In the last few years, the Cyprus economy has surprised many people. Back in 2011-2013, the situation in treasury, industry, and business of the country was poor. Some European functionaries even dared to compare them to a bankrupt casino.
However, the country’s leadership and business community have since managed to change a lot for the better. Subsequently, despite severe problems in the service sector due to the covid pandemic, Cyprus managed to finish 2021 with very positive results, including an overall economic growth of 5.5%. Partly the effect of an undervalued base after a difficult 2020, but in any case, the numbers are impressive.
This year, given the sharply increased geopolitical instability, Cyprus is doing well. In the summer, the central bank of the republic slightly lowered the ambitiousness of the forecast figures, reducing the bar of expected economic growth from 3.6 to 2.7%, raising the level of expected inflation to 7%. Staying in the positive zone under the current circumstances, however, is a definite victory. It is worth remembering the improvements in the labor market, where unemployment rates have been dropping, albeit slowly, from 7.5% twelve months earlier to 6.9% at year’s end.
However, several segments in the economic potential could significantly improve the situation in the country as a whole, boosting growth. So far, though, this has not been done for several reasons. One of them is the already mentioned service sector, which has still not recovered from the consequences of the lockout before last year, and is now suffering from a decrease in tourist flows.
The problems in the service sector are understandable, however. These issues can be considered transitory because sooner or later, the situation in Europe will stabilize, and new popular resorts will be able to lure tourists in. The apparent stagnation in the construction sector looks like a much more complicated problem with non-obvious reasons. The total construction volume in the country over the first quarter of the year fell by 6.4% compared to the same period last year. The index of real estate prices also fell, though many expected that, if not a rebound after the previous years, then there would at least be a sense of stabilization.
if the country has managed to restart entire industries in recent years to resume economic growth, perhaps it’s time to rethink the politics of the real estate development market. A reference to foreign experience may be handy. They were able to find materials from Russia, clearly illustrating that, even in difficult unfamiliar economic circumstances, and without the support of the state, the construction business can organize itself to ensure steady growth, an attractive product for the buyer, and decent tax deductions for local administrations. We suggest studying them more closely.
Creators of Mini-Revolutions
As a model, let’s look at the Euroinvest holding company based in St. Petersburg. It is headed by Andrey Berezin, an entrepreneur whose business career is equal in length to the entire history of the free market in Russia. He went into business at the very beginning of the 90s, giving up his career as a scientist and designer. During the first years, he actively engaged in trade, closing vacant niches by supplying imported products and goods. Later, when the startup capital and experience had already been accumulated, together with his crucial partner Yuri Vasiliev, he moved to development, where he managed to make several mini revolutions.
The first of these revolutions concerned the consumer qualities of the apartments offered. Berezin was one of the first developers to offer Russians Euro-format housing: open living rooms, a sufficient number of bathrooms, and utility rooms. At first, few people believed that this novelty would find enough buyers, but very soon, the euro apartments began to sell in notably high numbers.
A much more significant change was initiated by the creators of Euroinvest in terms of determining housing location. For dozens of years, developers in St. Petersburg, as well as in Moscow and other major cities in the country, tried to build housing projects into the existing block network, compacting it. Although, for all its advantages, this infill development had apparent disadvantages, mainly because it began to irritate the citizens.
Under these conditions, Berezin and Vasiliev were the ones who managed to lead the industry out of the impasse. They turned their attention to the closest suburbs of St. Petersburg, where they were able to buy up vast amounts of land from the previous owners: farmers, shareholders of bankrupt farms. Once the land is in their hands, they could build on it for many years, little by little expanding the plot of land. Euroinvest thought otherwise, opening the project for other developers to ensure the simultaneous construction of housing, social facilities, and engineering infrastructure.
Consequently, the settlements of Kudrovo and Murino, which grew on the site of the fields bought out by Berezin, happily avoided the fate of many districts of new buildings on the outskirts of the city, being a dull and unattractive backwater for citizens who could not earn money for more exciting housing.
Both Kudrovo and Murino have already obtained the status of towns and are even the fastest growing in the country. A significant charge of local patriotism distinguishes their residents. According to many surveys, people consider their places of residence the best possible.
Even today, Euroinvest actively works on developing the territory of both towns. Last year, the urban planning council of the Leningrad region approved the concept of expanding the built-up area in South Murino. The new project is given almost 400 hectares, and its development is expected to become a model for urban planning. In particular, both building density and height will be strictly limited here; the houses will occupy not more than a fifth of the whole area, and at the same time, none of the residential buildings will be higher than 12 floors.
At the same time, Berezin’s holding continues to work within the framework of the former principle: quality is more important than quantity. The co-owner of Euroinvest emphasized this in a recent interview: “There is no doubt that we have land for construction, and we even have plots with construction permits. But right now, we are not positioning ourselves as landowners. On the contrary, we have a lot of projects where we buy land or negotiate some equity terms with the owners. When we go to landowners, they understand that we can offer better terms because we build of high quality and our prices for apartments are higher than those of our competitors. But despite this, sales are faster. The reason is that almost all of our houses are always delivered before the deadline. This position allows us to keep our prices and to develop further. And everyone sees it! At the moment, we are not looking to inflate the development business. We could have launched projects on our lands, but we did not do that.”
