2. 2
BRIEF PROJECT DESCRIPTION
This project presentation is aimed to show economic, social and ecological sides. By the way, pos-
itive psychological aspect of human perception of favorable environment and other details is very im-
portant and sometimes even decisive.
Most of wooden house proposals on the country market are buildings which are either cheap and
situated in locality with poor infrastructure and partial communications or very expensive and made of
laminated veneer lumber. But today there is a real opportunity to combine high-quality, environmental
friendliness and comfort of wooden house with full accommodation and its low cost.
Such buildings can reach high level of competitiveness due to many factors. The most important
factors are machining of parts at all stages of manufacturing and thermal pre-treatment of wood. They
contribute to preservation of parts proportions till the moment of installation, accuracy of parts uniting,
absence of necessity to keep time after installation to start finishing works, effective and perfect appear-
ance.
Moreover, there is a significant factor that the initiator of project takes part into the process of
main manufacturing of wooden-house parts. It allows to minimize total cost without high added value
and with income level that is enough for simply reproduction. That’s why the main labor intensive and
expensive stages of wood primary processing are excluded and the manufacturing chain consists only of
technical drying of purchased bars, their longitudinal profiling and production of angular and technical
joins. The main factor of project effectiveness such as low and stable price for sets of wooden houses
can be ensured due to initiator’s 22-year experience in wood processing, not numerous but at the same
time highly professional staff and optimal use of manufacturing capacity that provides production of not
less than 4 house sets a month.
A special feature of the project is the possibility to choose purpose of object use such as private
households, single hotel and recreation complex or mixed type.
Main difference between wooden buildings and buildings from brick and concrete:
- more favorable thermal conditions in wooden building because of natural low thermal
conductivity as a wooden wall with thickness of 200 mm equals to a brick or concrete wall with
thickness from 500 to 650 mm.;
- lower use of fuel resources in comparison with brick or concrete buildings in winter;
- absence of harmful effects from walls covering and thermal insulating materials (cements,
adhesives, petrochemicals, etc.);
- high level of natural humidity control in the room without heat loss due to porous tubular wood
structure;
- minimal load of wooden building on the base as such structure has multiply less weight in
comparison with brick or concrete one;
- low total cost of buildings due to absence of necessity in additional expensive indoor and
outdoor decoration;
- short building term due to modern technologies;
- original architectural solutions due to high strength and light weight of buildings ;
- perfect appearance.
The investment project is a complex of activities aimed at building of hotel type settlement con-
sisting of 32 wooden two-storied cottages with the area from 150 to 250 square meters, 10 two-storied
townhouses with the total area from 400 to 800 square meters providing flats of the area from 40 to 100
square meters each, building for sport & SPA center with the area of 1200 square meters, buildings of
bath complex with the area of 150 square meters and buildings of service organization with the area of
150 square meters.
All buildings are connected to central communications.
3. 3
internal funds
loan funds
investor's funds
Individual buildings can get additional effect and attractiveness using such modern interior
decoration things as follows:
- equipping first floors of cottages and townhouses with fireplaces;
- equipping first floors of cottages and townhouses with water floors with possibility of
automatic temperature control;
- equipping first floors of cottages with mini hydro isolated winter gardens;
- equipping of wiring and heating technologically hidden in wooden walls.
PROJECT INFORMATION
Place of project implementation is Minsk region.
Implementation period of project is from 2016 till 2019 years inclusive.
Total investment is 3,802,000.00 EUR.
Defining of the plot and development of business plan are completed.
LIST OF INFRASTRUCTURE OBJECTS COSTS
- Design 88,200.00 EUR
- Acquiring of property (first floors of townhouses that are
to be reconstructed) and building for sport center 632,200.00 EUR
- Cottages 1265,500.00 EUR
- Townhouses 945,700.00 EUR
- Sport center 205,500.00 EUR
- Communications (gas, sewage, storm drainage, plumbing, electricity) 147,500.00 EUR
- Landscaping 168,600.00 EUR
- Equipment 374,100.00 EUR
SOURCES OF PROJECT FINANCING
Sources of financing 2016 2017 2018 2016-2019
Internal funds, thousand
EUR
163,7 535,5 - 699,2
Loan funds, thousand
EUR
799,4 179,1 - 1978,5
Investor’s
funds,thousand EUR
- 773,4 350,9 1124,3
Total, thousand EUR 1963,1 1488,1 350,9 3802,0
18%
52%
30%
4. 4
Financial aspect of the project is the possibility to use different types of financing, including
combined ones.
In the base of project financial model we envisage the most harsh variant which is lending
with 9% annual rate. But the most favorable variant is participation in project with partial or full
investment with minimum loan funds.
PROJECT EFFICIENCY INDICES
Variant of using hotel and recreation complex type:
Indices 2016 2017 2018 2019
Capacity of hotel rooms - 24 374 524
Number of visits, people (50% of filling) - 4390 68440 95800
Capacity of sport center (people) - 80 80 80
Number of visits, hours (50% of filling) - 58560 58560 58560
Volume of hotel service, thousand EUR - 30,730.00 479,080.00 670,600.00
Volume of wellness service, thousand
EUR
- 117,120.00 117,120.00 117,120.00
Variant 1 implementation according to business plan under negative conditions:
Simple payback period of the project - 25 months;
Discounted payback period - 30 months;
Internal rate of profitability - 28,53%;
Profitability index - 1,10;
Discounted net profit - 274,500.00 EUR٭
Variant 2 implementation according to market research results under real conditions:
Simple payback period of the project - 24 months;
Discounted payback period - 27 months;
Internal rate of profitability - 96,44%;
Profitability index - 1,56;
Discounted net profit - 927,900.00 EUR٭
٭Indices are presented taking into account costs for lending of 258,800.00 EUR.
