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The purpose of a profit for investors through the creation of enterprises on production of building panels, followed by delivery abroad, the construction of low-rise timber frame houses and apartments in Telemark (Norway).
The goal: Attract sufficient funds to implement the pilot project, while minimizing organizational costs. The implementation of the pilot project on construction of houses when orders are placed on the frame elements at third-party enterprises.
Commitments: the Implementation of this project definitely is, event with a certain degree of risk. In this regard, if You are willing to bear certain risks which may be beyond the control of the management of the project and can arise due to unknown reasons, we ask You to refrain from further examination of the Project, as this may impose on You the obligation to disclose facts that become known to You.
Maintenance:
If You are still reading this, I want to assure You that uncontrollable events are extremely unlikely and will be minimized by the efforts of the management of the project by all possible forces and means.
After the analysis of the collapse of the housing market in the provincial regions of Russia, I would like to mention the following:
Investors lost interest in the construction market, as a consequence of reducing the profitability of investment and increasing the period of their return.
In Russia, in the construction of houses of economy class return rate of investment is more than two years. The market of low-rise residential townhouses and low-rise apartment buildings normally works only in Moscow and Leningrad region, in other regions the indicator of profitability and return on investment is even worse than in the apartment segment.
There are plenty of reasons objective and subjective character, which does not allow to reduce term of return of investments in the foreseeable future.
The global crisis in construction, in one way or another connected with the mortgage bubble leading. However, there are no rules without exceptions.
Not all countries, the global crisis has affected the construction industry. Moreover, for example, in Norway, where the real estate market in 2014 was estimated as the most overheated in the world, at a reasonable activities of the government, the housing bubble not only burst, but also pushed the rapid development of the market.
Since the near fatal decline in oil prices, the government of Norway contributes to reduction of the mortgage interest and strongly encourages citizens to solve their housing problems (a massive social advertising encourages to live in a new house).
This caused an abrupt increase in the residential real estate market in 2015 and especially in 2016.
The basis of the residential market in Norway are low-rise timber frame (wooden) house. These objects are characterized by a relatively short duration of construction and commissioning and very short exposure period of apartments.
From the purchase of land to commissioning of the house is ≈ 4KB. — 6 square for about six months, existing home sales ≈1-2 months. Considered the market TELEMARK 100-200 km. from Oslo, Porsgrunn, Larvik & ets.
Currently, the supply of housing from the Russian forests to the market of Norway is largely carried out by Baltic companies and joint ventures. We managed to find one joint venture — IEC HUS, which has its own production in the Leningrad region and its own fleet of heavy vehicles for delivery of components in Norway.
Pre-project research.
Currently developed the idea of the business of construction and sale of low-rise residential buildings in Norway (Telemark region) of the technology frame and panel construction, with the supply of components from Russia.
The analysis of the real estate market in 2016. The aspects of legal support for transactions, planning regulations and taxation. Given the attempt to analyze the profitability of sales of residential property.
Analyzed the supply of panels from Russia, ordering of housing enterprises in Karelia, the Leningrad region, the Kirov region. Investigated the potential for self-Assembly panels of edged boards.
Held preliminary talks with the designers and brokers.
Conducted preliminary talks with small construction companies in Porsgrunn (Telemark, Norway), which would build the housing in place. There is information about the parameters of the finished housing.
Held preliminary talks with the Norwegian development company. Which is interested in supply of components from Russia.
A variant of the production plan and Flow of funds for the construction of 40 apartments (10 conventional 4-apartment houses.
Pre-risk assessment and ROI.
ROI is roughly 20% per calendar year in EUR adjusted net (moderate scenario)
The return on investment roughly 10 months.
Market analytics
The housing market in Norway has experienced unprecedented growth.
Norwegians constantly improve their living conditions, they occupy one of the first places in the world for the number of square meters per person. Due to the fact that they mostly live in private houses and small apartment houses, more developed private sector.
Multi-storey construction relatively recently began to appear in Oslo, Bergen, Trondheim, Dramane, i.e. in large cities, and in connection with the enormous influx of migrants. The main building material is wood. And most of all built energy-efficient timber frame houses.
In July and August 2016, the new owners gained 3087 homes and apartments. This is 47% higher than the same period in 2015.
Such information was published by research Agency Samfunnsøkonomisk analyse. According to the organization, the average cost per square meter in new buildings amounted to $5 800, writes Business Insider.
Due to record low mortgage rates and the first signs of economic recovery housing throughout the country started to go up.
In August of this year, average property prices rose by 2, 8% on a monthly basis, and 9, of 1% per year, according to Bloomberg. Moreover, sales increased 8, 2% per annum and amounted to 8 628 deals.
Norges Bank predicts that by the end of 2016, the annual growth of prices will be 7, 3%. But the numbers may be more impressive because the country's Central Bank in June announced that he is ready to continue to cut interest rates on loans to support the economy the largest oil producer in Western Europe.
Currently, the development of residential real estate in the provincial regions of Norway are mainly small and medium-sized enterprises and private entrepreneurs. The market will soon be enlarging due to the increased attractiveness for foreign investors. The market for land and housing is sufficiently transparent and honest (in particular, the seller always guarantees the purity of the transaction and the veracity of stated characteristics of their property).
International project
Project price: 500 000 000
Investments volume: 150 000 000
Stage: Project is at development stage
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Savchuk Aleksey Vadimovich
