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Introduction

1. Real estate as an investment object

2. The history of the emergence of the institution of shared construction abroad

3 . Foreign experience in attracting investment in housing construction

4. Task

Conclusion

Bibliography

Introduction

In our time, issues related to real estate have become relevant. And this is understandable, because how we learn to work with this institution - private property, largely depends on the prospects for our progress. Real estate should become an active engine of economic development.

The real estate market is inextricably linked with investment activities. Investments are made both in the primary - new construction, and in the secondary real estate markets - the transfer of property rights to objects. Worldwide real estate is one of the most common and effective financial instruments. Meanwhile, the money invested in this industry will not be wasted even under the most unfavorable market conditions, and in most cases bring several times greater dividends than bank deposits. Right now the situation in the real estate market is very comfortable for private investment.

Investment activity is influenced by the existing features of the Russian real estate market. There are three main areas for investment: housing, land and commercial real estate that generates income.

The real estate market is attractive to potential investors for the following reasons:

Investments in real estate are characterized by a greater degree of safety, security and the ability to control the investor;

At the time of purchasing a house, apartment, garage, cottage, etc., the investor receives a package of rights, while most other investment objects do not entail the right of ownership;

With the rapid depreciation of funds, insufficient reliability of their safety in credit institutions and the limited more profitable areas of investment, investments in real estate allow you to save money from inflation.

In recent years, the real estate market has been in a state of stability and balance, and despite the problems in the economy, housing prices are practically unchanged.

The purpose of this work was to consider foreign experience in attracting investment in housing construction. To achieve this goal, the following tasks were put forward:

Consider real estate as an investment object;

Consider the history of the emergence of the institution of shared construction abroad;

Consider foreign experience in attracting investment in housing construction.

1 . Real estate as an investment object

The current Civil Code of the Russian Federation contains the definition of real estate in Art. 130 Immovable and movable things. According to paragraph 1 of Art. 130 of the Civil Code of the Russian Federation, real estate (real estate, real estate) includes land plots, subsoil plots, isolated water bodies and everything that is firmly connected with land, i.e. objects, the movement of which is impossible without disproportionate damage to their purpose, including forests, perennial plantations, buildings, structures, objects of construction in progress. Immovable things also include aircraft and sea vessels subject to state registration, inland navigation vessels, and space objects. Along with the above, it is noted that other property may also be classified as immovable by law.

The following features of real estate can be distinguished:

Real estate cannot be moved without causing damage to the object; - real estate is firmly connected with the land, not only physically, but also legally;

Durability of the investment object;

Each specific property is unique in terms of physical characteristics and in terms of investment attractiveness;

Real estate cannot be stolen, broken or lost under normal conditions;

The cost of real estate is high, and its fragmentation into property shares is difficult, and in other cases impossible;

Information about real estate transactions is often not available;

The loss of consumer properties or the transfer of value in the production process occurs gradually as it wears out;

The usefulness of real estate is determined by the ability to satisfy a specific human need for residential and industrial space;

The possibility of a positive or negative impact of new construction on the cost of adjacent land, buildings;

There is a tendency for property values ​​to increase over time; - there are specific risks inherent in real estate as an investment object: the risk of physical damage under the influence of natural and man-made factors, the risk of accumulation of external and functional wear and tear, financial risk associated with the conditions for revising the rent; - strict state regulation of real estate transactions. There are three main types of real estate: land, housing and non-residential premises . The basic object of real estate is land. Along with the division into types, real estate is classified according to a number of criteria, which contributes to more successful research of the real estate market and facilitates the development and application of methods for evaluating various categories of real estate and managing them. Classification according to the most common features is presented in Table 1.

There are the following forms of income from investing in real estate:

Increasing the value of real estate due to changes in market prices, the acquisition of new and development of old facilities;

Future periodic cash flows;

Income from the resale of the property at the end of the holding period.

Table 1 - General classification of real estate

Type of classification	Types of real estate
By nature of use	For housing: houses, cottages, apartments for commercial and industrial activities: hotels, office space, shops, restaurants, service points, factories, factories, warehouses
	For agricultural purposes: farms, orchards
	For special purposes: schools, churches, monasteries, hospitals, nurseries, nursing homes, government and administrative buildings
Purpose of ownership	For business, for owner's residence
	As an investment
	As inventory and WIP
	For exploration and development to consume exhaustible resources
By degree of specialization	Specialized (due to its special nature, it is rarely, if ever, leased to third parties or sold on the open market to continue its existing use, except when it is sold as part of its using business): refineries and chemical plants, power plants, museums, libraries, and similar premises belonging to the public sector
	Non-specialized - all other real estate for which there is a general demand on the open market for investment, existing or similar purposes
According to the degree of readiness for operation	Put into operation requiring reconstruction or major repairs construction in progress
By reproducibility in natural form	Non-reproducible: land plots, mineral deposits
	Reproducible: buildings, structures, perennial plantings

The attractiveness of investing in real estate is explained by the following factors:

At the time of the acquisition of real estate, the investor receives a package of rights, while many investment objects do not entail ownership rights;

The safety of invested funds in general (under normal conditions, real estate cannot be lost or stolen) and inflation in particular (inflationary processes are accompanied by an increase in real estate prices and income from it);

The opportunity to receive income from real estate in monetary terms and other beneficial effects of living, the prestige of owning a certain object, etc.

Investing in real estate has such positive features as the possibility of long-term use of the object and capital preservation.

2 . The history of the emergence of the institute of shared construction abroad

The institution of equity participation in construction was born in Argentina in 1985. Here it also receives its name “construccion de la equidad”, which literally translates from Spanish as “construction in justice”. Then this name was translated into English as "equity construction", and only then from English into Russian as "equity construction".

In 1983, Raul Riccardo Alfonsin Fulkes became president of Argentina. Ruined by years of military junta rule, a seven-year civil war, and a crushing defeat in the Falkland Islands war with Great Britain, the country was in a difficult economic situation. As a result, there was hyperinflation and devaluation of the national currency - the old Argentine peso and its replacement with a new monetary unit - the austral. However, this did not stabilize the economy; inflation rates became not only high, but also completely unpredictable. In the current situation, banks refused to issue loans in the national currency, as they became extremely unprofitable for banks - to issue a loan even for six months meant to get back a hundred thousand times less money. And the issuance of loans in foreign currency at that time was prohibited by law.

Thus, neither construction organizations nor citizens were issued mortgage loans, and it was not possible to accumulate their own funds due to the same hyperinflation.

It was then, in 1985, that Raul Riccardo Alfonsin put forward the idea of ​​"housing for justice". Thus, people wishing to build their own housing had to assist the construction company in the construction of future houses. To implement this idea, a special joint-stock company was created, the shares of which were freely available and were nominated not in monetary units, but in square meters of living space. Many Argentines exchanged their, including small, cash savings until they had time to fall in price for such shares. Once a sufficient number of shares had been accumulated, they could be exchanged for built housing.

At that time, many Argentine companies had not only long-term construction, but also ready-made houses, but there was no demand for this housing. Large homeowners went bankrupt due to the fact that tenants stopped paying rent, and houses were sold only as a whole, not by apartments. Such houses, despite the fact that no one lived in them, were maintained in good condition and guarded. President Alfonsín convinced the owners to sell the apartments separately. Thus, construction companies received funds to complete long-term construction projects and were able to sell off long-standing facilities that required money for their maintenance.

The constructed houses were not rented out, as there was licensing for both construction activities and activities for the maintenance of tenement houses, and one license excluded the other. In order to force homeowners to sell extra apartments, Alfonsin imposed a large progressive tax on landlords, and builders who did not rent out the houses they built, on the contrary, were subsidized.

As a result of the implementation of such a policy by Raul Riccardo Alfonsin, the number of homeowners during the years of his reign increased by 19%.

Currently, such joint-stock companies in Argentina are no longer so widespread, the country is experiencing a construction boom, and real estate prices are growing by an average of 15% per year.

The experience of Argentina was subsequently adopted by such countries as Chile, El Salvador, and England.

In Chile, shared construction emerged in the 1990s. Here, shareholders united, as a rule, in order to build a house, and then receive income from it in proportion to the invested capital. Unlike Argentina, the emergence of this institution in Chile was initiated by private organizations, not the state. However, this can rather be attributed to negative aspects, since the state did not control these relations, some companies could not fulfill their obligations and went bankrupt. Insurance companies, and sometimes reinsurance companies, had to finish building the facilities, since not all insurers found funds while several clients went bankrupt. Thus, equity holders were not deceived and received their apartments. However, after that, the Chileans treat this method of construction with distrust.

In El Salvador, everything turned out much worse, people, having invested in shared construction, were left with nothing. The spread of this institution also took place in the early nineties, when the country recovered from a long civil war. Large-scale migration - from the war-torn and impoverished villages, the population rushed to the cities - gave rise to a surge in fraud: construction companies offered citizens to invest their remaining savings and soon get new housing in the city. However, these promises were never fulfilled. In 1996, the Salvadoran government banned such activities by law, finally ending such widespread deception of citizens.

In the UK, this kind of relationship originated at the end of the last century. It is this country that is considered the founder of the "Russian" scheme of shared construction. English construction companies turned to this agreement in order to guarantee the sale of objects that have not yet been built. At the same time, investment took place, as a rule, in real estate located not in the United Kingdom itself, but abroad - in the UAE, Egypt, Qatar, Kuwait. British developers were selling so-called "castles in the air", that is, houses that had not yet been built, which at first aroused distrust. However, the impeccable reputation of the British, as well as the oil boom (property prices are directly dependent on oil prices) convinced Arab buyers who began to willingly buy unfinished properties, knowing that they would sell finished ones at a higher price.

But the fall in oil prices entails a fall in real estate prices, equity holders are forced to sell square meters at a lower price than they originally paid for them. Buyers will be the losers even if market prices remain the same - due to inflation, the real price will be much lower. In addition, the difference in price between the built and not built object is getting smaller, which leads to a reduction in the number of buyers of "air".

Thus, the popularity of the institution of shared construction in various countries, as a rule, fell on the economic downturn. The exception was Great Britain, where they skillfully sold unfinished properties to Arab buyers who were eager to urgently invest money from oil sales. It should be noted that similar share construction schemes abroad did not lead to such a large-scale problem of deceived equity holders as in Russia.

3. Foreign experience in attracting investment in housing construction

Foreign systems of shared construction have their own characteristics and in many respects radically differ from the system that has developed in our country. It should be noted that housing construction in many foreign countries is developed due to the availability of economic and legal means to ensure the return of cash investments, as well as the availability of finished objects to the general public. Consider the institution of shared construction and its inherent characteristic features within several foreign countries. The scheme currently used in the United Arab Emirates is characterized by the fact that, first of all, the developer receives permits, passes an examination of the project and agrees on it. The cost of the project is assessed by an expert council, and construction estimates are public. To start construction, it is required to collect all one hundred percent of the funds necessary for the construction of the facility, and this must be done within a certain period, for example, six months. In order to meet the limited timeframe, the developer is forced to conduct the initial sale at a minimum markup, expecting that the remaining unsold apartments will increase significantly in price by the time construction is completed.

The depositors' funds are kept in target accounts of authorized banks. Financing of the construction is carried out in stages and under the supervision of an authorized bank. The risks of a significant increase in the cost of construction can be insured by insurance companies, however, as a rule, construction is accompanied only by an increase in the cost of the project itself and unsold apartments. Investors are also protected from missing the deadlines for the completion of the object - in this case, penalties in the form of fines may be imposed on the developer.

Often, at the initial stage, various large investors invest in construction in order to buy apartments at the lowest price. This mechanism is of an investment nature, therefore, during the crisis, almost fifty percent of construction projects in Dubai also froze, but ordinary equity holders did not suffer, and only large investors' investments did not pay off.

In the United States of America, the customer operates according to the following scheme: he creates a group, which may include project managers, foremen, estimators, economists, engineers. They develop all the necessary documentation, draw up an estimate. Once the materials are received, the project manager begins working with contractors, and consulting firms are widely used. If we talk about the cooperative form of investment in construction, then in America it also has a characteristic feature, for example, with the prosecutor's offices of some states there are special units that control the collection and spending of funds received by cooperative entities engaged in this area from investors. In addition, all funds are transferred to a special prosecutor's account, through which their subsequent expenditure is possible.

The widespread housing supply in the United States is supported by widespread mortgage lending. The system of mortgage lending for housing construction and the acquisition of housing ownership began to take shape as early as the time of President Franklin Roosevelt.

Currently, various types of programs are used, the loan term is the time during which the borrower works, that is, until retirement.

A wide variety of institutions, institutions of the primary and secondary mortgage market, including the securities market, are involved in housing finance activities - these are mortgage banks, savings and credit associations, commercial and savings banks, insurance companies, pension funds, investment institutions, private lenders, real estate, brokerage firms and other organizations. So, another feature of lending in this country is that all residential premises are divided into 3 groups: the cheapest, the average and the most expensive. A loan for an object of the first category is issued by the state, for other categories - with the help of private mortgage institutions. In this case, the loan period is 12 years, and the amount of the subsidy is 75% of the cost of the dwelling.

When concluding a shared construction agreement in France, the cost of the object is paid in stages: before the start of construction work and laying the foundation, the buyer pays 5% of the cost, by the time the roof is erected, 70% of the contract amount must be paid, then another 20% is paid and the remaining 5% is paid at renting a house.

French legislation does not provide for compensation payments to deceived equity holders, however, guarantees can still be provided by French banks.

In France, housing lending is also developed, and contractual housing savings are widely used. So, in France there are two types of housing savings accounts: on the first account you can accumulate up to 100 thousand francs and after that you can get a preferential housing loan of 150 thousand francs at 3.75% per annum, while every year a state premium is added to the target deposit in the amount of 7.5 thousand francs; on the second housing savings account, you can accumulate up to 400 thousand francs and receive a preferential housing loan in the amount of up to 600 thousand francs at 4.8% per annum. Interest rates on loans are 4-5% lower than the market ones. Loans are also provided to landowners and construction companies for residential and industrial construction for a period of 3 to 20 years.