Calculations of variant 1 were carried out according to minimum selling price of 1 square me-
ter taking into account 100% pre-payment by the buyer is at stage of design and survey work.
Calculations of variant 2 were carried out according to average market price for the objects
with the same or worse characteristics.
One of the factors that provide effectiveness of project realization is low price for wood and
especially for products of its deep processing.
Due to this fact woodworking products occupy a significant place in Belarusian export. At the
same time, modern wooden houses are cheaper than brick or concrete ones in Belarus and visa
versa in Europe, where they are much more expensive.
5. 5
Factors and conditions providing the level of object perception by the buyers and guests:
RISKS AND WAYS TO MINIMIZE THEM
Generally, project risks are minimized at the stage of preliminary preparation of main
components such as place of building, structure and form of particular objects.
Project risks, connected with overdraft of project costs and terms are minimized with:
- cooperation with contracting organizations that have experience in cottage house-building
with implementation of construction and installation work;
- attraction of contracting organizations through tender;
- providing additional quality control at place of wooden houses manufacturing;
- annual accounting audit.
Project risks connected with demand volume are minimized with:
- flexible pricing policy;
- bonuses in the form of free additional architectural design and shape;
- additional improvement in the form of central summer fountain and walking paths;
- possibility to use open sport and leisure objects of infrastructure free of charges (football and
other sport playgrounds, forest running and skiing tracks, open barbeque bowers);
- equipping of playground;
- equipping of playroom in cafe.
INVESTOR’SINTERESTSPROTECTION
Investment protection mechanism provides:
- control over the current activity of enterprise;
- control over the expenditure of funds in accordance with the purpose;
- the right to use tangible and intangible assets that will be acquired during the project
implementation as a security for return on investment;
- legislative guarantee of returning on investment in the country.
0 2 4 6 8negative assessment positive assessment
6. 6
All cooperation between the investor and the initiator of the project should be built based on
trust and openness. It means that investor or his/her representative can check the documentation,
progress of construction and installation process at any time he/she wants. The initiator of the pro-
ject from his side fully provides these possibilities for the investor.
PROJECT STRATEGY
Successful implementation of project involves the mutual interest of the parties as it will serve
as positive reference point of project implementation in general that provides the construction of
three similar settlements in Minsk region.
Today the investors and initiators can choose more favorable place of building and as a result
total cost for project implementation. In the near future this selection will be considerably narrower.
That’s why such projects will be implemented either by supposed participants or by other
interested in this people.
At the same time much more significant effect from similar projects can be reached during
their realization on the territory of Western Europe countries, where the interest to modern wooden
building as ecologically favorable for living and recreation is always high.
This is confirmed by some special inquiries to the initiator of the project, as the head of
woodworking company, from the Czech Republic, Slovenia and Spain during the last few years.
However, the single supply of few buildings is of little commercial interest because of some instal-
lation obligations and long payment period.
In case of constant cooperation with local contractors of construction and preparation works
in Europe the implementation of projects on wooden house-building as small settlements or sepa-
rate houses with modern facilities is qualitatively different.
In this situation one of profitability conditions is the need for manufacturing house sets at
functioning production using cheap Belarusian raw materials, cheap local labor, with limited profit-
ability implying low cost of finished product at the rate og no more than 200 EUR for cubic meter.
The overall success of business in this direction is provided by combination with such factors
as high price for objects in this real estate segment in Europe, flexibility of individual orders per-
formance and pricing policy.
ECOLOGICAL ASPECT OF PROJECT
Nowadays more and more people in big cities think about ecological safety of their living.
During the last years big cities of the republic were overbuilt with multi-storied residential
complexes constantly increasing population density per unit of area.
There is a tendency among middle-aged and elderly residents tochange living in flats for
living in individual houses. This tendency is stable in spite of the fact that, as a rule, individual
houses don’t have connection to the main central communications, are expensive in repairs and
landscaping, don’t have convenient paved access roads and are situated far from big cities and
objects of social infrastructure.
The reason for this is not only the genetic attraction to the rural life of the indigenous
population laid by previous generation, but also negative factors of urban conditions increased with
urbanization level and overbuilding density of population.
At the same time, in Minsk surrounding forests ecological situation is the most favorable for
this because of freeness from industrial enterprises and high-rise buildings.
The aim of the project is to provide high quality of life and leisure for Minsk citizens willing
compensate working time in the city with leisure time in natural environment.
7. 7
Main ecological aspects of project as complex:
- low rise buildings (not more than 2 stories);
- forestry environment(coniferous trees of the age of 100-120 years);
- maximum preservation of greenery during the building process;
- maximum preservation of landscape and binding the buildings to surface undulation;
- maximum preservation of forestry environment outside the territory of the complex;
- interior landscaping with tiled pavements and park lighting;
- reconstruction and improvement of fountain;
- equipping of central lawn and flower beds with automatic watering system;
- equipping of central sanitary sewage;
- equipping of storm water drain;
- providing centralized waste collection with its division.
Main ecological aspects of individual buildings:
- ecologically pure material of the softwood used as a basis for the construction of cottages
and second floors of townhouses;
- thermal treatment of wood with soft technical drying of blanks to the level close to natural
one as 14-15%;
- using of ecologically pure jute canvas as technological cushioning material;
- absence of necessity in addition insulating of wall joints with artificial fillers due to minimal
hogging of technically dried elements in course of time;
- using of ecologically pure overhead and septum insulating material on the base of basalt
fiber;
- using of ecologically pure protective finish coat both inside and outside of the room.
Initiator of the project:
Bortich Sergey Nikolaevich,
Mobile phone. +375 29 6650981,
E-mail: sbbb@tut.by
