Monday, April 15 2013 16:03
President of Shen Holding: Current state of real estate market dictates new ideas - inexpensive "finished" flats
ArmInfo. The current state of the residential property market dictates new ideas - inexpensive "finished" flats, Samvel Beglaryan, President of Shen Holding, said when commenting on the continuous stagnation of Armenia's construction sector for ArmInfo's correspondent.
He explained that the residential property segment is oversaturated with high-class new buildings meant for the Diaspora, however "the time of these flats has ended - the high-class new buildings will inevitably be replaced by inexpensive comfortable flats". Beglaryan is convinced that the construction of such flats is possible in case of application of the progressive technologies, the know-how in the sphere of residential construction.
The President of Shen Holding thinks that the growing misbalance in the residential property market can be removed by means of implementation of state programs on provision of the country's citizens with affordable housing. In the meantime, the measures of state support may be different, he said. "This may be gratuitous provision of land plots for construction of buildings, introduction of long-term mortgage lending mechanisms, particularly, for a 20-year period, at low interest rates", said Beglaryan.
He pointed out that the residential construction cost depends not only on the price of construction materials, but also on the degree of earthquake resistance of the structures: "however, the earthquake-resistant structure should not always be expensive or clumsy, made of tufa and fittings. Up-to-date construction use technologies that change the logic of price formation and allow building light and inexpensive constructions". Beglaryan said that the packs of expanded perlite belong to such technologies. "I hope that some day the Armenian architects will also give due share of credit to the advantages of this material".
Beglaryan thinks that the development of socially oriented residential construction will stimulate the demand for construction materials of the certain price segment, where Armenian manufacturers will manage to increase the output of their own production and import substitution. This will also allow avoiding the negative impact of foreign exchange fluctuations on the price of the construction materials. "In any case, we need to find an effective way to reduce the prime cost of the construction. And the companies succeeding in economical and effective construction in every respect will successfully work in the market", he said.
According to the calculation of specialists of the "Shen Holding" one square meter of the "ready-made" (repaired) apartment partly furnished (kitchen furniture) in the many-storied apartment house will cost $1000. This is an unprecedented proposal, the head of the Holding said and assured that there are not such reasonable prices at the local real estate market.
According to the data of Armenian National Statistic Service, in 2009 in the conditions of total reduction of the construction volumes by 36,4%, the real estate construction dropped by 20%. In 2012 the real estate segment reduced by more than half. As for the building materials production in 2012, it reduced by 7,6% versus 2011.
The average price for cement (50 kg bag) in Yerevan grew by 14,5% up to 2,825 drams, for gaja - dropped by 2,1% - to 2160 drams. At the same time, the average price for the mainly exported paint materials sharply grew. Thus, oil paints grew in price by about 80%, water-based paints and floor varnish grew by 44,5% up to 1,818 drams and by 40,9% - up to 2,090 drams respectively for a litre of paint.
To note, Shen Holding dates back to 1970 when the largest enterprise for state supplies of non-ferrous metals ("HayGunMet") was established. In 1995, the latter was privatized and transformed into Shen Concern CJSC. Having merged with Huntsman Building Products, Shen Concern was converted into Shen Holding which nowadays encompasses Shen Concern CJSC, Huntsman Building Products and Shen group. Prior to 1999, Shen Holding was into importing and selling construction materials. Thereafter, the management made a strategic decision to develop Armenian manufacturing, to contribute to the development of the domestic labor market. As a result, the company established the first production facility of its own, and is nowadays a major manufacturer of construction materials in the Republic of Armenia.
In 1999, the company established the first plant to produce dry mixtures in Armenia. In 2000, the plant to produce paints and varnishes was commissioned; it was designed to manufacture environmentally friendly construction paints in conformity with international standards. In 2003, Shen Concern was granted a license by the Ministry of Economy to operate a gypsum mine, and in 2010, overburden removal on the mine started. In 2005, Shen Concern CJSC built and commissioned a new facility to produce concrete blocks for industrial and household purposes. In the meantime, other production facilities were upgraded and enlarged. In 2007 and 2009, respectively, Shen Concern commissioned Shen Textile and Shen Decor stores to sell imported goods for interior furnishing from leading European manufacturers. In 2008, Shen Concern launched construction and renovation works using both imported materials and the ones of its own production. In 2008, Shen Concern also started the implementation of architecture and design projects. Since 2012, the company has added a real estate agency to the long inventory of its activities. To-date, Shen Holding has created over 500 jobs.
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