The Netherlands has faced an unexpected problem of growing real estate prices in recent years. The Dutch have long been accustomed to buying and renting housing is quite expensive.
The fact that in five years the purchase price is five times higher and rent tripled, it is difficult to get used even to the unperturbed residents of Amsterdam. We analyze how the Russian experience can help the leaders of the country.
Dutch Ambitions about 100 Thousand Houses a Year
Experts argue about the reasons for the jump in real estate prices in the Netherlands, but among the most important, they name several. Firstly, the purely physical lack of places for new construction, and secondly, the activity of investors who buy housing not for living but for the preservation of capital. And third is a severe migration surge in recent years. Be that as it may, the government of the Netherlands was forced to look for radical solutions.
And some steps have already been taken, for example, by adopting a program to build 600 thousand houses across the country by 2030. It plans to build a hundred thousand houses annually in the coming years. In addition, a package of measures was developed to limit investment transactions with housing; in particular, a significant portion of it in large cities will be sold with the so-called obligation to settle; that is, the buyers will have to live in them.
Another measure concerns the regulation of housing construction in different price categories of the total volume of commissioned houses; not less than two-thirds should belong to the type of “affordable”, that is not to exceed the amount of 350 thousand euros. A similar set of measures is adopted in the rental housing market.
Whether all this will help to achieve price stabilization is too early to say. But the scale of the effort is worthy of respect, especially if we take into account the attitude of the Dutch developers and supervisory authorities to the quality of the constructed housing, as well as to the image and living conditions formed in it.
And yet, even though the level of organization of the Dutch housing construction seems so high, the Russian developers have an experience that could be useful to colleagues from Amsterdam and The Hague. Let us look at a few examples.
Let’s note right away that the Dutch have a lot to offer in this direction. For example, the mechanism of the National Mortgage Guarantee and related mortgage rates. The National Mortgage Guarantee is an insurance policy if the borrower cannot pay the mortgage loan for objective reasons. In such a situation, the agency would cover the shortfall, and the home would remain with the owner. Application of the guarantee will increase the mortgage rate by 1%, but much of this increase is compensated by a reduced rate of loans, which can be obtained from banks when using this scheme.
However, from the Russian side, the package of proposals to ensure affordability looks, perhaps, even more weighty. On the one hand, the state has developed some preferential mortgage programs for various categories of borrowers, from young families and the military to IT specialists. But even these programs, often allowing to reduce the interest on mortgages to a minimum, are easily outweighed by the latest proposals of Russian developers.
Euroinvest, a developer from St. Petersburg and the Leningrad region, offers buyers of apartments in some of its housing complexes to subsidize their interest on the loan. In some cases, this allows for an effective mortgage rate of 0.1% per annum!
“For example, if you buy 34 m² double apartment on the 6th floor in the iD Park Pobedy club quarter on a mortgage from VTB Bank at 0.1% per annum for 30 years, your payment will be 2.074 million rubles, the monthly payment on the loan will be 33 141 rubles, and the overpayment for the entire term will be only 177 672 rubles, “- the company employees explain with a specific example.
To compare, if you buy the same apartment in the standard basic mortgage program with state support, the down payment would be 1.8 million rubles, the monthly payment would be 82 thousand rubles, and the overpayment for the entire period would exceed 19 million rubles.
Quality of Constructions
It would seem that Russian builders could surprise the Dutch with their centuries of experience building complex engineering facilities. And yet it is possible.
And here, we can give an example of another innovation implemented by Euroinvest LLC in its development projects. This creates a full-fledged condition for an active life on the territory of residential complexes, especially outside the boundaries of acquired apartments. And it is not only not so much about the possibilities to walk along the alleys or send children to play on the playgrounds. In Euroinvest, we achieved much more and created a unique microenvironment for club socializing and joint leisure activities for their residents.
Apartment buyers, according to the approaches of Andrey Berezin holding, are investing not only in a square meter but in the rich life, development, and self-education. A combination of these approaches is combined within the concept of 3iD; it includes all the residential complexes built by Euroinvest in recent years. Its main feature is to unite all home buyers into a club of like-minded people.
And the club participants get access to a unique set of offers, including entertaining events and educational platforms for the most different age groups, including master classes and lectures with exciting authors. It is included in this “exclusive package” and discounts from partner organizations, both for goods and services, including those in the field of welfare, beauty, and health.
Special attention to the concept of 3iD is paid to children; for example, in the iD Murino residential complex, the holding has developed and implemented an original model for a playground, opening up a myriad of scenarios for play and leisure. Among the beautiful objects are a sandpit and a small town with suspended rope paths, and a labyrinth cube. There are also logs for climbing, as well as a variety of swings. There is also a metallophone for those who want to play a little music.
For the period of bad weather, which is traditionally long in our country, the developer has made provisions for playrooms, which have a Swedish wall, a pool with balls, tables for creativity, and a video screen that will allow collective or individual screenings.
It should be noted that the residential complexes of Euroinvest do not belong to the elite or business class. Experts put them in the upper range of comfort class, that is, mass housing. Whether buyers of mass apartments in Amsterdam, Brussels, or Paris can count on such an approach is a big question.