Considering relations in the field of shared construction in Germany, it is worth noting that no special legislation has been adopted here, relations are regulated by the Civil Code, and government decisions are adopted only on some issues.

In Germany, the buyer deals directly with the licensed construction company and not with several contract partners. The amount of the contract is also transferred directly to the company's account, and strictly not earlier than the building permit is issued, otherwise the developer is threatened with revocation of the license. Thus, the construction company is obliged, personally responsible for meeting the deadlines and quality of construction, to build an object and transfer part of it to the investor in the form of real estate. The creation of special design companies is not prohibited by law, they will be subject to the same licensing requirements as the construction company itself. But here it should be borne in mind that the determining criterion in German construction is the reliability and positive reputation of the market participant who will carry out the construction, and the creation of special design companies, which, in turn, enter into contracts with their own participants, in this case will characterize the construction industry. company not in the best way.

Germany also has a system of support for citizens in the form of a classic form of contract savings - building savings banks. Their source of resources for targeted housing loans are contributions from citizens, borrowers' fees for using a housing loan, as well as state bonuses, which are paid in accordance with a building savings contract, provided that the depositor has invested a certain amount in his account during the year.

In accordance with German law, building savings banks cannot carry out any active operations, except for issuing loans to their depositors, who, unlike the depositor of a commercial bank, who does not have any information about how his funds are used, know exactly who and on under what conditions he uses their money.

Employed citizens enter into an agreement with construction savings banks to finance construction, on the basis of which the home buyer pays a certain amount of money to his account at such a cash desk every month. The employer adds DM 78 to the salary every month, which is DM 936 per year, and the state adds another DM 93.6. This is how capital is accumulated for housing construction. When the required amount accumulates and amounts to about 1/3 of the cost of the object, the state allocates 10% of the cost of housing to the citizen, and the construction savings bank issues a loan for the rest at a low fixed interest rate. If housing is purchased by a young family with at least two children, the state gives them annually for eight years after the acquisition of 40,000 marks in the form of house subsidies, 24,000 marks for children, 4,000 marks in the form of an environmental allowance and 3,200 stamps in the form of energy subsidies.

Shared construction in the UK (as well as some Scandinavian countries) is characterized by the fact that the representative of the customer is often an architect. He selects all the specialists necessary for the construction, who evaluate the preliminary cost of the project, perform various subcontracting works. The architect, together with them, prepares the documentation necessary for concluding a contract, which indicates the expediency of participation in the auction, develops a program of work before and after the auction, and ways to reduce the duration of construction.

In England, as well as in Germany, the system of building societies has been successfully functioning since the last century, but the mechanism of their work is slightly different from German ones - in order to receive a housing loan, it is not necessary to be a contributor to a building society. As a result of the liberalization of UK banking legislation, the functions of these companies have recently become more and more like those of ordinary commercial banks, which in turn increases competition between these two structures and, consequently, leads to lower lending rates. In addition, the activities of building societies in England are closely connected with insurance companies - insurance services are included in a single mechanism of mortgage lending.

Foreign shared construction can be characterized by several more features.

In many Western countries, firms engaged in construction and interested in each other's activities unite among themselves in cartels, which can significantly reduce the cost of construction. With such cooperation, costs and expenses are reduced by providing mutual discounts on the services provided and the materials supplied.

Abroad, the state takes an active part in the investment process. In countries with developed market economies, it simultaneously performs several functions: it regulates the total volume of private business investments; stimulates the attraction of investments in certain industries, enterprises with the help of various benefits; directly intervenes in the investment process itself.

The state is also actively involved in the process of pricing for construction projects. For example, in Sweden, each province has specialists who monitor the prices of goods and services and make proposals for their regulation. The government can set an upper price threshold, and with a significant increase in prices and high inflation, the state has the right to freeze them, however, only for certain goods and services. In the event of an increase in housing prices, the state begins to actively support the population, and especially young families, by providing them with various housing subsidies and long-term soft loans.

In countries such as the United States of America, Germany, Finland, Japan, Canada and others, government agencies can also interfere in the pricing process, for example, when the price of a construction project exceeds production costs and the average rate of return. If the rate of profit turns out to be higher than the average, then state bodies investigate the reasons for such growth, and if they are not justified, then the state regulates this rate forcibly.

Analyzing the systems of shared construction of foreign countries, it is possible to identify both the fundamental features inherent in specific countries and common features. Thus, in many countries, firms engaged in construction activities are united among themselves for more fruitful activities, which can significantly reduce construction costs, reduce costs and expenses. The customer representative is an individual (architect in the UK, Sweden, Finland, group in the USA, general contractor in Germany), who selects the specialists necessary for the construction, determining the required amount of work.

In economically developed foreign states, there is social support for citizens, especially young families, which helps to provide them with their own housing. Also, special attention is paid to pricing issues - state bodies exercise control over prices, set their upper limit.

Considering the world experience in providing the population with housing, it must be borne in mind that the practical development and organization of housing lending in a particular country is significantly influenced by a number of factors that can be divided into political, economic and legal ones. These factors have served as the basis for the formation of dozens of varieties and options for organizing housing loans in the world. Based on the foregoing, the technology of investing in the housing sector is based on three main principles: contract savings, mortgage lending and government support.

The so-called “extended open model” has significant differences. This is a model in which the main influx of credit resources into the mortgage lending system comes from a secondary market for mortgage-backed securities specially organized for this purpose. Implementation of the expanded open model can be ensured only if an expanded infrastructure of the mortgage market is created, as a rule, with some assistance from the state and, at a minimum, with its partial control over the issue of securities traded on the secondary market.

If we take the system of mortgage lending in the US in general, it can be noted that previously there was a “red line rule” within which loans could be issued, and risk zones for issuing loans were also calculated. If a citizen fell within the red line or entered an inaccessible risk zone, then he was denied a loan. A loan in the United States is issued for the period during which the borrower works, i.e. until retirement.

In general, it is worth noting that this institution in the countries discussed above is more developed than in our country.

Task

In the reporting year, a general construction organization built and put into operation 70 thousand m 2 of living space, of which 20 thousand m 2 were made of brick. For the current year, the organization has set a plan for putting into operation 80 thousand m 2 of housing, of which 10 thousand m 2 are made of brick, 60 thousand m 2 of large-panel construction and 10 thousand m 2 of volume-block construction.

Determine the growth in the share (%) of residential buildings, solved in prefabricated structures, in the current year compared to the reporting year.

From the condition of 70 thousand m 2 - 100%

brick 20 thousand m 2

80 thousand m 2 - 100%

10 thousand cm 2 brick

60 thousand m 2 panel

10 thousand m 2 block

Actual 50 thousand m 2 (71.4%)

Planned 70 thousand m 2 (87.5%),

those. by 16.1%

Production area of ​​the mechanical shop - 980 m 2 , auxiliary area - 170 m 2 , construction volume of the building - 12075 m 3 . The total amount of capital investments is 250 thousand rubles, including the estimated cost of construction and installation works - 130 thousand rubles.

Determine the space-planning indicators k 1 and k 2 and the proportion of construction and installation works in the total volume of capital investments for the facility.

The cost-effectiveness of space-planning decisions of the building is characterized by the coefficients k 1 and k 2, which are determined by the formulas:

real estate equity investment capital

k 2 = F/F floor,

where V is the construction volume of the building (the entire volume of the ground and underground parts of the building without the volume of the technical underground and attic, loggias and balconies), m 3;

F - residential and industrial area (intended only for the implementation of the technological process, in public buildings - working area), m 2;

F floor - usable area (in residential buildings - this is the sum of residential and utility areas minus the area of ​​​​stairwells, in industrial buildings - the sum of production and auxiliary areas).

The coefficient k 2 with a rational space-planning decision in industrial buildings is 0.93-0.95, in residential buildings - 0.62-0.72.

k 1 \u003d V / F \u003d 12075: 980 \u003d 12.32;

k 2 \u003d F / F floor \u003d 980: (980 + 720) \u003d 980: 1700 \u003d 0.58,

which is not rational, because for industrial buildings k 2 is 0.93-0.95.

The share of construction and installation works k SMR in the volume of capital investments is determined by the formula:

k cmr \u003d C cmr / K * 100,

where C smr is the estimated cost of construction and installation works of the facility, rub.;

K - the total amount of capital investments in the object, rub.

k cmr \u003d C cmr / K * 100 \u003d 130000: 250000 \u003d 0.52.

Conclusion

If we consider foreign experience in attracting investments, then it is necessary to say about the relative balance of investment demand, on the one hand, and the proposals of construction companies to meet this demand, on the other. This situation has developed due to the availability of ready-made construction projects, the availability of economic and legal mechanisms to ensure the return of invested funds and optimal payback periods for investments.

I would like to note that foreign systems of equity participation in construction have their own fundamental features. This is due to the fact that in many countries mortgage housing lending is developed and citizens, receiving a loan, purchase ready-made housing without fear that the developer will not fulfill its obligations or the construction period will be delayed. This type of lending is much more profitable and efficient for citizens, is provided by the country's stable economy and is protected by many developed legal institutions.

The next important point in the organization of construction is the role of the customer and the one who performs its functions. In England, Finland and Sweden, the customer representative is often an architect. He selects the specialists necessary for the construction, who determine the preliminary cost of construction, perform subcontract work, and collect other necessary data. Together with them, the architect prepares documents for the conclusion of a contract, which determines the expediency of participation in the tender, the program of work before and after the tender, economic methods of work and the issues of reducing the duration of construction.

In the US, the customer creates a team, which may include estimators, engineers, economists, contract managers and superintendents. Further, they develop all the necessary documentation and schemes of the construction process. Based on the materials received, the contract manager begins work with contracting firms. At the same time, for the optimal choice, it is common to involve consulting firms. Japan has taken a step forward in this direction. Large research laboratories and even institutes are organized at construction firms; scientists are actively involved in the staff of the firm. At the same time, instead of the concept of “customer”, the concept of “developer” is used, whose functions include the acquisition of a site, financing, construction and sale of housing. The developer may engage contractors and subcontractors.

Another feature is the relationship between the customer and the contractor, which influences the formation of relations between the shareholder and the customer in this case.

Based on the foregoing, the following conclusions can be drawn. The introduction of mortgage lending in Russia at the proper level at the current stage is hindered by a number of factors: insufficient development of the securities market; lack of investors willing to accept low yields on mortgages; poor development of the insurance business for the purposes of servicing mortgage loans; the high cost of funds from commercial banks, necessary for the issuance of long-term mortgage loans; high inflation rates, changes in the ruble exchange rate, causing a significant risk of interest rates in long-term lending, etc.

Bibliography

1. Civil Code of the Russian Federation (Part Three) of November 26, 2001 No. 146-FZ (adopted by the State Duma of the Federal Assembly of the Russian Federation on December 22, 1995) (current version of January 30, 2014)

2. Krutik A. B. Economics of real estate / Krutik A.B., Gorenburgov M.A., Gorenburgov Yu.M. - St. Petersburg: Lan, 2010. - 480 p.

3. Matyugina E.G. On the housing market / E.G. Matyugina // Housing construction. - 2011.- No. 1. - S. 8-14.

4. Rakhman I.A. Development of the real estate market in Russia: theory, problems, practice / I.A. Rahman. - M.: Economics, 2004. - 294 p.

5. Rakhman I.A. Foreign experience in regulating investment and construction activities / I.A. Rahman // Construction Economics. - 2010. - No. 6. - S. 45-48.

