KONTI: WE ARE A FULL-Cycle Company.

KONTI: WE ARE full service company

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Vyacheslav Timerbulatov, Vice President of the KONTI Group of Companies
AZ:The KONTI Group of Companies was one of the main ideologists of the development of the New Moscow Ring program. Could you tell us more about the current state of affairs in implementing this program?
 Vyacheslav Timerbulatov: Indeed, the idea of constructing high-rise buildings came to us back in 1994. As a result, in the period from 1995-1996, at our request, the General Plan Research Institute conducted research work to determine the most suitable construction sites for residential high-rise buildings from the point of view of the visual landscape factor. As a result, on the initiative of the Konti Corporation, the City Comprehensive Investment Program «New Ring of Moscow» was prepared, which in 1999 received municipal status. The program provides for the construction of a series of «about 60» high-rise multifunctional residential complexes in the central and peripheral belt of Moscow. In 2005, we commissioned the first high-rise residential complex «Edelweiss» on Kutuzovsky Prospekt built within the program. This year, within the program, it is planned to put 13 new sites up for auction; in total, 200 multifunctional high-rise complexes should be built by 2015; investors have also been identified for three new projects.
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Residential complex “Continental”
Construction of high-rise buildings in the capital is simply necessary today, since the city can no longer expand in width, one of the exits is to grow upward. At the same time, it is profitable for developers to build objects with a large functional area on the land they receive. The «output» of housing from one square meter in a high-rise complex is incomparable with any other construction. Nevertheless, the «New Ring of Moscow» program, in my opinion, is being implemented somewhat slower than planned. This is due to the fact that when putting sites up for auction, some inaccuracies are allowed, caused by poor elaboration of the tender documentation. Usually, issues of utility networks, communications, geodetic bases are poorly studied, which entails additional costs on the part of the investor. Moreover, the plots of land intended for development are not very well located, and their cost is quite high. Due to poor documentation, the period of development of the site increases significantly, and accordingly, the investment attractiveness decreases.
AZ:What high-rise buildings have already been built by KONTI? In which segment of the construction market does the construction of high-rise buildings seem to be the most profitable: residential real estate or commercial properties?
 Vyacheslav Timerbulatov: In 2005, we completed the construction of the Edelweiss residential complex on Kutuzovsky Prospekt. Now the Konti Group of Companies is building the Continental complex of variable height on Marshal Zhukov Prospekt (4 x 20 x 24 x 48). Each of these buildings is a multifunctional complex that includes, in addition to residential and office space, shops, gyms, restaurants, medical centers and other infrastructure facilities. Initially, the program provided for the construction of only residential buildings, but the construction of commercial real estate is also quite promising. A residential high-rise building pays for itself much faster than office and commercial real estate. According to our calculations, its payback period is three years from the start of construction. The profit margin is 15-20%. As for office and hotel complexes, they can be built by companies with experience in managing such facilities, since the funds from the implementation of such projects pay for themselves within 10-15 years. AZ: Does KONTI handle engineering contracts for heating, ventilation, air conditioning systems and their automation on its own or do you involve third-party organizations? Can you name the companies with whom you have established partnerships? 
 Vyacheslav Timerbulatov: The Konti Group of Companies is a full-cycle construction company, so we have both designers and our own general contractor. Nevertheless, we often involve contractors in engineering work. 
 AZ: How is the operation service organized at KONTI facilities? In your opinion, is the operation of a high-rise building any different from the operation of an ordinary facility? 
 Vyacheslav Timerbulatov: Operation of a high-rise building is significantly different from servicing an ordinary house: completely different operating standards for engineering support and building structures that are at a great height. There is extensive design documentation on the technical operation of high-rise buildings, since these structures belong to the first category and are designed according to special SNI — Paam. High-rise buildings are autonomous multifunctional complexes, so they are equipped with super-powerful diesel generators. For a skyscraper to function, special equipment is required, such as additional pumps that maintain water pressure at a great height. Due to this, water pipes are laid directly, without the use of storage tanks. Special air conditioning and ventilation systems for the building are required. All high-rise buildings must be equipped with automated fire safety systems. This is not only extinguishing, but also responding to a fire anywhere in the building. Information from the sensors goes to the automated control panel, where an operative is on duty. The system responds to the slightest change in temperature. When selecting an elevator system, the height of the building, the area of the floors, the maximum number of passengers, the number of residents/employees in the building, and the expected number of elevators in the building are taken into account. Both the elevator shafts and the cabins themselves are fire-resistant. An autonomous power system is provided, which eliminates the possibility that the elevators will be blocked. In the event of a central power supply failure, the facility's systems switch to backup power. This means that the elevators will continue to operate as usual for three to four hours, and the residents' apartments will have water and electricity. All this places additional restrictions on the operating service. 
 АЗ: How can the height affect the increase in costs associated with the operation of the building? Has your company conducted economic studies of the feasibility of constructing high-rise buildings for an investor/developer depending on the height of the facility? Vyacheslav Timerbulatov: The increase in the cost of constructing a high-rise building occurs due to the costs of complex engineering and is approximately 1.5-2 thousand dollars per sq. m. The design features of high-rise buildings require the installation of a special water supply, sewerage, and air conditioning system. When constructing such houses, complex engineering is provided, duplicate communications are required, a technical floor dividing the building into two parts. The condition of the soil under the designed house is of particular importance, since thorough geological studies are carried out. This additionally affects the increase in costs. Skyscrapers, as a rule, are «smart houses». Accordingly, expensive systems are installed in these buildings that collect information about the state of all internal networks, all processes occurring in the house. In high-rise residential complexes there is software that allows you to promptly monitor all this. Accordingly, all this in turn is reflected in the cost of operating the building. 
<IMG height=359 src=»/konti 1.jpg» width=248 border=0> Residential complex «Edelweiss»
AZ:What is holding back the development of construction in Moscow today? What are the reasons and what are the solutions?
 Vyacheslav Timerbulatov: One of the main problems today is the lack of construction sites without serious encumbrances. The development of new sites is associated with the reconstruction or demolition of dilapidated buildings, the withdrawal of industrial enterprises, modernization or laying of new utility networks. All this requires the use of new technologies and large financial investments. Among the significant problems of the construction market, one can also highlight the monopolization of the construction materials market. The presence of administrative barriers leads to a significant increase in the terms of project implementation. For the overwhelming majority of objects, this period is currently 3-4 years. And an increase in the implementation period leads to a decrease in capital turnover, which significantly affects the cost. Individually, they do not have a significant impact on the cost price, but their combined size often forces one to abandon the implementation of a particular project. To partially solve the existing problems, serious support from the capital's administration is needed for investors-developers: perhaps by reducing the tax burden on construction companies, increasing the transparency of the bureaucratic system associated with the allocation of land for development and the approval of construction documentation. AZ: Which cities, in your opinion, are the most attractive for construction?
 Vyacheslav Timerbulatov: Today, commercial real estate is most in demand in the regions, the return on investment in which can reach 50%, depending on the success of the project. The return on investment in residential real estate is only about 10-15%. As for the most investment-attractive regions, in our opinion, these are St. Petersburg, cities on the Black Sea coast, Kaliningrad.

KONTI: WE are a full-cycle company.

KONTI: WE ARE A FULL-Cycle Company.

KONTI: WE ARE full service company