PRESIDENT OF SHEN HOLDING: THE CURRENT REAL ESTATE MARKET DICTATES THE NEED FOR NEW IDEAS – INEXPENSIVE “TURNKEY” APARTMENTS
ARMINFO
Monday, April 29, 08:55
The current real estate market dictates the need for new ideas –
inexpensive “turnkey” apartments, President of Shen Holding Samvel
Beglaryan told ArmInfo when asked to comment on continuing stagnation
in Armenia’s construction sector.
He explains that the market is glutted with high-class apartment
houses, built for Diaspora Armenians, but, in his opinion, the age
of luxury housing has come to an end, and now it is the time of
inexpensive comfortable flats. “However, to build them you need
advanced construction technologies and know-how,” he said.
Beglaryan believes that the Armenian Government might stop the growing
imbalance on the real estate market by offering people affordable
housing opportunities. “They could do it in different ways: they could
provide people with either free building plots or long-term mortgage
lending options, like, say, a twenty-year low-interest loan,” he said.
According to Beglaryan, the cost of a housing construction project
depends not only on the price of the construction materials it applies
but also on the degree of its earthquake resistance. “Being earthquake
resistant does not always mean being expensive and bulky – made of
tufa and armature. Present-day construction applies technologies
that can make houses light and cheap. One such technology is the use
of concrete blocks containing expanded perlite. I hope some day our
architects will give this material its due,” Beglaryan said.
He believes that socially-oriented housing construction can spur
demand for building materials within specific price brackets and
encourage local manufacturers to boost own production and import
substitution. This will also prevent the negative impacts currency
shifts are currently having on local construction material prices. “In
any case, we need to find a good way to reduce construction costs.
Only companies with cost-saving and efficient construction policies
will be able to succeed on the market,” Beglaryan said.
According to Shen Holding’s specialists, one square meter of “turnkey”
housing (with full repairs and kitchen furniture) in an apartment
house will cost to potential clients $1,000. “This is a unique offer,
the most affordable price you can find on the local real estate market
today,” Beglaryan said.
The National Statistical Service of Armenia reports that in 2009
construction activities in Armenia slumped by 36.4%. That year
housing construction was down 20%. In 2012 it almost halved, while
construction materials production dropped by 7.6%. In 2008-2012 cement
and gaja production kept declining from 769,800 tons to 437,600 tons
for cement and from 46,000 tons to 30,400 tons for gaja.
In Yerevan the average price of a 50-kg sack of cement grew by
14.6% to 2,825 AMD, while the price of gaja fell by 2.1% to 2,160
AMD. In the meantime, the average price of mostly imported paint and
lacquer materials soared: the price of oil paint by 80%, the price
of water-based paint by 44.5% to 1,818 AMD, that of floor varnish by
40.9% to 2,090 AMD.
Shen Holding dates back to 1970 when the largest enterprise for state
supplies of non-ferrous metals (“HayGunMet”) was established. In
1995, the latter was privatized and transformed into Shen Concern
CJSC. Having merged with “Huntsman Building Products” LLC and “Shen
Group” CJSC,Shen Concern was converted into Shen. Prior to 1999,
Shen Holding was into importing and selling construction materials.
Thereafter, the management made a strategic decision to develop
Armenian manufacturing, to contribute to the development of the
domestic labor market. As a result, the company established the first
production facility of its own, and is nowadays a major manufacturer
of construction materials in the Republic of Armenia.
In 1999, the company established the first plant to produce
dry mixtures in Armenia. In 2000, the plant to produce paints
and varnishes was commissioned; it was designed to manufacture
environmentally friendly construction paints in conformity with
international standards. In 2003, Shen Concern was granted a license
by the Ministry of Economy to operate a gypsum mine, and in 2010,
overburden removal on the mine started. In 2005, Shen Concern CJSC
built and commissioned a new facility to produce concrete blocks
for industrial and household purposes. In the meantime, other
production facilities were upgraded and enlarged. In 2007 and 2009,
respectively, Shen Concern commissioned Shen Textile and Shen Decor
stores to sell imported goods for interior furnishing from leading
European manufacturers. In 2008, Shen Concern launched construction and
renovation works using both imported materials and the ones of its own
production. In 2008, Shen Concern also started the implementation of
architecture and design projects. Since 2012, the company has added a
real estate agency to the long inventory of its activities. To-date,
Shen Holding has created over 500 jobs.