6. Economics of real estate / ed. V. Borovkova. - St. Petersburg: Peter, 2009. - 416 p.

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Pushkina Marina Valerievna Has been practicing law since 2003. She is a partner of the law firm Tenzor Consulting Group and heads the Land, Construction, Real Estate practice. The developer and organizer of a number of author's seminars, has published scientific and practical articles on the legal issues of land use and real estate management. Author of the book "Commercial Real Estate: Privatization and Protection", co-author of the books "Special Economic Zones in Russia: Tax Incentives and Benefits" and "The Legal Regime of Foreign Investment in the Russian Federation". The book is a comprehensive legal analysis of the processes associated with the turnover of commercial real estate, conducted by the lawyers of the company Tenzor Consulting Group. The author considers topical aspects, including: analysis of the current situation in the commercial real estate market; assessment of the most common risks arising from the construction, purchase and sale and management of commercial real estate; ways to minimize the negative consequences of the most likely miscalculations of market participants. Kommercheskaya_nedvigimost.indd 1 12.08.2009 13:15:07 Series "Tenzor Consulting Group Library" Marina PUSHKINA Commercial real estate as an investment object PUBLISHERS Moscow 2009 UDC 330.322.214 BBK 65.225.3-56 P91 Published with the assistance of Pushkin's Tenzor Consulting Group M. P91 Commercial real estate as an investment object / Marina Pushkina. - M.: Alpina Publishers, 2009. - 244 p. - (Series "Library of Tenzor Consulting Group"). ISBN 978-5-9614-1039-6 Until recently, the commercial real estate market has been one of the most dynamically developing and has attracted a lot of participants and financial resources, but the process of buying, selling and operating real estate is still associated with a lot of legislative shortcomings and commercial omissions. The book is a comprehensive legal analysis of the processes associated with the turnover of commercial real estate, conducted by the lawyers of the company Tenzor Consulting Group. The authors consider the situation that has developed in this market, assess the most common risks that arise in the construction, sale and management of commercial real estate, paying special attention to ways to minimize the negative consequences of the most likely miscalculations of market participants. The book is addressed to professional participants in the commercial real estate market, as well as owners and tenants of real estate. UDC 330.322.214 LBC 65.225.3-56 All rights reserved. No part of this book may be reproduced in any form or by any means, including posting on the Internet and in corporate networks, as well as recording in computer memory for private or public use, without the written permission of the copyright owner. rights. For the organization of access to the electronic library of the publisher, please contact [email protected] fiction.ru. ISBN 978-5-9614-1161-4 (series) ISBN 978-5-9614-1039-6 © Tenzor Consulting Group, 2009 © Alpina Publishers LLC, 2009 Table of contents FOREWORD .............. ................................................. .................7 INTRODUCTION.............................. ................................................. ......9 Chapter 1. STRUCTURE (SEGMENTATION) OF THE COMMERCIAL REAL ESTATE MARKET ...............11 1.1. The main types of commercial real estate .................................................................. ................... 11 1.2. Legal Status and Specific Risks of Types of Commercial Real Estate 17 1.3. Stages of development of the commercial real estate market....................................33 Chapter 2. MAIN PLAYERS IN THE COMMERCIAL REAL ESTATE MARKET REAL ESTATE..............................35 2.1. Developer ................................................. .......................35 2.2. Investor................................................. .........................40 2.3. General Contractor, Contractor and Subcontractor .......................................................... 47 2.4. Management Company...............................................52 4 COMMERCIAL REAL ESTATE AS AN INVESTMENT OBJECT Chapter 3. MAIN STAGES OF ACTIVITIES OF PARTICIPANTS OF THE COMMERCIAL REAL ESTATE MARKET.......................................... .................... 61 3.1. Construction: stages (designing, obtaining a land plot) .............................................. 61 3.1.1. Stages, technical details...............................................62 3.1.2. The specifics of the construction contract ....... 79 3.1.3. Insurance of risks during construction...............................86 3.1.4. Participation of the region in the construction of commercial real estate: problems of mutual settlements between developers (owners) and administration .................88 3.2. Management of the property ...............................99 3.2.1. Control Schemes................................................... .99 3.2.2. Management of state and municipal real estate................................... 102 3.3. Participation of the management company in the construction of the real estate object .............................. 103 3.3.1. Key Participants .................................................. 103 3.3.2 . Legal Analysis of Contracts Concluded in the Process of Management............................. 106 Chapter 4. INVESTING TRANSACTIONS OF PURCHASE AND SALE OF COMMERCIAL REAL ESTATE............................. 106 ...... 131 4.1. Choice of investment object ............................... ....... 131 4.2. Mechanism for valuation of real estate objects .......... 148 4.3. Investment in the construction of commercial real estate. Stages, risks, ways to optimize taxation............................................... 161 4.4. Acquisition of a commercial property. Stages, risks.............................................. 185 5 Table of contents 4.5. Ways of lending when buying real estate............................................................... 205 4.6. Leasing of commercial real estate.............................. 219 CONCLUSION. Prospects for further development of the commercial real estate market...... 235 Foreword The last decade in Russia was characterized by the activation of the national economy and the strengthening of its position in the international arena. The result of this situation was an increase in the investment attractiveness of the Russian market at the present time. Such success was due to the stabilization of the political and economic spheres, a lot of work to streamline national legislation, as well as reasonable measures to minimize the negative consequences of the 2008 global financial crisis. These changes did not bypass and the commercial real estate market. Investing in real estate has always been considered a reliable and profitable investment. Despite all the turmoil in the markets, the value of real estate very rarely stops growing. New entrants continue to enter this market, pushing the pioneers of the commercial real estate trade, which forces them to pay increased attention to optimizing their activities and looking for new ways to make a profit. The most acute issue of cost optimization arose in 2008 in connection with the global financial crisis and the subsequent crisis of non-payments and a decline in the purchasing power of the population. Because of this, any information about the legal features of the circulation of land, buildings or premises, about the legal and financial problems associated with them, acquires considerable value. This book is devoted to the most pressing issues of investment in real estate directly related to this area of ​​the market. It contains a detailed and systematized description of the participants, objects and procedures of turnover 8 COMMERCIAL REAL ESTATE AS A COMMERCIAL REAL ESTATE INVESTMENT. The authors not only described the general standard aspects of the sale and purchase in this area, but also analyzed the legal framework governing activities in this area, which allows avoiding many complications. Here are specific examples of judicial practice, it shows how the court thinks, how the regulatory framework for commercial real estate is applied in a particular case, describes the legal tools with which the owner can protect his property, not lose it, significantly reduce the likelihood of risks, and some even exclude. Particular attention is paid to the topic of risks associated with commercial real estate, in particular, the risks arising from the creation, purchase and sale of objects, as well as ways to protect against them are considered. Unfortunately, the complexity and versatility of the phenomenon under consideration do not allow us to discuss all aspects of the topic in detail. Therefore, the purpose of this book is a systematic presentation of the key elements of the process of investing in commercial real estate. Let's hope that this work is only the first step in a large-scale study of investment in construction. The book will be interesting and useful both for a wide range of readers and experienced or novice market participants. A. A. Andreev, Member of the Presidium of OPORA RUSSIA Introduction Until recently, transactions involving buildings, structures, non-residential premises, entire complexes (warehouse, retail and office, etc.), in other words, were quite widespread on the Russian market - objects of commercial real estate. Most of all with such objects transactions on privatization, rent, purchase and sale are made. Now the participants in these transactions, both past and planned, have to be more careful in their plans. Today obliges the participants in these transactions to be more careful and attentive to their partners, to the subject of the transaction and to the procedure for its implementation. In this work, we will consider the role of the main participants in the commercial real estate market: investors, developers, contractors, management companies. In addition, we will analyze the procedure for buying and selling objects, who and how carries out their construction and subsequent operation. We will discuss how to make a successful choice of an object, which must be taken into account when drawing up a contract of sale, as well as when registering ownership of an object. It is very important to do everything right, taking into account the legislation of the Russian Federation, as well as applying it accordingly. If a potential buyer is concerned about the fate of his business and, by purchasing real estate, he expects to receive a certain income with its help, and not be left without an object and money, trusting nosy crooks who trade in the commercial real estate market, he needs not only to be well versed in the legislative framework , but also have an idea of ​​judicial practice, and be familiar with real examples of such transactions. 10 COMMERCIAL REAL ESTATE AS AN INVESTMENT OBJECT It is necessary to know the segmentation of the commercial real estate market, the prospects for its further development, take into account all risks and try to minimize them. It is also important to understand the taxation system in order to understand how to reduce the amount of tax payments and spend the savings on business development or employee bonuses. It should be borne in mind that land plots can also be objects of commercial real estate. The allocation of such a land plot for construction must go through all stages in accordance with the law. Otherwise, a situation may arise in which the court will oblige the demolition of an object erected on land allocated for construction inappropriately. Undoubtedly, it is impossible to know and consider everything, so it is important to remember that business is always risky. However, you should try to minimize problems, risks and failures. Then the business will prosper, generating income, and you will not be afraid of the occurrence of any unaccounted for “hindrances”. The autumn of 2008 showed that the methods of minimizing risks and costs have not lost their relevance. This makes it necessary to pay special attention in the book not only to measures to prevent dangerous situations, but also to combat their adverse consequences. Chapter 1 Structure (segmentation) of the commercial real estate market 1.1. Main types of commercial real estate All over the world, commercial real estate is usually divided into three large groups (Russia is no exception in this regard): - office real estate, which contains many components: these are the buildings themselves, business centers, premises and basement floors of residential buildings, premises for free use, as well as premises of enterprises, both former and existing; - retail real estate, which includes various shops, consumer service centers, multifunctional shopping malls, etc. In Russian law, this real estate is defined in Art. 346.27 12 COMMERCIAL REAL ESTATE AS AN INVESTMENT OBJECT of the Tax Code of the Russian Federation as retail space: “a part of a store, pavilion (open area) occupied by equipment designed for displaying and demonstrating goods, conducting cash settlements and servicing customers, the area of ​​cash registers and cash booths, the area of ​​workplaces for service personnel and passages for buyers. The trading area does not include: premises for receiving and storing goods and premises for preparing goods for sale (acceptance, unloading, storerooms, packaging, etc.), utility rooms (for storing containers, packaging materials, inventory, linen, etc.), administrative and household premises (office premises, etc.) ), technical premises (ventilation chambers, machine room of elevators and refrigeration units, telephone switchboard, boiler room, etc.) (Resolution of the State Statistics Committee of the Russian Federation dated 04.03.2002 No. 20); - warehouses and logistics centers, these can be specially equipped warehouse complexes, and warehouses in industrial zones on the territories of various industrial enterprises, as well as premises in residential buildings, equipped in accordance with the Decree of the Gosstroy of the Russian Federation of September 27, 2003 No. 170. Documents confirming for law enforcers, one of the above statuses of the premises are inventory and title documents for this object, containing: - the necessary information about the purpose, design features and layout of the premises of such an object; - the necessary information confirming the right to use this object (a contract for the sale of non-residential premises, a technical passport for non-residential premises, plans, diagrams, explications, a lease (sublease) agreement for non-residential premises or its part (s). Chapter 1. Structure (segmentation) commercial real estate market 13 A special role in this case belongs to the technical inventory bodies that maintain technical accounting of residential and non-residential funds.In addition, office real estate around the world is usually divided into classes A, B, C. But it must be borne in mind that clear division parameters in this matter still not, and in order to assign a building or a complex of one or another class level, it is necessary to conduct a detailed analysis of all its technical characteristics, infrastructure and other parameters.Class A offices are the most elite and prestigious buildings in the commercial real estate segment under consideration. : - location on the main transport arteries and squares, with convenient access; - it should be a new construction object, made according to an individual (author's) project; - interior decoration is carried out according to the individual order of the tenant; - fully controlled microclimate in the premises, maintaining a constant temperature and humidity using a single combined ventilation, heating and air conditioning system; - a sufficient number of parking spaces in the underground parking lot, guarded parking lots. Usually such buildings are used as business centers. Class B offices are located, as a rule, in new or reconstructed buildings with high-quality, but inexpensive finishes. These can be class A buildings, but after 5–7 years of operation, or buildings that cannot move to a higher class for some reasons. For example: an inconvenient entrance. Mandatory conditions for offices of this class are the presence of an air conditioning system, modern elevators, ground security, car parking, food service points and infrastructure facilities. As a rule, the building is managed by a special service that manages the building in accordance with international standards. It is also necessary to have properly executed legal documentation for the ownership and operation of the building. Such buildings are used not only as business centers, but also as offices. Class C offices are usually located in already outdated office buildings of higher classes, in buildings that have been converted into offices in the recent past (for example, buildings of factories, research institutes, factories, etc.). This type is characterized by transport remoteness and lack of parking spaces. Often, only a cosmetic external repair of the facade is carried out, without reconstruction. Each individual office has undergone its own repairs at the expense of the tenants, and therefore there is no harmony in the appearance of the building. This class does not require the presence of an author's architectural project or developed engineering systems, but it requires an experienced management company. It is assumed that these buildings will be used only as office buildings. In addition to these classes, classes D, E and F are sometimes distinguished, which include non-residential premises in obsolete residential or non-residential buildings (more than 10 years old), they, as a rule, do not have requirements for architectural solutions, infrastructure and management. At the end of 2006, the "big four" consulting companies (CB Richard Ellis Noble Gibbons, Colliers International, Cushman & Wakefield Stiles & Riabokobylko, Jones Lang LaSalle) - the participants of the Moscow International Forum - adopted a new classification of office buildings, which caused a wide resonance among specialists . It was designed to divide offices into classes in accordance with their objective criteria and was developed taking into account the opinions of experts from many industries - development, management and maintenance of offices. What was the reason for the need to introduce a new classification system for office buildings? Experts say that it was caused by the rapid pace of development of the office real estate segment, constantly updated technologies in the construction industry. In addition, the new classification of offices in the future will allow the office market to develop in accordance with international standards. Using the new classification, which specifically specifies certain parameters and criteria for premises, developers and investors will be able to get a more complete and detailed idea of ​​​​what a modern office should be like, as well as provide a basis for further development. At the same time, a potential tenant will have the opportunity to more carefully select an office and realistically assess their requirements and capabilities. In addition, belonging to a particular class affects the value of the rental rate. The new standards are much stricter, and the classification itself, although it looks more mature and thoughtful, raises many questions and complaints. In accordance with it, offices are divided into three classes - A, B + and B -. The parameters by which offices are graded are, in turn, subdivided into groups, each of which contains a specific set of mandatory and optional criteria. For example, under the previous classification of 2003, in order for an office to be recognized as belonging to the highest class A, it was enough to score 16 points out of 20 possible, while now a building claiming the class A category must meet 20 mandatory criteria and 4 additional ones; class B+ building - 10 obligatory and 12 additional; class B– - 7 mandatory and 12 optional. Electricity requirements have been tightened for offices of the highest category, and being within the Garden Ring (applicable to the capital), on the contrary, is no longer a necessary attribute of this class. In addition, it should be noted that all parameters have become clearer and more detailed. They are divided into six groups: 1) office location; 2) availability of parking; 3) availability of an office building management system; 4) engineering systems; 5) design features of the building; 6) ownership of the building. It was the last criterion that caused the greatest resonance. In the previous classification, this parameter was absent altogether. Now class A can only be assigned to a building that belongs to one owner, and not sold in parts. On the one hand, the presence of one owner is a guarantee that the building is an integral complex with a single management system, as well as a guarantee of the safety of the building itself. However, business centers and multifunctional complexes do not fall into the category of elite high-class offices. As a rule, office premises that are part of such complexes, although they meet the highest international standards and meet almost all the requirements of the new classification, rarely belong to one owner. The required amount of investment is very difficult to obtain from a single source, and a rare developer has such amounts; premises are sold, as a rule, in parts to various buyers. Accordingly, the entire complex cannot have a single owner. In addition, as world practice shows, this criterion is not a prerequisite for an office to belong to class A. We dare to say that the ownership structure still does not affect the level of the building and premises, as well as the quality of its service. The main condition is that the building is serviced by one management company that has experience in working at least five office buildings with an area of ​​at least 5,000 square meters. m each. In connection with the adoption of the new classification, most office buildings had to revise their “value system”, the process of revising the class rating of buildings continued until the end of 2007. 