Strategic View of Development
European people in business may think of it as excessive reinsurance, but in Russia, entrepreneurs, having reached a certain level, prefer to diversify their businesses and investments. For some, this is simply an additional resource for financial stability. For Euroinvest, however, such diversification seems to have become something more. Over the recent years, the company, while remaining active in its traditional development field, succeeded in creating its agricultural cluster and developing innovative industrial production, and even in creating mechanisms of support for professional education.
If the economic efficiency of the agricultural and industrial sectors is generally understandable, then the activity in the field of education and support of young talents looks at first glance like pure philanthropy and fulfillment of a “social duty” to the native country. However, this is far from being true, and the head of Euroinvest speaks about this openly.
“For the fourth industrial revolution (which is happening now, ed.), markets do not mean much anymore. This is the time of the knowledge economy. What matters is the quality of what companies create. If you know, you don’t need machines or markets. You come up with the product, and they will bring the rest for you: production and sales. The only thing that matters is human capital and the country’s intellectual potential. In the world, only what you can invent yourself is valued. This happens everywhere. And the main thing for us is not to fall by the wayside at all,” Andrey Berezin said in his interview with Novy Prospect.
Thus, the head of the holding identified quite high ambitions for his own company; it plans not to remain just a subject of economic activity and to become a significant factor in the country’s modernization through the development of its educational system. That is, we can see that the head of the developer intends to invest also in those who will live in his houses, in their education and professional development. Whether such examples can be found in the Netherlands and all of old Europe is highly doubtful, even considering their rich tradition of investing in social projects.
And most importantly, the statements of Euroinvest’s management are backed by quite concrete and relatively large-scale deeds. This includes support for young talents and educational institutions as a whole. In its development business, the company invariably consists of the construction of educational institutions among its priorities; for example, now the holding is building a kindergarten for 200 children in Kudrovo and plans to put it in place ahead of schedule, despite all the difficulties with the supply of construction materials.
At the same time, the company actively supports some initiatives in this area. For example, camps and Olympiads of the Euler Mathematical Foundation, a competition to support young talents from the World Club of Petersburgers. Euroinvest has also established its scholarship, awarded to outstanding and graduate students.
But Andrey Berezin and his colleagues do not stop there, declaring their readiness to do much more. For example, they want to provide the Northern Capital with a principally new educational institution, the Governor’s academy for gifted children. Such a flagship school is expected to work on a boarding school basis, and here we can clearly feel the personal experience of Berezin, who spent his childhood in such a math focused school № 239.
The quality of the educational process at the Lyceum is planned to be ensured with the help of teachers from another famous St. Petersburg school, No. 45. Reportedly, preliminary agreements on this have already been reached. We think it was easier to do because the future location of the institution has already been determined; the plot for the construction was allocated in Kaselevo Microdistrict. Kyaselevo near Bolshoy lake.
There will be enough space for future students and teachers; teaching and accommodation buildings and other essential elements, which will provide the necessary level, will be placed on the territory. Among them: are laboratories, creative studios, gyms, swimming pools, beaches and piers.
All this will not only be built mainly at the expense of Euroinvest but also a significant part of the cost of maintaining the institution the company plans to undertake. In the same interview, Berezin explicitly said that he is ready to pay the salary of the lyceum staff so that the engaged teachers can count on the high quality of their own life.
As a result, we can emphasize: Russian developers have learned a lot from the example of Andrey Berezin and his colleagues, and today, in turn, they are ready to give them several important lessons at once. Both provide affordable housing for the general public and create qualitatively new living conditions in their apartment complexes. And most importantly, in understanding the mission of their business as a resource for the development of the country as a whole.
To be honest, these lessons would be helpful not only to the Dutch. To an even greater extent, it would be helpful for Russian business.
Andrey Berezin was born in 1967 in Leningrad. He graduated from high school №239 with an advanced study in mathematics. In 1990 he graduated with honors from Leningrad Ustinov Mechanical Institute. In 1990 he graduated with honors from the Leningrad Ustinov Mechanical Institute, where he specialized in automatic control systems for aircraft. During his studies, he was Lenin’s and Ustinov’s scholar and had scientific publications. In 1990 he enrolled in a post-graduate course at LMI and started a parallel business.
In 1993 he took part in creating the North-West Fisheries Company. In 1995, together with Yury Vasilyev, he founded the investment company Euroinvest and has been its CEO ever since.
Today Euroinvest is a diversified holding company, which includes companies and projects from different economic sectors.
One of the directions of Euroinvest work is legal and engineering support for developing land plots and territories in St. Petersburg, the Leningrad region, and other areas.
At the end of 2017, Euroinvest Group created its construction division Euroinvest Development, which is engaged in the construction of housing and other objects, thus forming a total cycle development business.
A relatively new direction for Euroinvest is the agro-industrial sector. For example, Agrocluster Krasnoye Znamya in the Pskov region specializes in producing grain and fodder for livestock.
In May 2017, the managers of the Euroinvest investment company established the Euro Venture fund with an initial amount of €10M. Priority areas for investment are innovative developments in the scientific and technical sphere, as well as projects in the creative industry.
In 2017, Andrey Berezin was awarded a certificate of merit by the Ministry of Industry and Trade of Russia for his significant contribution to developing the Russian industry and many years of diligent work.