Page 36 - BNE_magazine_11_2019

36 I Eastern Europe bne November 2019
Residential real estate developer Samolet is now focusing on projects that are worth more than $1bn each.
Samolet residential real estate business is flying
Ben Aris in Berlin
"We offer pragmatic class housing and build towns
and residential areas in and around Moscow and St Petersburg,
not individual buildings. We have an asset-light model and a healthy balance sheet where we can fund the develop- ment from our cashflow,” says Stanislav Shekshnya, chairman of the board of directors of Samolet since June 2018.
Russia’s residential real estate market is recovering as the economy emerges from several years of crisis. Incomes have been stagnant for six years, but everyone has a job and the demand for housing is enough for developers to build a second Moscow to meet it. And even though salaries are not going up, interest rates are going down making new housing affordable for more Muscovites each year.
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There are four big players in the residen- tial development business, but one of the things that marks Samolet out from its peers is that it doesn’t purchase land plots but partners with landowners in development projects. Together with these partners the company already has a land bank of more than 10mn square meters – one of the biggest in Russia. (PIK has 10.9msqm, LSR 7.8msqm, and Etalon 4msqm). It is also the only one
of the big four that is not listed.
“We have good relations with many people and organisations who have land banks and we are constantly looking
for new partners who have land they want to develop,” Shekshnya told bne IntelliNews in an exclusive interview, emphasising that building up long-term relations with the company’s partners is the backbone of the business model.
Many of these partners are large Russian firms with access to land but for whom development is not a core business. The land is acquired as part of an acquisition into a business and the owner turns to Samolet to make some more money out of it by developing the land. In other cases the land was used to collateralise a debt that went bad and was acquired by a busi- ness that is not in the real estate business.
While the land acquisition, design, per- missions, project management through to the eventual marketing and sales are all done in-house, the actual construc- tion of the buildings is outsourced to professional construction companies.
In this way Samolet has built up
a sizable business in the most lucra- tive Moscow metropolitan area that is second only to that of the market leader