1.2. Legal Status and Specific Risks of Types of Commercial Real Estate Objects According to Russian law, the main objects in the commercial real estate market can be immovable things that are firmly connected with the land, located on its surface, not limited or not withdrawn from civil circulation and intended for profit. Such objects can be: - land plots; - buildings, structures; - Separate rooms. Land plots in the commercial real estate market acquire their main value due to the ability to accommodate buildings and structures. Therefore, the main criteria for selecting a land plot are not only its area, legal status, provision of communications, but also its types of permitted use. In the course of choosing and acquiring the rights to use a land plot, several stages will have to be passed, due to the requirements of the law. The determination of the boundaries of the site is carried out during land management, which includes, in particular, measures to study the state of land, plan and organize the rational use of land and their protection, the formation of new and streamlining existing land management objects and establishing their boundaries on terrain. A fairly common problem associated with this stage is the incorrect definition of the boundaries of the land, which can lead to land disputes with the owners of neighboring plots. Since such situations, as a rule, remain on the conscience of special bodies that carry out geodetic surveys, it can be advised to indicate in the contract the increased responsibility of this organization in case of an error. As a rule, the turnover in the commercial real estate market includes land of settlements, industry and agricultural purposes. At the same time, agricultural land is clearly not subject to use in the creation of a commercial property. Typically, such plots are transferred to the category of industrial land or land of settlements. In the first case, there remains the possibility that a shopping center built on such a site will be considered an “off-purpose use” of the site. In the second case, the site may be outside the boundaries of the settlement and require the transfer of these boundaries, carried out on the basis of a rather lengthy approval procedure. The rights to a land plot are acquired only after passing through a special procedure, provided primarily by Art. 131 of the Civil Code of the Russian Federation. This applies primarily to cases where the parties to the transaction are private individuals. But a significant number of land plots in Russia are currently managed not by private individuals, but by municipal authorities. In this case, in order to acquire rights to develop a land plot, the future developer will have to pass a competitive selection or win an auction. Speaking about the lease of land plots in state or municipal ownership, it is necessary to pay attention to the following points. Tenants of such land plots pay rent. Its basic amounts are set by the relevant executive authorities and can differ quite significantly from the amount of land tax paid, in turn, by land owners. Land is often more expensive for tenants than it is for owners. In such a situation, the question arises of the appropriateness of the purchase of land. However, this issue should be considered only in the case when the possibility of privatization of the leased land plot exists in reality. From Art. 36 of the Land Code of the Russian Federation, it is not entirely clear whether the owner of real estate located on a land plot has the right to privatize it if he already leases this land plot. It does not clarify the situation and the procedure for granting rights to a land plot, as set out in the Land Code. In addition, the code does not provide for a mechanism for automatic privatization of a land plot leased by the owner of buildings, structures and structures located on it. The scope of powers to dispose of a built-up area under both legal regimes is almost the same. The rights to a land plot can be assigned, credit funds can be attracted under the mortgage of a plot, both your own and a leased plot are equally easy to build up. But how much does the “cost of ownership” cost? The state cadastral valuation of land is carried out at least once every five years, but not more than once every three years. However, the amount of the rent may change once a year, respectively, the risks of the tenant to increase land payments are slightly higher than those of the owner of the land. A significant disadvantage of the lease is the fact that local authorities, despite the expected long-term nature of land use, for example, maintenance of buildings and structures, can conclude land lease agreements for short (up to five years) terms. The prolongation of such contracts includes the need for new approvals in the regulatory authorities. In addition, there is no guarantee that it will be possible to obtain consent to the sublease of the land plot. The question of the right under which the land plot subject to re-registration will be acquired (on the right of lease or ownership) remains debatable. It is clear that in most cases legal entities-acquirers seek to register the land as property, while the actions of the authorities are aimed at preventing this in every possible way and providing the land for rent. Owners of buildings located on re-registered land plots tend to believe that they have the right to choose, but the owners of land plots (municipal bodies) have an opposite point of view. Based on the analysis of the current legislation, it seems that the right to choose in resolving this issue still belongs to the owner of the building, and not the land plot. This conclusion follows from the provisions of the Land Code of the Russian Federation itself, art. 36 of which states that “citizens and legal entities owning, gratuitous use, economic management or operational management of buildings, structures, structures located on land plots that are in state or municipal ownership, acquire rights to these land plots in accordance with this code." In addition, the opportunity given to the owner of real estate to choose the right to acquire a land plot is consistent with the principle of a single legal fate of the land plot and the buildings erected on it, which is reflected in Art. 1 of the Land Code. Combining in one person the owner of a land plot and the owner of real estate objects located on it, which the legislator is striving for, will most favorably affect the turnover of real estate and the position of its owners, as well as increase the investment attractiveness of real estate objects. Chapter 1. Structure (segmentation) of the commercial real estate market 21 Judicial practice that has developed in the course of resolving this issue also confirms this point of view (Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated March 24, 2005 No. 11 “On some issues related to the application of land legislation) . However, when considering such cases, the courts evaluate the arguments of the executive bodies of state power or local self-government bodies on the impossibility of selling the disputed land plot due to its restriction in circulation, the prohibition of privatization established by federal law, or because of its reservation for state or municipal needs for the basis of regulatory legal acts of state authorities on reservation, its use for other purposes (state or public needs). In particular, the legitimate reason for refusing to sell a land plot is the fact that, in accordance with the general plan of the settlement, approved before the owner of the property applied for the purchase of the land plot, it was planned to build another object on this land plot. Despite this position of the judiciary, we believe that such justification of their actions by local authorities is not entirely correct: according to the current Urban Planning Code of the Russian Federation, the master plan is not a legal act, and therefore cannot serve as a basis for a ban on the purchase of land. Reference to it by the authorities actually deprives both citizens and legal entities of the right to challenge the decision to withdraw the site. The master plan is only a framework document, on the basis of which land use and development rules should be adopted, and then planning and surveying projects. According to Art. 36 of the Land Code of the Russian Federation, the exclusive right to privatize land plots belongs to the owners of buildings, structures, structures located on these plots. Since this right is exclusive, that is, no one except the owner of the building, structure, structure has the right to privatize the land plot occupied by the relevant building, structure, structure, then when considering disputes related to the implementation of this exclusive law, it should be assumed that the prohibition established by the Federal Law “On the Privatization of State and Municipal Property” for legal entities in whose authorized capital the share of the Russian Federation, its constituent entities and municipalities exceeds 25%, to purchase state and municipal property is not applied during privatization the said legal entities of the land plots on which the real estate objects owned by them are located. In addition, the Law on the Enactment of the Land Code of the Russian Federation establishes that the privatization of real estate is carried out with the simultaneous privatization of the land plots on which they are located. So, by virtue of Art. 28 of the Law "On the Privatization of State and Municipal Property", the privatization of real estate is carried out simultaneously with the alienation of land plots occupied by this property and necessary for its use. When resolving disputes related to the application of these norms, one should proceed from the fact that the privatization of buildings, structures, structures, including enterprises and other property complexes, is carried out with the simultaneous privatization of land plots occupied by such property and necessary for its use (for except for cases when the relevant land plots are withdrawn from circulation or limited in it). According to Art. 2 of the Law on the Enactment of the Land Code of the Russian Federation, when selling land plots to owners of buildings, structures and structures located on them, their value is determined by the authorities of the subject of the state. If it is not defined, the established minimum land tax rate is applied. Determining the price of a land plot under a sale and purchase agreement concluded in accordance with Art. 36 of the Land Code of the Russian Federation, the parties must be guided by the Law on the introduction of the Land Code of the Russian Federation, which contains an imperative rule on specific conditions for determining the value of a land plot. However, the provisions of the Law on Appraisal Activities in the Russian Federation when determining the value of a land plot under such an agreement are not subject to application. In the event that at the time of the conclusion of the contract for the sale of a land plot by a constituent entity of the Russian Federation the price of a land plot has not been established, the corresponding minimum land tax rate is applied. If, prior to the determination by the authorities of a subject of the Russian Federation of the price of a land plot, the parties to the agreement agreed on its price without taking into account the requirements of the Law on the Enactment of the Land Code of the Russian Federation, then this circumstance does not entail the recognition of the agreement as not concluded, and the price condition is determined based on the corresponding minimum land tax rate. Buildings and structures in the form of business centers and office buildings, already built, or objects under construction form the basis of the commercial real estate market. As necessary elements of the concept of "building" we can single out its immovable and capital character, individual certainty and suitability for use for the stated purposes. The main risks in operations with these objects are listed below. their uncertainty. The lack of registration records, certificates of law, inaccurate drawing up of plans do not allow us to accurately individualize this structure. Moveable character. Not every structure installed on a land plot is recognized as a building due to the fact that it is not connected to the land plot to such an extent that this structure cannot be moved to another site without violating its structural value. An example is stalls and kiosks that are not recognized as immovable objects. 24 COMMERCIAL REAL ESTATE AS OBJECT OF INVESTMENT Lack of the possibility of targeted use. First of all, this is due to the lack of proper communications and the design features of the building. The lack of permits and approvals of the relevant services is already a consequence, and not the reason for blocking the intended use of the building. Separate premises are specially identified in this classification, since quite often they are presented as objects in specific contractual relations for the intended use of commercial real estate. Here you can also specify individual areas in the premises used for commercial purposes. In relation to the second type of objects (buildings, structures), premises and areas are secondary, and they follow the fate of the building. In this section, it should be specifically noted that residential premises can also be used as commercial real estate. For example, many mini-hotels and other small businesses are often located in former apartments that have been converted to non-residential premises. Among the advantages of this option: - smaller amount of necessary investments, in contrast to investments in large complexes; - less dependence on changes in the economic situation in the country: real estate that does not have the status and price of an elite property is more likely to be purchased; - greater responsiveness to changes in the situation: such premises are much easier to convert from a mini-hotel to an office or back to a residential building than a large complex; - significant simplification of land relations: when transferring a dwelling, there are no problems with registration of a land plot and rights to it. Housing legislation allows you to use your own square meters for work, but on condition that this does not violate the rights and legitimate interests of other citizens, and subject to the requirements for residential premises. There is no contradiction here. You can work in an apartment quite legally if you do business alone and do not need warehouse, production and other specialized premises. In most cases, this is done by individual entrepreneurs working alone - programmers, artists and some lawyers. In other words, in your own apartment you can do something that does not create noise, does not cause unpleasant odors, wall vibrations, fire hazards or poisoning others. In order to transfer residential premises to non-residential premises, the following conditions must be met: - be the owner of the premises; - the apartment must be located either on the ground floor of an apartment building, or directly above another non-residential premises; - there must be free access to the engineering communications of the entrance or house (if there is none, then the owner provides it at his own expense); - the house should have the possibility of equipping a separate entrance (it should also be equipped at the expense of the owner); - the premises should not be pledged or under arrest, should not be encumbered with the rights of third parties and should not be used by a citizen as a place of permanent residence. In other words, the owner and other family members must be discharged from the apartment. The law does not require the consent of the owners of premises adjacent to the apartment transferred to the non-residential fund. The registration procedure itself is not very complicated, but time-consuming due to the fact that officials can find fault with the shortcomings in documents, etc. p. We consider it necessary to consider it, since this procedure is one of the ways to acquire or acquire ownership of a commercial property. This process begins with an application. The law does not establish the form of an application for the transfer of premises (apartments) to the non-residential fund. But, in fact, it plays the role of a cover letter, which should contain the declaration of will and the list of attached title documents: - a certificate of registration of a citizen's right to a particular real estate object, which is issued by the regional body of the Federal Registration Service (a certified copy is attached); - technical passport of the premises and floor plan of the building in which it is located. These documents are ordered from the technical inventory authorities at the location of the apartment. To do this, you need to write an appropriate application and attach a document confirming payment for this service. In addition, a redevelopment project should be prepared in advance and all necessary permits should be collected. The interested person prepares the project of redevelopment and (or) reorganization of the premises independently. If the building is a monument of antiquity, a conclusion of the institution for the protection of monuments of architecture, history and culture on the admissibility of redevelopment and (or) reorganization will be required. It must be remembered that if an illegal (i.e., not properly executed) redevelopment was carried out in the premises before the acquisition, then the real owner, acquiring this premises, assumes responsibility for such redevelopment. If this fact is discovered, then he will have to pay a fine, as well as eliminate all alterations at his own expense or go to court with a lawsuit to recognize such redevelopment as legal. Chapter 1. Structure (segmentation) of the commercial real estate market 27 When the above conditions are met and the documents are prepared, they must be transferred to the local administration body that transfers residential premises to non-residential stock. In Moscow, the City Interdepartmental Commission for the Use of the Housing Fund transfers "from housing to non-residential", and accepts documents "one window" of the Department of Housing Policy and Housing Fund of the City of Moscow. The applicant must be issued a receipt indicating the date of receipt of the documents and their complete list. The decision on the transfer must be made within 45 days from the date of submission of documents. After receiving the act of transfer, you can begin to equip your office. The transfer is confirmed by the act of the acceptance committee, which is the basis for using the premises as non-residential. Possible reasons for denial of permission to transfer: - the required documents are not submitted; - the documents were not provided at the location of the apartment; - the premises do not meet the necessary criteria: most likely, a lack of technical feasibility of arranging an apartment for an office was found (impossibility of arranging a separate entrance, free access to communications, etc.); - the project of reconstruction and (or) redevelopment of the residential premises does not meet the requirements of the current legislation. When determining the class of an office building, there are some "pitfalls". The most significant of them were administrative barriers that arise at the stages of development and approval of the project: - approval is a long process, lasting about a year on average, during which the developer incurs significant material costs; 28 COMMERCIAL REAL ESTATE AS OBJECT OF INVESTMENT - lack of good transport accessibility - an office building located near a constantly busy traffic artery loses its competitive advantage; to solve this problem, the city authorities developed and began to implement programs for the reconstruction of existing and construction of new roads; - shortage of energy resources; - connection of communications to new real estate objects (not only offices) is a very laborious process, associated with certain difficulties, since urban engineering infrastructure facilities are in a rather worn out condition. Inability to attract an experienced management company. Due to the youth of the Russian commercial real estate market, the number of experienced management companies does not satisfy the entire volume of demand. For premises of the lower classes, the problem of redevelopment of premises allocated for offices, as well as the transfer of premises to another category, becomes relevant. For example, according to paragraph 2 of Art. 37 of the Town Planning Code of the Russian Federation "with respect to each territorial zone, the types of permitted use of land plots and capital construction facilities are established." Changes in the types of permitted use, as well as the transfer of premises to the category of non-residential, are carried out by decision of local authorities. One of the leaders in commercial real estate is retail real estate. As this market develops, the concepts of shopping centers are constantly becoming more complex. This is due to the fact that consumers in most cases prefer huge hypermarkets to small stores. Today, the buyer has a huge choice, he wants not only to buy goods, but also to enjoy shopping, as well as diversify his leisure time and purchase a number of additional services. This is the reason for the success of large multifunctional leisure and entertainment shopping centers. Developers, of course, are aware of this and come up with more and more new moves to attract consumers; as the market grows, competition between malls increases exponentially. This aspect affects the fact that it is shopping and entertainment centers that most of all need competent and professional management. A multifunctional shopping complex must have more than two operational purposes. At the same time, complexes of this kind, as a rule, have one main function. Much less often there are cases when the complex has functions that exist independently of each other. There are various interpretations of the way in which its components are combined in a multidisciplinary complex. All these classifications are currently theoretical and are not clearly fixed in Russian legislation. Trade and office complex. This is a complex in which the main function is trade, while a certain part of the area is reserved for offices. Such a combination seems to be neutral: these two functions exist parallel to each other, that is, they do not intersect. As a rule, this kind of shopping complex is created when developers and investors want to save money. Office and trade complexes differ from trade and office complexes in that their main direction is offices, and shops are opened on the first floors of such buildings, the main target audience of which is office employees. Shopping and entertainment complex. This type of diversified complexes appeared due to ever-increasing competition, due to which their owners are forced to reshape their original concept and expand the range of additional services. One way to attract visitors is to create an entertainment infrastructure. As a rule, these are food outlets - cafes, restaurants, bars, fast foods, as well as cinemas, indoor skating rinks, playgrounds for children, bowling alleys and fitness centers, beauty salons. 30 COMMERCIAL REAL ESTATE AS AN INVESTMENT OBJECT It is the presence of an entertainment function, according to experts, that significantly increases the competitiveness of the entire shopping center. Hotel and shopping complex. Such complexes are usually created at large and well-known hotels, and their target audience is the guests of these hotels. Specialization of the infrastructure of these complexes - pharmacies, beauty salons, fitness centers, clothing boutiques, restaurants. Specialized malls are very different from traditional malls. Their main functional purpose can be entertainment of visitors, discounts, household goods, lifestyle, etc. Advantages of multifunctional shopping malls: - an increase in the investment attractiveness of the project is achieved by neutralizing risks by investing funds simultaneously in various segments of commercial real estate; - the most efficient use of the land on which the complex is located; - bright prospects for the future - mixed type development; - in connection with the increase in competitiveness, multifunctionality becomes one of the main advantages; - complementarity of visitor flows; - Satisfaction of various needs of visitors. However, despite the above advantages, multifunctional shopping malls also have a number of disadvantages: - the need for more complex professional management; - the complexity of building operation; - the need for a clear and well-thought-out concept, otherwise a situation may arise when the functions interfere with each other; Chapter 1. Structure (segmentation) of the commercial real estate market 31 - there may be restrictions and encumbrances from the current legislation; - the complexity of financing the construction and operation of such complexes, as a rule, it is quite difficult to manage when financing such a project with one source. Options for combining various functional purposes of multidisciplinary centers are very diverse, and the key to the successful implementation of such projects and the functioning of the centers is a well-thought-out and planned concept. Warehouses, warehouses, and warehouse complexes are perhaps the youngest and most immature segment of the commercial real estate market in our country. However, due to the progressive development of the business, warehouse real estate is becoming more and more relevant. Renting a warehouse or its construction at this stage is becoming one of the primary tasks for many companies and individual entrepreneurs. The main problem of large multifunctional complexes is their occupancy. As a rule, organizations are placed in such complexes on the basis of a lease agreement. The owners of elite class real estate may have a problem with finding tenants who will strive for less elite and expensive premises. To solve the problem of securing relationships with users, the law offers several ways. Leasing. A financial lease agreement allows the parties to establish a long-term relationship. A real estate leasing contract is usually concluded for 5–7 years. It provides the owner of the property with stable rental payments, and the client - the necessary premises and the right to acquire them as a property. In addition, the parties to the agreement enjoy significant tax benefits, especially property tax, due to the accelerated depreciation of property. 32 COMMERCIAL REAL ESTATE AS OBJECT OF INVESTMENT Lease agreement with the right of subsequent purchase. It differs from the leasing described above in that the client does not indicate to the lessor which property is to be leased. In addition, the parties are deprived of tax benefits. At the same time, lease payments can be included in the redemption value of the property, while in case of leasing, the client has to pay not only rent, but also remuneration to the lessor. Mortgage loans are another way to earn money. Real estate, even if it is not occupied by tenants, retains its value. The owner not only gets the opportunity to diversify his activities by taking out a loan secured by an empty shopping complex for the construction of more sought-after facilities, but this scheme can serve as a way to sell unclaimed property at a higher price if its market price falls. When selling or buying any type of commercial real estate, the parties need to study some documents of the regulatory framework. State registration of rights to non-residential premises and transactions with them is regulated by regulations of various levels. In addition to the Constitution of the Russian Federation, it is necessary to name the Federal Law of July 21, 1997 No. 122-FZ “On State Registration of Rights to Real Estate and Transactions with It” (with the latest amendments and additions). It gives the concept of state registration, describes in detail and clearly the procedure, grounds for refusal and suspension of state registration, indicates the state body that currently performs this function, etc. No less important are the norms of the Civil Code of the Russian Federation, in particular Art. 131 (on the need for state registration of real rights to real estate), 164 "State registration of transactions", 223 "Moment of the acquisition of ownership by the acquirer under the contract", 433 "Moment of the conclusion of the contract", p. 4 tbsp. 218, etc. It is also necessary to note the Rules for maintaining a unified state register of rights to real estate Chapter 1. Structure (segmentation) of the commercial real estate market 33 property and transactions with it, approved by Decree of the Government of the Russian Federation of February 18, 1998 No. 219. Formation of a single practice state registration will serve to establish a civilized real estate market, will more fully protect and protect the rights and legitimate interests of citizens and other persons. 