A large company is already 100-300 thousand square meters. Top developers - from 300 thousand square meters annually.
The construction business is a complex strategic planning model agreed with the bank. And the larger the company, the larger and more complex this model. Is it possible to deploy a large company in a small town? It is possible, but it takes time and volumes. And there 10-15 thousand square meters. What will even an average developer with such a volume do? He has a tough system. Otherwise, a big company will collapse, will not survive.
Large companies have a large staff, management structures. Everything is built on the development of pre-compiled and agreed plans, priorities, technologies and roadmaps. Construction is a pipeline, the more construction, the more difficult it is. Of course, you can set everything up individually and manually, and then invent something every time. At the same time, each extra move will cost the average or large developer 5, 7, 10 and even 20 million rubles. The company will not work at a loss, which means that all expenses must be included in the cost price. The result is expensive housing. Will a resident of a small and remote city pull it out? Won't pull out. Therefore, the average and even more so the top developer does not go to small and distant cities, to the periphery.
- But the need remains, the demand is there. How can the problem with the shortage of new housing in small towns be solved systematically?
- Partially today the problem is solved at the expense of medium-sized regional developers. They are trying to work out the construction at home and in neighboring regions. But on a smaller level, they don’t have the strength and capabilities left.
Therefore, the necessary small developers. Today there is an urgent need for the development of small, local developers. Which would take over the development in volumes of up to 10 thousand square meters and, if necessary, could transfer capacities and move to neighboring, equally small and remote cities.
But there are very few such builders. And those who remain are in a deplorable state. Therefore, for starters, we need monitoring to understand where they are still alive. Then they need to be created, organized and developed.
There are business incubators for the development of various types of small and medium-sized businesses. But you can't accommodate builders in Skolkovo. They need their own Association, which will unite and strengthen their position in the market, be able to help with orders, teach them how to do business competently, how to deal with banks, and so on.
In the State Duma, with experts from the construction industry, the Ministry of Construction, we talk a lot about the need to unite small and medium-sized developers. Companies that will be able to build in Ivanovo, Mozhaisk, in small towns and urban-type settlements. Such companies should be united and further developed. Then the issue will be resolved systematically, the renovation of the housing stock will begin in small distant cities.
- Can a small business cope?
- You can argue and philosophize a lot on this topic, but I know very well that nothing will work without small and medium-sized businesses. These are the main taxpayers. And it is small business that creates jobs for local residents.
A small developer is a generalist. Due to its versatility, it has a very low cost component. And as soon as he built 3-4 houses, he is also an experienced developer.Another nuance: buildings in small towns have a pronounced low-rise. So we are back to small companies again.
But it is the small builders who need help. They cannot afford the staff that large companies have. They cannot hire financiers, economists, lawyers. And professionals are urgently needed for small companies. Therefore, we need an alliance that can hold seminars, teach, suggest and share experience.
Suppose there is a small developer somewhere in Vladivostok. Well, why does he need to reinvent the wheel every time when you can just share information? Who will share this information? Who needs them, these little developers? They are very necessary in small towns. People need them.
Thus, we come to the conclusion that a union is necessary. We need the Union of Builders, which can become that structure, will represent the interests of small and medium-sized developers at any level, will be able to find orders, evaluate them and redistribute them among the members of the Union.
If we are talking about the goals set by the President, then the task of the Ministry of Construction is a large-scale development. And large companies have a double responsibility - they need to stretch the volumes and the social burden, and at the same time not let down the regional authorities.
And the Union of Small and Medium-Sized Developers can take on the function of a quasi-ministry, and in such a way as to help small developers earn money, look for orders, teach them to process orders competently, on time and protect their interests.
When we talk about the interests of the developer, the first thing you immediately want to pay attention to is bankruptcy. The bankruptcy of small and medium-sized developers is a separate, very serious and important topic from the point of view of the construction industry. Bankruptcy is a loss of jobs, a reduction in tax payments and a tragedy for investors. To date, bankruptcy proceedings, according to 127-FZ, are open in relation to more than 500 construction companies. The Union can join in and help in such situations: assess the prospects for the recovery of the company, support, and, if necessary, protect.
Thus, the tasks of the Union are to create conditions for the development of small developers who need to work, earn money, and develop.
Why are we all afraid that the developer earns? Everyone remembers the 90s, 2000s, when developers stole, bought yachts and some country houses in Europe or America and left, fled there from their equity holders. The legislative base that protects citizens has been created and is working.
This means that one should not be afraid of small business in the construction industry, but control it. A small developer will be able to provide a new approach to the quality of development, appearance, architectural appearance.
The main principle that must be laid down in the philosophy of a small developer is to work, develop and improve.
- You touched upon the topic of blocked development as a separate area that can and should be developed by a small or medium-sized developer.
- Yes, a large and medium-sized developer is able to build high-rise apartment buildings. Small can't. As I have already said, due to professionalism and financial stability, in order to build a large volume, large and long-term investments are needed, as well as a large staff of professionals. Therefore, the destiny of small businesses is the construction of individual housing construction, townhouses, block housing. A large developer can build an object for 2-3 years before delivery. A small person needs to rent an object for a maximum of a year, and preferably every six months, in order to receive their money faster. Therefore, small developers specialize in medium and low-rise construction or block housing.
At the end of last year, the Duma adopted a law that comes into force on March 1 (2022): 214 of the Federal Law, which concerns shared construction, was expanded, equating housing equity holders in buildings of blocked development with equity holders of MKD. Absolutely correct decision. And on the one hand, it should push the market towards the development of low-rise construction, including through the access of developers of townhouses and lanehouses to project financing.
The key parameters of block-built residential buildings are: no more than three floors and no more than 10 blocks, each of which is intended for one family.
Definitely, the new rules will increase the responsibility of developers and increase the cost of blocked development. While the money of equity holders will be in escrow accounts, the construction of duplexes and townhouses will be carried out at the expense of bank loans. And this is a direct rise in the cost of construction. The cost price must include interest for using a bank loan, for servicing a bank loan, the costs of preparing and processing documents that the bank will require. Not always a credit institution will only agree to a pledge in the form of property assets, which means that you will have to invest your own financial resources.And the task of the Union would be precisely to help a small developer correctly calculate its cost, taking into account the new conditions, to fulfill the bank's requirements for preparing the necessary documents, and so on. Without such methodological support, the law, which is good from all points of view, will become an insurmountable obstacle for small businesses.
I see that the market situation and the legal framework are already pushing the small and medium-sized construction business to unite. They will need a core around which they can unite and thereby strengthen. They will come to this decision themselves. It is possible that we, as legislators, as people with administrative tools, will need to support them in this idea.
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