Unification Through a Club
Perhaps the worthiest innovation of consideration as a model for Cypriot development is the new approach proposed by Euroinvest to the concept of residential space.
We are talking about the approach the company has denoted by the formula 3id. It includes the most active use of modern technologies, including those in the category of smart homes, the closest approximation of all the services on the territory of the residential complex to the user’s smartphone.
However, its most crucial element is the attitude to the objects being sold. Under 3id, the company does not just sell apartments with a certain amount of square footage inside a high-rise. Instead, buyers are guaranteed quality and comfort of living in the residential complex, not only in the apartment walls but, on the contrary, the developer working explicitly to ensure that people spend as much time as possible in the public spaces.
Such spaces in every complex built within the 3id invariably have a lot, both in the open air and under the roof. These include green areas and complex, multi-component playgrounds. Inside the buildings are play areas for children, movie theaters, and adult restrooms. In some LCDs, even the rooftops are made as social spaces.
But that’s not all. To fill these public spaces with real life, Euroinvest started a particular leisure club program. According to it, each buyer of housing gets access to a closed club for the company members who organize regular activities: master classes, screenings, and lectures in TED format. Along with all of this, they also offer a wide range of discounts on goods and especially services provided in the residential complex, from hairdressers and beauty salons to children’s clubs.
Results of Euroinvest Holding’s work in the development market:
- 28 years in the market of integrated development of territories and land plots
- 700ha of land plots owned by the group
- Over 400 thousand m2 of real estate in design and construction
- 0 commissioning delays for projects
- No more than two years from the moment of the project’s commissioning to the handover of the keys
The Initiative in the Social Field
Special mention should be made of the social mission. In Russia, as it is commonly believed, business does not often seek to implement social, charitable, or environmental projects. Instead, entrepreneurs support the government’s relevant initiatives as not to look alienated, but they do not take the industry themselves too actively.
Some companies, including the same Euroinvest, have chosen a different tactic to help the state implement its projects and deploy their own. In the case of Berezin’s holding, the majority stake is in education. As Berezin himself admitted publicly some years ago, the company faced severe staffing problems; that experience pushed him to work in the direction of supporting intellectual potential.
Euroinvest not only builds new schools and kindergartens at the request of local administrations, but also helps improve the quality of education in existing ones. Most recently, the company has equipped a gymnasium in Gatchina with new furniture made within the framework of modern health-saving technologies.
In addition, serious investments are made in initiatives to support talented children and young people. In this area, Berezin’s holding works in partnership by helping to carry out educational activities to a mathematical fund named after L. Euler, and independently, through awarding its scholarship to the best students and graduate students.
The last step of the company in this direction has struck many with its boldness; it is about the announced plans to build its educational institution for gifted children. Berezin said he would finance the construction of the future governor’s lyceum in St. Petersburg and help select the staff and pay salaries. The place for construction has already been chosen: the picturesque shores of one of the local lakes. The campus will include several buildings for education, creativity, and sports. In addition, there will be living quarters placed for students because the academy is planned to run in a boarding house format.
In conclusion, we would like to underline that, of course, there are a lot of developers in Cyprus who actively use modern technologies in construction, very competently zoning the living spaces and at the same time consistently implement their social mission. But the approaches used by Euroinvest and its managers have proven to be effective in the relatively harsh conditions of the Russian economy. These are, therefore, worthy of the most scrutiny. It is quite possible that having borrowed some of the innovations Berezin and his colleagues applied, the country will be able to give a long-awaited boost to the development of its construction sector.
Background Information
Andrey Berezin was born in 1967 in Leningrad. He graduated from high school № 239 with an advanced study of mathematics. In 1990 he graduated with honors from Leningrad Ustinov Mechanical Institute. In 1990 he graduated with honors from the Leningrad Ustinov Mechanical Institute, where he specialized in automatic control systems for aircraft. During his studies, he was Lenin’s and Ustinov’s scholar and had scientific publications. In 1990 he enrolled in a post-graduate course at LMI and started a similar business.
In 1993, Berezin took part in creating the North-West Fisheries Company. In 1995, together with Yury Vasilyev, he founded the Euroinvest investment company and had been its Chairman of the Board ever since.
Today, Euroinvest is a diversified holding company, which includes companies and projects from different economic sectors.
One of the directions of Euroinvest work is legal and engineering support for developing land plots and territories in St. Petersburg, the Leningrad region, and other areas.
At the end of 2017, Euroinvest Group created its construction division Euroinvest Development, which is engaged in the construction of housing and other objects, resultantly forming an entire cycle development business.
A relatively new direction for Euroinvest is the agro-industrial sector. For example, Agrocluster Krasnoye Znamya in the Pskov region specializes in producing grain and fodder for livestock.
In May 2017, the managers of IC Euroinvest established a venture fund Euro Venture with an initial amount of € 10 million. Priority areas of investment are innovative developments in the scientific and technical sphere and projects in the creative industry.
In 2017, Andrey Berezin was awarded a certificate of merit by the Ministry of Industry and Trade of Russia for his outstanding contribution to developing the Russian industry and many years of diligent work.