1.3. Stages of development of the commercial real estate market Speaking about the sphere of office real estate in our country, three stages of development of this segment can be distinguished. The first of these began in the mid-1990s. and continued until the default in 1998. It is characterized by the highest possible prices and a shortage of supply. The August crisis led to a decline in prices and rental rates by an average of 30-40%. As a result, many foreign investors and tenants left the Russian market. A year later, the situation stabilized, and the office market began to intensify largely due to the measures taken by the country's leadership, which ultimately led to economic recovery and GDP growth. The next stage, which lasted until 2008, began in 2000. It is characterized by a stable (and sometimes, as was the case in 2006, sharp) rise in prices and rental rates, continuously increasing activity of developers and investors, as well as a shortage of proposals in this segment 1. In the light of the events of the autumn of 2008, it is already possible to single out the fourth stage associated with the financial crisis. A decrease in the solvency of market participants will lead to the stagnation of the industry. The result of such events will be a drop in demand for real estate and, accordingly, prices for it. 1 Adapted from A. Tsogoev's book "How to Invest in Real Estate" (Alpina Business Books, 2007). 34 COMMERCIAL REAL ESTATE AS AN INVESTMENT OBJECT In 2009, the commercial real estate market should expect a decline in activity. In addition, the restructuring of market participants will be carried out. The period of post-crisis recovery in 2010–2012 can be predicted as the proposed fifth stage. It will be characterized not only by an increase in prices, but also by a surge in the activity of participants. At this time, new participants will appear on the market, who have come to replace those who left due to the crisis, and the reorganization of the former participants who survived it will be carried out. Chapter 2 Major players in the commercial real estate market 2.1. Developer "Developer" is a new concept for Russian business, and so far not everyone has an idea of ​​what development is, or their information about this phenomenon is incomplete and contains distortions. The term "developer" comes from the English develop - "improve", "develop". The purpose of development is the transformation of real estate in order to increase its value and, as a result, generate income. Developers most often work in real estate, both commercial and residential. A developer is a person (legal or, much less often, an individual) who organizes the process of creating real estate objects at all stages of the project or the reconstruction of an already finished building. His tasks include the development of a highly profitable and competitive project, the purchase or lease of a land plot, the construction of a facility, all contacts with builders, as well as the further sale of finished square meters (sale or lease). The main task of development is to find the most profitable options for using the available land, as well as buildings and structures. For the successful implementation of all the stages listed above, the developer must have a wide range of knowledge, skills, connections, as well as sufficient experience. Knowledge of legal issues is necessary for the competent drafting of agreements and contracts, as well as the execution of all related transactions. A developer cannot do without knowledge of marketing and management technologies. Financial skills are needed to conduct competent calculations, budgeting, obtaining loans, as well as, if necessary, reorienting the project and attracting additional investment resources. Knowledge in the field of construction technologies will allow you to make the right choice of the intended purpose of the property. In Russia, a situation has developed where almost all companies that call themselves developers have either grown out of former construction organizations or have grown from active realtors. In world practice, there are two types of development - fee-development and speculative development. Fee-development is characterized by the fact that the developer does not bear financial risks and receives a certain remuneration for his work - a fee. In such a situation, the developer does not invest his own funds in the project, but only acts on behalf of the customer and at his expense carries out the design, as well as the construction of the building and the commissioning of the facility. The developer's fee consists of two parts - a fixed fee and the so-called success fee, a bonus for successful and timely work. The fixed part of the remuneration for the developer is approximately 5-10% of the construction cost. The success fee is calculated according to a complex scheme and depends on many factors, in particular on how quickly the facility was built and how successful it was. Success fee is about 10-15% of the investor's profit; the size is determined in each case individually. In speculative development, the developer creates a real estate object, acting as the sole organizer of the project. With such a scheme, the financing of the project, i.e., the development of its financial scheme, additionally falls on his shoulders. It is not uncommon for a developer to invest his own money, and at the same time, his risks are much higher. However, it should be noted that in their pure form, such as they are given above, these two development schemes practically do not exist. As a rule, they resort to mixed financing, when the developer has a certain share in the project he is implementing and at the same time invests his part of the money. Development can be described as the process of managing an investment project, which, in turn, consists of several stages: - selection of a highly profitable project; - marketing research; - obtaining permits required for the implementation of the project; - development of a mechanism and conditions for attracting investment flows; - search and selection of construction organizations, control over their activities, financing. - implementation of the created real estate object, which includes the search for buyers or tenants, professional managers, etc. The developer profession itself differs significantly from others present in the real estate industry. It is more ambitious and covers several areas at once, since it is the developer who assumes all the risks associated with the implementation of the project. Very often they mix, and sometimes even substitute for each other such concepts as "developer", "investor" and, in fact, "developer". Many experts say that there are no developers in Russia in the traditional sense. Some categorically declare that they never will be. They explain this position by the actual absence of a free land market in our state, when the predominant right to land is rent, not property. Therefore, it can be argued that in the conditions of modern Russia, development begins only after the appearance of a free zone for development. It is the developers who decide the land issue. For example, in the capital, the most common ways to solve it are the following: - withdrawal of industrial enterprises from the city and the construction of real estate in their place; - participation in social programs, which often involve the reconstruction of entire neighborhoods; - conclusion of investment contracts with city authorities through auctions; - "repurchase" of such investment contracts from other persons (also calling themselves developers). A foreign developer, as a rule, acquires ownership of an already prepared land plot necessary for the implementation of a planned business project, and a domestic specialist is forced to deal with the land issue himself. This also involves obtaining various approvals necessary for conducting and connecting communications, which takes a huge amount of time and money resources. Before contacting investors, the developer needs to take a number of steps to develop and implement a strategy to raise funds for the project: - develop an investment strategy for the project; - analyze the possibility of attracting investment funds for the implementation of the plan; - develop a loan application for the bank; - ensure that all necessary negotiations are carried out with attracted financial institutions, as well as work out specific schemes for their participation in the project; - make a presentation of the project. Stages of development 1. At the pre-project stage, an analysis of the real estate market is carried out, a business project is developed to create a new property or reconstruct an existing one, then an investment analysis is carried out, and attraction of investment flows and, if necessary, credit funds begins. At this stage, the professional level of training of attracted specialists and their experience in this area is of great importance: the lack of qualified personnel at the initial stage can nullify all the efforts of developers. 2. At the design stage, as noted above, the solution of the land issue begins. In parallel with it, the process of collecting the necessary permits and approvals takes place. In addition, at this stage, the general contractor is selected, usually through a tender, and an architectural and engineering group is also formed. 3. At the stage of construction of a real estate object, coordination of construction work is carried out, as well as control over the quality of construction. 4. At the implementation stage, the sale (or leasing) of finished premises takes place directly, as well as control over the operation of the building. 40 COMMERCIAL REAL ESTATE AS OBJECT OF INVESTMENT 2.2. Investor Transformation of the socio-economic system of the Russian Federation in the 90s. The 20th century brought dramatic changes to the construction industry. The volume of construction work carried out at the expense of budgetary funds has significantly decreased, and in some regions has practically ceased. Accordingly, all investment investments in the field of capital construction, as a rule, are non-state, private, in nature. Today, construction is one of the most expensive types of economic activity that requires very large and long-term investments, therefore, the equity participation institution is widely used in residential and commercial construction. Previously, cooperative construction was extremely popular. It still occupies a certain niche, but at present, equity holders much more often prefer to consolidate their relationship through civil law contracts. The term "investor" in contrast to the concept of "developer" is contained in the current legislation. Thus, in July 1998, the Federal Law “On Investment Activities in the Russian Federation Carried out in the Form of Capital Investments” was adopted, which came into force in March 1999 (as amended on July 24, 2007). According to part 2 of Art. 4 of this law, “investors make capital investments in the territory of the Russian Federation using their own and (or) borrowed funds in accordance with the legislation of the Russian Federation. Investors can be individuals and legal entities, associations of legal entities created on the basis of a joint activity agreement and not having the status of a legal entity, state bodies, local governments, as well as foreign business entities. In accordance with this definition, investors can be: Chapter 2. The main players in the commercial real estate market 41 - legal entities; - individuals; - government departments; - local self-government bodies; - associations of legal entities that are created on the basis of a joint activity agreement and do not have the status of a legal entity; - foreign business entities. An investor can use both his own and attracted funds, as well as both at the same time, to implement his financial intentions. The main difference between a developer and an investor is that the investor, as a rule, only invests money in the project and as a result makes a profit, while the developer is engaged in the entire implementation of the project. By itself, the investor cannot exist in isolation from the investment activity. Investing is the process of investing material wealth (money) by investors in the activities of the investment organizer (in our case, the developer) in order to receive profit, material benefits in the future. Thus, we can say that for an investor, the purpose of participating in investing is to extract material benefits. In accordance with the provisions of Art. 1 of the Federal Law "On investment activities in the Russian Federation, carried out in the form of capital investments", investment activity is "investment and implementation of practical actions in order to make a profit and (or) achieve another beneficial effect." Investment activity, like any other type of entrepreneurial activity, has the features that are reflected in Art. 2 of the Civil Code of the Russian Federation. In particular, it states that “civil law regulates relations between persons engaged in entrepreneurial activity, or with their participation, based on the fact that entrepreneurial activity is an independent activity carried out at one's own risk, aimed at systematic receipt of profit from the use of property, the sale of goods, the performance of work or the provision of services by persons registered in this capacity in the manner prescribed by law. Construction investment contracts are always associated with the creation of a new property. It is in this connection that the investor is rightly called the initiator of the construction (along with the developer). In order to implement the investment project, an investment agreement is concluded, prerequisites are created for the possible conclusion of various agreements in the future: a loan agreement, a contract for the sale or lease of a land plot, an agreement for design and survey work, a construction contract, an agreement for participation in shared construction. In these circumstances, a new subject comes to the fore - the investor, who is immediately assigned a special role. On the one hand, it is a passive participant, since it does not perform the functions of a customer, developer, or contractor, on the other hand, it is a necessary participant, since it finances the construction of the facility. The investor does not even manage his money: for this, there is a developer who attracts the capital of various persons and is responsible to them for the implementation of a specific investment project. Depending on the amount of financial investments required for construction, the number of investors can vary from one or two to several tens, and sometimes hundreds. The following players can be distinguished on the commercial real estate investment market: - investment companies with foreign capital that prefer to operate under the sale-leaseback scheme, i.e. by buying out leased space at an agreed rate of return (we are talking about sale with subsequent lease); - Closed-end investment funds under the management of management companies; - financial and industrial groups that specialize in commercial real estate; - real estate agencies that consider residential real estate a priority and work with ready-made properties; - banks and other credit organizations that invest their funds in both commercial and residential real estate, but still give preference to commercial real estate. Often, banks choose for themselves one particular segment of real estate and work only in it. However, it is worth noting that investing in real estate is still not the main activity for such organizations. The main source of their income is lending, including to commercial real estate developers; - private investors, whose interest in the real estate market seems quite logical: real estate prices are growing rapidly (2006 is especially indicative in this regard), respectively, and investors' incomes are growing. In addition, this is perhaps the most reliable way to preserve and increase capital. After all, banks offer their customers much lower interest rates on deposits than investment in real estate provides. However, one should not forget about banking crises (the most significant took place in 1995, 1998, 2005) and the likelihood that the selected bank may go bankrupt. In this regard, real estate seems to be the most reliable source of income, which is confirmed by several factors, such as those listed below. 44 COMMERCIAL REAL ESTATE AS AN INVESTMENT 1. The real estate market is less affected by economic crises and currency fluctuations. For example, in the memorable 1998 the decline in prices for residential real estate occurred by about 30-40%, while the prices for the shares of various Russian companies fell two to three times. Thus, it is safe to say that investments in real estate are much more reliable than investments in the stock market or bank deposits. 2. The presence of real estate in their asset helps the owners to balance the investment portfolio. 3. Investments in real estate - a source of constant and stable income; moreover, real estate cannot disappear and in fact constantly increases in value. In the real estate market, the following types of investment can be distinguished, which are preferred by private investors: - acquisition of a property for the purpose of subsequent resale (typical for residential real estate); - purchase of real estate for the purpose of their subsequent lease (typical for both residential and commercial real estate); - investing at the construction stage of the facility (allows you to get the maximum possible income). However, investing in the construction of large retail, office and business centers for private investors does not yet look realistic. First of all, this is due to large amounts of cash. At the same time, some private investors sometimes have significant material resources, preferring to distribute them between objects of both commercial and residential real estate, thereby diversifying their risks and funds. Many investors have tested and become increasingly popular such a mechanism as a commercial mortgage, borrowed from foreign experience. The following scheme is applied here: a ready-made object is purchased for own money; then, having pledged this real estate, the investor takes a loan from the bank to invest the funds received in the next profitable property, and the income received from the lease of the mortgaged property goes to repay the debt to the bank. This process can continue indefinitely. It should only be taken into account that as long as the building (or part of it) is pledged to the bank, the owner cannot sell it - the sale is possible only after the loan is repaid. On the way to the implementation of the above scheme, the investor may encounter certain difficulties. In particular, stable ties with the bank are the key to success, because, in fact, mortgages for commercial real estate in our country have not yet been developed. In addition, a careful analysis of the terms of the loan is needed and the need to ensure that the receipt of rental payments from tenants coincides in time with the payments on the loan. However, the implementation of a commercial mortgage scheme seems to be very risky. The investor constantly has to service loans. If, God forbid, at least one tenant stops paying him, then the whole carefully planned chain may fall apart. Speaking about investing in commercial real estate, one cannot but touch upon the issue of interaction between the investor and the developer. Here, the issue of trust is of great importance, because it is the transparency of relations between these two persons that is the key to the successful implementation of the planned project, and also allows you to quickly resolve conflict situations and issues related to investment management. Investment analysis includes assessment and forecast of the cost of design, construction, finishing, services of specialists and consultants, as well as work on the development of various project budget scenarios. The business plan also consists of all kinds of analyzes and forecasts: legal analysis, financial, organizational, etc. In addition, the business plan includes the development of an optimal financial scheme and a scheme for optimizing taxation, creating legal opinion on the project, as well as all necessary agreements and contracts aimed at regulating the relationship of project participants. In general, the relationship between the developer and the investor begins already at the stage of developing a business project and investment analysis. It is in them that the obligations of the developer are stipulated, in particular, in terms of the payback period of the object, and for the investor - the terms and amounts of the receipt of funds necessary to start the construction process. The key to the successful implementation of a commercial real estate investment project lies in the combination of productive interaction between the main participants in the process and a clear distribution of responsibilities between them. While many developers are in need of funds to implement their projects, investors are often unable to find investment opportunities. In order to remedy the situation, it is necessary to create a high-quality information field, to "establish a bridge" between Russian developers and investors. Both should show readiness for dialogue, as well as for the development and proposal of investments. One of the main problems for developers is the search for financing at an early stage of a development project, when banks do not issue loans (too high risks), and there is not enough equity capital. In the West, this problem is solved by attracting direct investment by developers from companies that are ready to take high risks for the sake of high returns. In Russia, this method of financing has not yet been developed, and the reasons for this are as follows: - developers are secretive (they are afraid to show themselves and their projects); - lack of understanding by developers of the investor market (developers do not know specialized investors and their investment requirements); Chapter 2. Major players in the commercial real estate market 47 - low professional level of developers (they cannot present their projects properly); - overestimated expectations of developers (overestimate their role and share). - low marketing activity of investors (hidden site owners still do not know the majority of specialized investors). In order to unite investors and developers and try to eliminate the indicated reasons for their low interaction, today meetings are organized in the form of seminars, conferences and round tables. An increasing number of players are taking part in them, and this helps to increase the awareness of investors and developers about each other and strengthen the relationship between them. 2.3. General contractor, contractor and subcontractor Although developers and investors are the key players in the real estate market, contracting structures that are directly involved in the construction of a property are no less important. The overall success of the project depends on the quality of their work. A situation has become widespread when the choice of a general contractor is carried out through contract bidding, which is one of the forms of placing orders for construction, providing for the selection of a contractor to perform construction work on a competitive basis. Since May 1993, the Regulations on contract tenders in the Russian Federation have been in force in Russia, approved by order of the State Property Committee of the Russian Federation No. 660-r and Gosstroy of the Russian Federation No. 18–7, which “determines the general procedure and conditions for the preparation, organization, conduct, regulation REAL ESTATE AS A OBJECT OF INVESTMENT Bidding for the performance of the entire range of works and provision of services related to the construction of new, expansion, reconstruction and repair of existing facilities on the territory of the Russian Federation. It is stipulated that this provision is "mandatory when conducting contract tenders for placing orders for newly begun construction for federal state needs." In other cases, the customer himself can decide on the advisability of holding contract tenders. Over the past decade, in our state, a steady trend has developed in the construction real estate market to work with a general contractor, and not with many individual contracting structures. Of course, this creates certain advantages. For example, the functions of the general contractor include: - organization of the construction process of a real estate object; - performance of the work specified in the license, on its own, as well as by attracting subcontractors; - conclusion of subcontracts for the performance of certain types of work; - control over the progress of work performed under contracts and subcontracts; - labor protection of employees; - ensuring fire safety during construction and installation works; - registration of all necessary executive documentation; - putting the object into operation. How can a developer and investor not make a mistake in choosing a general contractor? The most significant criteria for the customer should be the quality of work, the timing and cost of their implementation. When discussing the cost of work, the developer should be wary of too low a price for the services of a contractor, as a rule, this indicates a low quality of work. The contractor's quick deadlines also do not always correspond to the declared quality, and often the customer has to postpone the opening of the facility only because a lot has to be completed. The customer needs to find out in advance whether the contractor has the necessary equipment and specialists. If not, what is the policy of this company to address this issue (there are established relations with subcontractors, or there are plans to purchase equipment on lease). In addition, when conducting tenders to select a contractor, it should be taken into account that, as a rule, in many tenders applicants for general contracting issue price proposals based on the concept of the future facility. In this case, a high degree of uncertainty allows applicants to offer completely different solutions that outwardly fit into the framework of the concept. The most experienced and responsible contractors lose in such tenders, as they take into account all the "pitfalls" in their proposals, which is reflected in the price. In this case, the Customer, having chosen the offer with the lowest price, during the implementation of the project is forced to leave the initial project that does not meet his expectations. The selection of contractors for participation in large projects is usually carried out in two stages (although there may be more). The first (preliminary or qualifying) selection assesses the ability of the organization to perform the work. This can be done according to the following criteria: - work experience: first of all, feedback from previous customers is evaluated; - readiness to perform this work: the organizational structure of the company, the availability of its own or attracted production facilities, qualified engineering staff, the current production management and quality control system are subject to assessment; 50 COMMERCIAL REAL ESTATE AS AN INVESTMENT OBJECT - availability and reasonableness of the contractor's work plan: the contractor provides the plan, technological sequence, description of problematic issues; - Reliability: assesses the current financial situation, availability of licenses and other documents confirming the right to conduct relevant activities, the absence of lawsuits for non-fulfillment of obligations, etc. Pre-selection is usually carried out in the early stages of the project, when there are no complete data for the final selection. At the second, final stage, when the project documentation is already ready and applicants can perform calculations with a sufficient degree of accuracy, such parameters as are compared in commercial proposals: - cost: the final cost can be compared only if the scope and scope of work are precisely defined; if not, the costs of individual positions are compared; - work completion time: this item is also of great importance, however, it must be taken into account that the work completion time depends not only on the contractor, but also on the fulfillment by the customer (investor, developer) of his obligations to provide a scope of work and agree on a number of issues; - technical parameters: this item becomes important if there are various options for solving technical issues, for example, the use of different materials, technologies and equipment; the proposal with the minimum price may not provide the best solution for the customer. It is the representatives of the general contractor who coordinate all work at the facility. In addition, when there is a general contractor at the facility, he clearly defines the procedure for conducting work and their timing, and when there are many contractors, there is always a risk of confusion and, as a result, conflict situations, which may ultimately lead to additional costs and losses. As the experience of recent years shows, more and more developers are realizing the benefits of having a general contractor and prefer to work with one large construction organization, rather than with several small ones, responsible only for their specific area of ​​work. In this case, they conclude one contract, and then only accept the finished object. Another important figure in the construction of a property is the general supplier. This is an organization that fulfills obligations under a construction contract to supply equipment and materials for a facility under construction. With the consent of the customer (developer), the general supplier may, if necessary, involve other companies as sub-suppliers of the necessary materials. But it is the general supplier who remains responsible to the customer for the fulfillment of obligations by sub-suppliers. For a long time, there was a situation where domestic construction companies considered housing construction as their main area of ​​activity, while only foreign companies showed interest in commercial and industrial real estate. However, recently the situation has begun to change, and the dominance of foreign contractors no longer looks so obvious in this real estate segment. However, as a result of recent changes in the economic situation in the world, housing construction is likely to again become a priority for domestic investors. Another distinguishing feature of the commercial real estate construction market is the presence of large construction holdings, which have their own general contracting organizations in their structure. As a rule, these are companies that previously specialized in housing construction. 52 COMMERCIAL REAL ESTATE AS OBJECT OF INVESTMENT 2.4. Management Company By and large, during the entire turbulent decade of development of the commercial real estate market, especially in Moscow and St. Petersburg, the issues of facility management in the traditional sense (a combination of technical operation with organizational and commercial maintenance) remained in the background. However, in extensively growing markets, qualitative development is in a certain sense secondary. The lack of supply a priori made almost any new project successful and highly profitable. It is clear that this did not require any special efforts to move the objects. In general, the main task of the commercial real estate market players was to increase the volume. As a result of the increase in the number of real estate objects, the inability of the owner to effectively manage it was revealed. In addition, in connection with the filling of the commercial real estate market in both Russian capitals and the establishment of a relative balance between supply and demand, there was a need for significant efforts to maintain the level of profitability of existing facilities and turn new ones into a profitable financial instrument. At the moment, due to the decrease in economic activity, a real war is already unfolding for the tenant of commercial real estate. Governance issues come to the fore. Now management business (property management) in the commercial real estate market is becoming more and more in demand. The number of properties that require professional and efficient management is growing, and property owners are increasingly turning to the services of professionals. It is they who will be able to achieve maximum profit for the owner, provide him with a full complex maintenance of the object, ensure the maintenance of detailed, clear, optimized accounting, tax and management accounting, and also guarantee the absence of conflicts of interest. Chapter 2. Main players in the commercial real estate market 53 The first professional companies in the field of commercial real estate management, independent of the owners, appeared in Russia in the mid-1990s. If in Moscow these were mainly subdivisions of well-known Western management companies, then in St. Petersburg mainly local firms worked. Turning to the management company (MC), the property owner seeks to achieve the following goals. Getting a high income. To achieve this goal, the Management Company performs the functions of establishing relations with tenants, maintains financial records, accompanies the contractual framework, etc. Maintaining the building in a technically sound condition. The management company usually takes care of the cleaning and maintenance of the property, as well as maintaining the networks in good condition. However, many experts believe that this function is not inherent in the Criminal Code and should be carried out by specialized organizations on the basis of a contract. Increase in the market value of the building. This goal is achieved not only by additional investment of funds of the management company in improvement, but also by the implementation of a specially developed program for the selection of tenants and the concept of development of the facility by the management company. The development and implementation of such concepts by the CMs are typical for objects used for trading purposes. Cost minimization. For the owner, this goal includes two aspects: minimizing the cost of owning a property and minimizing the cost of maintaining the management company. The management company, in turn, interested in generating income, will seek to shift its losses onto the tenant and other participants in the management process. Currently, the main share of the commercial real estate management market is occupied by Western companies, the largest of which are Hines and Sawatzky. But analysts tend to believe that Russian players have serious prospects in this market. Domestic realities impose their limitations on Western standards, so Russian players still have a field for activity, and in recent years the share of domestic companies in the commercial real estate market has been growing and crowding out Western firms. Western companies, as a rule, have extensive experience and high standards of property management, so many owners want to cooperate with them. Although their Russian counterparts are more adapted to local conditions and are increasingly adopting some Western management standards, they lack experience, work organization and a competent monitoring system. However, many experts believe that domestic companies will soon crowd out foreign firms in this market. The advantage of the Russian management company is not only knowledge of the realities of the market, but also an individual approach to each client. The consequence of this policy is the constant expansion of the range of services provided. The work of Western companies is distinguished by a conservative approach, they work exactly according to the instructions. The desire to foresee all situations and the trust in previously developed instructions is the other side of great experience. In addition, more than half of domestic management companies entered the market with their own assets, managing their own real estate. This provides them with the opportunity to acquire the necessary experience and at the same time ensures their financial stability. *** Management companies today are not only actively going to the regions, but also expanding their business, actively offering such non-traditional services as consulting and brokerage. By doing this, they invade the patrimony of traditional consulting companies, which are not yet very worried about this turn of events, either not considering the newly-minted brokers as serious competitors, or rightly believing that there is enough room for everyone in the growing market. Chapter 2. Major players in the commercial real estate market 55 Currently, management companies can offer a very wide range of services. Property management includes three components: technical (repair and engineering works), organizational (interior, security system development, organization of conferences) and commercial (renting out premises, development of repair estimates, utility bills). The main activities of the management company: - management activities: marketing, real estate services, development of a concept for the development of an object, drawing up an operation management plan, drawing up a business plan, budgeting a property; - consulting services: audit of economic and technical operation, analysis of adopted technical solutions, technical supervision during the construction process, participation in the work of acceptance committees, calculation of the cost of operating costs, legal advice; - operation of buildings: maintenance of building elements and engineering equipment in good condition, carrying out current and major repairs, modernization of obsolete engineering systems and equipment, security of the building and organization of access control and other related work; - cleaning services: cleaning of internal areas, adjacent territories, landscaping, cleaning of roofs, washing of facades and glazing, garbage and snow removal, marble crystallization. An example is the services provided by some MCs. 1. Maintenance of the construction phase. Control of the construction process, verification of documentation with the signing of acts of work performed. 56 COMMERCIAL REAL ESTATE AS A OBJECT OF INVESTMENT Preparation of reports on identified defects and deviations from the project before completion of works. Checking the availability of contracts and contracts for warranty service. Control over the timely elimination of defects and shortcomings. Participation in the working and state commissions. Conclusion of contracts with resource-supplying and contracting organizations. 2. Financial management. Conducting accounting and tax accounting of the company owner of the object in full. Preparation and submission of complete accounting and tax reporting to regulatory authorities. Issuing invoices to tenants for paying rent payments in accordance with lease agreements. Providing budgets, reports on costs, cash flows, income and expenses. 3. Administrative functions. Development of a program of planned and preventive maintenance of the facility. Carrying out regular inspections of the facility, preparing detailed reports. Management and control of the work of staff and subcontractors. Interaction with subcontractors. Interaction with city and federal authorities. Organization of the purchase and delivery of all necessary materials, tools and equipment. 4. Interaction with tenants. Monitoring the fulfillment by tenants of obligations under lease agreements. Chapter 2. Major players in the commercial real estate market 57 Development of rules for tenants. Responding to all requirements of tenants regarding the management and operation of the facility. Supervision of the organization of work on redevelopment of premises by tenants. 5. Maintenance of the property. Maintenance of heating, ventilation, air conditioning systems. Maintenance of automatic control systems, security and fire protection systems. Maintenance of electrical power and lighting systems, elevator facilities. Maintenance of water supply and sewerage network, structural parts of the building and roofing. Carrying out maintenance of engineering equipment. 24/7 emergency response. 6. Cleaning. Cleaning and maintenance of the property. Provision of all necessary consumables and equipment. Ensuring the availability of garbage containers and organizing the work of the garbage collection service. Washing facades and windows. Snow removal from the site. Landscaping of the property. Disposal of solid waste, fluorescent lamps. Landscape work. 7. Ensuring security. Provision and maintenance of security posts. Ensuring the operation of equipment for video surveillance and access control. Response and liquidation of consequences in case of emergencies. 58 COMMERCIAL REAL ESTATE AS AN INVESTMENT OBJECT Development of instructions on the actions of tenants in emergency situations. 8. Consulting services. Technical audit of design estimates for a facility under construction. Technical Supervision. Participation in the acceptance of the object into operation. Monitoring of engineering and technical systems and building equipment. Development of the concept of management and operation of the building. As we have already mentioned, many experts believe that the work of the management company will become more efficient if it does not lead individual areas in the process of real estate management, but the whole range of services for a long time, being fully responsible for the result of management. Based on this requirement, management companies seek to take over the process of renting out managed real estate, that is, engage in brokerage. Brokerage and consulting services are considered a necessary element of the MC's range of services. This is due to the fact that the goal of the management company is to increase the capitalization of the object in the long term and maintain the initial concept of the development of the object. The management company, whose income depends on the operating profit of the facility, will efficiently and efficiently select tenants and create the most comfortable working conditions for them. It is the management company that will develop the concept for the development of the facility, functional zoning and project documentation, taking into account the further efficient operation and management of the facility. On the other hand, there is an opinion that the participation of the management company in the process of inviting tenants should be limited. Of course, the management company should participate in the process of developing a standard lease agreement and annexes to it with a description of operating costs and utility bills, as well as negotiate with tenants. At the same time, she should interact with professional brokers, since the main problem of brokerage is the existence of established relationships with various categories of tenants. This issue is especially acute when leasing large shopping complexes that require large, “anchor” tenants, creating a high-quality concept, attracting these tenants, compiling the right tenant mix (selecting the right tenant mix at the facility) and developing a long-term strategy to increase profits from managed object. Only professional companies that have been operating in the brokerage market for a long time have such skills and connections. Further development of the idea of ​​preference for narrow specialists leads the management company to the practice of outsourcing. This is the way foreign CCs have gone. Usually, cleaning services, consulting and brokerage are outsourced, and the management company only exercises control over the activities of outsourcers. However, in Russia, the transition of management companies to outsourcing is not a matter of the very near future; Russian management companies are unlikely to use this scheme. It is unlikely that any of them will want to share profits by outsourcing to other companies. This means that competition is inevitable in the long run. The desire of management companies to close the whole cycle (from concept development and consulting to brokerage and facility management), their willingness to take responsibility for success or failure, deep knowledge of technical subtleties and extensive practical experience determine their advantages in the upcoming competition with each other and with more specialized companies. Here is a far from complete list of participants in the commercial real estate market. In the future, we will still draw your attention to his other players. However, there is a separate type of participants to whom we would like to pay closer attention. We are talking about management companies. In our opinion, the future of commercial real estate in our country is connected with them. 60 COMMERCIAL REAL ESTATE AS OBJECT OF INVESTMENT *** The most problematic for market participants is building stable relationships. The multiplicity of participants in the process of creating and operating real estate objects increases the risk of non-compliance with their obligations at each stage of the process. In a crisis situation, a guarantee that a partner will fulfill its obligations becomes especially valuable. Such a guarantee can be given by a single control center for all participants in the process. In organizational terms, this trend is realized in the form of holdings. In addition, there is the possibility of a merger of companies - market participants in the form of reorganization. But the reorganization takes considerable time and limits the economic opportunities of the parties. Participants that were previously separate firms become divisions of a larger company. In this case, the amount of material liability of the parties increases, the choice of participants in the relationship is limited. In the situation of creating a holding company, the merger procedure is limited only to the acquisition of a stake in the company. At the same time, the acquired company reserves the right to conclude business contracts with third parties and is not liable for the obligations of the parent organization. Below are the advantages of acquiring shares. Unlike the situation of reorganization, when buying a share in another company, it is not required to go through the approval procedure at the general meeting of shareholders, except in cases of major transactions. When acquiring shares, the participants in this transaction do not have to re-form the authorized capital, which is connected with the issues of additional issue and conversion of shares. When companies merge, their creditors receive the right to demand early repayment of debts of the reorganized companies. As a result, market participants quite simply and quickly acquire a coordination center that guarantees the fulfillment of contractual obligations by the parties. Chapter 3 The main stages of activity of market participants ... The main stages of activity of participants in the commercial real estate market 3.1. Construction: stages (design, obtaining a land plot) This book is devoted to the issue of buying and selling commercial real estate. But, speaking about the commercial real estate market, it should be pointed out that the stage of purchase and sale does not fully cover the scope of this market. Mention should be made of the stages of creating a commercial real estate object and managing an already acquired object. Further, some points of these stages and their impact on the process of buying and selling a commercial real estate object will be considered in more detail. We will now discuss these steps in general. According to the provisions of Chapter 6 of the Town Planning Code of the Russian Federation, the legislator distinguishes the following stages of construction: engineering surveys; architectural and construction design; state expertise of project documentation and engineering survey results; non-state examination of project documentation; issuance of building permits; construction implementation; construction control; state supervision; issuance of a permit for putting the facility into operation. However, these provisions primarily regulate the legal side of the technical procedure for erecting a structure. For an investor planning to build an office or retail building, the scope of legal and technical issues is much broader. 3.1.1. Stages, technical details 1. Solving the land issue In order to be able to build any real estate object, a land plot is required. However, its presence on any right (property, permanent (perpetual) use, lease) does not guarantee the absence of difficulties. If the situation with a full-fledged owner of a land plot is more or less clear, then with the legal status of legal entities owning land plots on the basis of the right of permanent (perpetual) use or lease, it is still not fully clarified. A permanent user of the land is practically deprived of the right to dispose of the land at his own discretion. He cannot sell, donate, pledge or otherwise dispose of it, nor can he assign the right of permanent (unlimited) use to another person. According to Art. 20 of the Land Code, the disposal of a land plot that is in permanent (unlimited) use of citizens or legal entities is not

• Types of commercial sites

- has long meant investing in a profitable business. The sale of commercial real estate is no exception in this sense and attracts hundreds of millions of rubles annually. It is commercial properties that are able to bring the greatest profit, however, investing in this type of real estate can be more risky than investing in housing.

What is commercial real estate

Investing in today's real estate market can be in a number of categories of objects. The main two areas are the housing market and the commercial real estate market. As for residential real estate, everything is simple here - these are apartments in new buildings and the secondary market, as well as individual houses. Investing in a home is simple, you just need to find the property you want on the market and buy it for resale or rental. The risks in the housing market are minimal and most of them are borne by the developer.

Investments in commercial sites, unlike investments in housing, have a lot of features. Firstly, there are much more commercial types of objects on the market, these are any sites that are used for commercial purposes. Secondly, commercial real estate can bring much more profit, since it often depends on the success of the business, and if the project is in demand, the commercial property brings a correspondingly high income. Thirdly, the market for commercial properties is more risky and, unlike housing, properties tend to quickly rise in price and fall in price, depending on market conditions. In a word, investing in real estate is a more difficult way to make money than investing in housing, but with the right approach, it can bring much more profit.

Types of commercial sites

Investments in commercial real estate in Russia can be made in many types of properties. The first type of commercial objects- These are shops and various trading platforms. According to experts, retail real estate in Russia today is one of the most profitable types of assets. If you find a free land plot and build a shopping complex on it, then renting out sites can bring huge profits. The owners of large shopping centers today are among the richest people in Russia. A trading platform with a favorable location and high demand brings thousands of rubles a month for each square meter, and just think about the area of ​​shopping malls being built today - you can imagine how much the owners of this business receive for rent. Renting out sites only requires the creation of an appropriate area, you don’t even need to worry about its improvement, as is the case with housing, the lease of which requires the purchase of furniture and equipment, repairs, etc.

The second type of commercial real estate These are office spaces. Investments in real estate in this category can also bring huge returns and offices with a favorable location are much more expensive than the corresponding housing. Renting space in office centers brings monthly income, so investment in commercial real estate today attracts a huge number of investors. Office real estate is inferior to commercial real estate in terms of profitability, but in some cases it can bring no less money. The main advantage of retail facilities over office facilities is, first of all, their scale. Of course, it is difficult to imagine an office center of the same area as large shopping malls, but in some cases they do occur and bring super profits to their owners in Russia.

The third type of commercial real estate- industrial facilities. These are warehouses, industrial facilities, sites of large enterprises. In terms of popularity, industrial real estate in Russia is inferior to residential, office and retail real estate, but it is still not difficult to find companies on the market that earn millions of rubles every month on this type of property. Leasing premises for enterprises, factories, and especially warehouses is also a very profitable way to earn money in Russia. Warehouse premises are in high demand today - both large retail chains and online stores are interested in leasing such facilities. Unlike office space, warehouse facilities are easier to prepare and renting out facilities takes less time and requires less investment.

Anton Murygin talks about the current situation with commercial real estate

Hotels, apartments, cafes, restaurants

In fact, today there are a huge number of types of commercial real estate. Rooms for rent are hotels, apartments with daily rent, cafes, restaurants, fitness clubs, entertainment centers and even social facilities. Even a medical center, swimming pool or airport can rent a room with a favorable location. Therefore, today an extremely popular type of income is the construction of sites for rent. Such sites can be created without preliminary design of the future purpose - if the object is located in the city center, then no matter what area, dimensions and level of arrangement it has, there will definitely be a buyer or tenant for it.

Ways to make money in commercial real estate

Today, there are a large number of opportunities to earn money on commercial facilities. You can invest in the construction of a site, invest in the purchase of a profitable area, buy out a share of a ready-made business, and even implement a more complicated project - build a site and open your own business on it.

The easiest option today is to buy a finished site, improve it and resell it. It can also be a long-term lease of commercial real estate. For the appropriate investment method, you need to find a property with a favorable location, negotiate its purchase, make repairs and redevelopment, if necessary, advertise the site and rent it out or sell it at a bargain price. For example, a large-scale shopping complex opened in a large microdistrict, and the investor discovered that there was an empty site next to it. The specialist understands that the opening of a shopping complex will lead to an increase in demand for sites nearby, because people who come to the main complex will be near this site and can pay attention to it. Here you can open a clothing store, a cafe, a restaurant or even apartments with daily rent. With such an investment, the main thing is to identify an object that can potentially be in high demand and invest money in it.

See a detailed strategy plan on how to make money on mini-offices.
Ivan specializes in commercial real estate, in particular mini-offices.
Also on abandoned sites, garages and others. In general, everything that can bring money 🙂 Ivan Sevostyanov will share his strategy for investing in commercial real estate.

The second type of investment in commercial real estate is the construction of a new site and either selling it or renting it out. This method is more expensive than the first, but more flexible. It allows you to create a site anywhere and clearly plan the area, dimensions of the room and other features of the site in advance. For example, a new residential complex is being built in one of the microdistricts of the city. The investor understands that soon people will move into apartments and there will be a high demand for many types of objects - supermarkets, cafes, restaurants, hairdressers, furniture stores, plumbing, etc. It remains only to build a site and wait until the houses begin to be occupied and the business becomes interested in a vacant site.

Invest right! Which type of commercial real estate is more profitable

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How to make money in real estate from scratch

The third type of investment is the creation of a commercial platform and the opening of a business. This is one of the most difficult ways to make money in real estate, however, and the most profitable. An investor finds a profitable place to open a business, for example, a trading one, buys or builds a site and opens a business. The meaning of such an investment is that you receive money through an active business, but at the same time you can sell the site at any time. If your property is in high demand, then in addition to your own business, the site can accommodate a number of other objects. That is why some investors create large sites on the territory of which several projects can be implemented at once.

And finally, the fourth type of investment in commercial facilities involves investing in a ready-made site, that is, buying out part of the business and making a profit from it. At first glance, this is the easiest type of investment in commercial properties, but in fact, the method has many of its own characteristics. First, the investor must find the most profitable object, for example, a shopping complex that is in high demand and receives a large profit by renting out premises. Secondly, the investor should buy out part of the business, and this requires not only a lot of money, but also the consent of other owners. Of course, no owner will be in a hurry to sell a part of a profitable business to anyone. You will either have to buy out part of the property at an inflated cost, the most beneficial for the owner, or offer some other special conditions. The larger the share of profitable business, the higher the profit. However, it should be noted that the investor must be 100% sure that the business will develop just as successfully. After all, if you invest in money in the site, and it becomes unprofitable, then your money will not bring profit.

Difficulties in investing in properties

According to experts, today in large cities with a high demand for commercial real estate, the cost of objects in 60-70% of cases is overstated. The fact is that no one is in a hurry to part with profitable properties, and therefore you should not be surprised even at fantastic prices for commercial properties, because sometimes owners set exorbitant prices on purpose, because they don’t want to sell an object at all. Usually inflated price tags are in cases where the demand for the site exceeds the supply on the market. This means that in this area, for example, square meters of office real estate, the demand is so high that a queue is built for real estate. This only goes to show that commercial properties are one of the most profitable assets on the market.

Undoubtedly, there are many types of real estate and investing in housing is more popular today, because such an investment is simpler and more understandable. Investments in commercial properties require knowledge of the market, trends, demand, but with all this they can bring in much more money than apartments. Today it is possible to invest in commercial real estate of various categories - these are warehouse, office, retail and many other sites. At the same time, you can invest in the relevant facilities in different ways - buy out a ready site, build a new one or invest in a ready-made business.

The most reliable, or at least one of the most reliable, then we can safely say that this is an investment in real estate.

Investing in real estate has always been a stable means of saving and increasing one's assets. This type of capital investment carries much less risk than investing in stocks or opening a deposit account in a bank.

Why is this happening? First of all, this is due to the fact that real estate in large cities is in regular demand and grows in price year by year. The larger the settlement, the more profitable it is to buy real estate. No one will dispute the fact that the liquidity of space in Moscow is much higher than in the same Tiksi.

It is clear that retail and other commercial real estate as an object is very good, but residential squares do not fade against this background. Apartments and houses cost less, and their placement can significantly increase liquidity. It is also necessary to take into account the degree of trust in the developer, the location of the house and the apartment layout. There is a great demand for 1-room apartments: they sell and rent better. However, let's start at the beginning and put everything in order.

Types and methods of investing in real estate

Of the majority of options that can be used to organize investments in real estate, almost every citizen of Russia can choose the most suitable one for himself. You need to focus, first of all, on the amount of savings and the expected income in relation to the predicted risks.

• Investment in residential real estate with its rental

This type is characterized by the least risks and simplicity. The whole algorithm of actions in this case will be clear to every person who does not even have a relationship with business: first you need to buy a living space, and then rent it out. Nothing complicated, as you can see. Of course, there are subtleties that must be taken into account even before purchasing an apartment. For example, which area to choose? How good should the layout be? Expensive repairs to plan or not? How to furnish an apartment, etc. However, the probability of making a big mistake and losing all the funds is very small.

The first unpleasant moment in this case of investment is the need for personal participation and control, since hiring a professional will be unprofitable. This is not so important, but you will have to find tenants, renovate the premises, take care of the furnishings, take rent and keep track of other little things. Another “pitfall” is that large investments in residential real estate can cause a certain difficulty: you can deal with two or three apartments, but there is simply not enough time and coordination for more.

One of the types of investments in residential real estate is the registration of a mortgage. This method of acquiring an apartment still retains its attractiveness. Although it also has its drawbacks.

And there are two positive points here: a significantly smaller contribution amount will be required, and a competent approach will provide a more significant profit. But at the same time, the investor must be more qualified: you need to choose an apartment, a loan from a bank, a reserve, choose an interest rate, and so on, which will require certain experience or knowledge. However, there are more risks here, it will not suit someone who does not recognize loans.

Investing in residential real estate requires the following points to be considered:

1. It is more profitable to acquire projects with a development perspective: having an unusual architecture, good implementation, infrastructure support, etc. But not only this is appreciated, but the apartment itself: a room can have an excellent layout, but an unfortunate view from the window.
2. Of course, it is better to invest in facilities located near the metro, train station and other transport routes. This is especially important when you plan to buy an elite class apartment.

• Investment in real estate under construction

This method of investment is very profitable, since the costs of buying such a property are relatively small.

In practice, this method is implemented as follows: real estate is bought (or taken on credit), after a certain period of time, construction ends, property prices rise, and there is a tangible benefit.

But it also has its risks, where without them. One of these disadvantages is that there is a possibility of a crisis situation, which is why construction is not completed, and the other is that income must be expected for a specific period.

Therefore, for a guaranteed income from investing funds, it is necessary to take the selection of an object with sufficient seriousness. First of all, you should pay attention to the reputation of the developer company: take into account the period of its existence on the market, the number of successfully built objects, the quality of objects, etc.

It is most profitable to combine different ways of investing in real estate: in a house under construction, after completion - to rent an apartment, and after a few years (5-15) to sell profitably, in accordance with market prices. This option will be the most effective.

• Investment in commercial real estate

Investments in commercial real estate are good for their ability to delegate authority in management and hire specialists for full or partial management of real estate.

This refers to the possibility of using electricians, plumbers and other technical personnel, and in the case of large and / or several objects, the services of a management company that performs all the tasks of maintaining real estate.

This will help, at least partially, to relieve yourself of the worries of renting it out, carrying out repairs, accepting rent and other worries.

Of course, the work of all employees must be controlled, but still it is better than the independent performance of these functions.

In addition, commercial real estate as an investment object is much more profitable than investment in residential real estate. The main disadvantage here is that such investments require initially a lot of capital, but it will pay off many times over.

• Strategies for investing in new buildings and new housing:
• Investments in commercial real estate
• Hospitality, Aggressive Housing Investment Strategies + Daily Rental Business
• Strategies for investing in land + strategies with your own land
• Strategies with finished real estate (on the secondary market)
• Personal equity real estate investment strategies not listed elsewhere
• All real estate investment strategies in one mind map
• The best real estate investment strategy in 2019

Investing in real estate is perhaps one of the most reliable options for accumulating capital and generating cash flow. Have you ever wondered why there are so many billionaires on the Forbes list who do it?

Investing in real estate is not a game, not Forex and not trading on the stock exchange, rental income is predictable. And thanks to inflation, the cost of buildings is growing, even despite the small drawdowns during the crisis, which always win back.

Strategies for investing in new buildings and new housing:

• new buildings for resale;

• new buildings for rent;

• investments in studios and apartments (a very economical format plus liquid housing);

• other strategies for investing in shared construction (ground floor and transfer to non-residential, etc.);

• investment in townhouses;

• investing in prefabricated modular houses.

Undoubtedly, the most interesting projects are being implemented in Moscow, the Moscow region and in large cities, where the cost of rent is quite high, and there is a constant demand for housing in various segments. This does not prevent investors from other cities from finding objects, partners and co-investors and coming to live meetings. Although, in fairness, it must be said that in the regions we have enough cases with a yield of 50 to 100% per annum.

Investments in commercial real estate

They mean:

• purchase of finished commercial real estate with subsequent leasing;
• construction of commercial real estate for resale and subsequent delivery;
• investing in coworking centers;
• leasing of workplaces, mini-offices and meeting rooms.

Hospitality, Aggressive Housing Investment Strategies + Daily Rental Business

Despite the fact that the rental business is quite simple in terms of organization, especially if it is a long-term deal with the conclusion of contracts with tenants from six months, there are segments that require a lot of inclusion for real estate management. We are talking about aggressive strategies that give the investor the maximum profit per square meter. But at the same time, they assume full inclusion in the process.

If you pass by this method, then the difficulty will increase in proportion to the number of clients with whom you have to deal. Here is a list of the most popular aggressive investment strategies:

1. Rental business: rent monthly, rent by the day (minimum investment)
2. Property management; how to rent an apartment?
3. Hostel and mini-hotel (by the day, by beds, in the center and near tourist places)
4. Organization of an anti-cafe, or how to rent real estate by the minute (the visitor pays for time, not for food)
5. Renting apartments for long-term sublease
6. Organization of hostels for workers
7. Antidormitory (a new format of comfortable housing for workers)
8. capsule hotel

Strategies for investing in land + strategies with your own land

1. Investment in housing construction, with a view to resale
2. Construction of low-rise apartment buildings with subsequent leasing
3. Installation of houses from containers on your own or rented plot
4. new 3 strategies for making money in summer cottages
5. Construction of apartment buildings for the purpose of selling shares (apartments): be careful! Illegal!
6. Land investment, buying shares, allocating the best plot and reselling many times more expensive (buy land, it is no longer produced)
7. Investing in plots from 12 acres, surveying into 3 parts of 3.5-4 acres with further sale, or building a budget house 80-100m2 from SIP panels

Strategies with finished real estate (on the secondary market)

1. Buying an apartment house or townhouse with subsequent leasing (recommended)
2. Buying a ready-made apartment on the secondary market, sawing and renting out
3. Homestaging. Buying a dead apartment, inexpensive, but cool repair using special technology and subsequent sale
4. Buying rooms and renting them by the day
5. Lifetime rent (3-5 apartments with a monthly payment of 10 thousand each and with the transfer of ownership)
6. Lifetime maintenance with a dependent (not recommended, ethical point, plus high risks)
7. Resettlement of communal apartments with the subsequent sale of a large apartment or the creation of a mini-hotel
8. Investing in real estate without money

Personal equity real estate investment strategies not listed elsewhere

1. Purchase of property from mortgage auctions of banks and bailiffs
2. Urgent purchase of apartments at a lower cost (20-30% below the market)
3. Transfer of an apartment on the ground floor to a non-residential fund
4. Investing in garages
5. Investments abroad (US tax certificates, solar energy, etc.)

All real estate investment strategies in one mind map

Click on the picture to go to the map: 35 examples of real estate investing

The best real estate investment strategy in 2019

Of course, each investor will find his own investment strategy. There are many options, as you can see. A the second most popular strategy was the daily rental of real estate, because does not require large investments to start, besides, it is easy to implement. In 2019, the majority of investors in our project chose investing in tenement houses, since this strategy has shown ultra-high profitability, plus in some cases it can be implemented even without your own money.