The FINANCIAL — The FINANCIAL interviewed Aidar Utelov, Chief Executive Officer (CEO), regarding the company’s key interests in Georgia’s real estate market and the corporate policy developed by DS in the competitive market of the construction sector in the country.
Development Solutions (DS), a Georgian-Kazakh real estate development company, will start sales with a re-branded LIFESTYLE promotion. DS claims to be implementer of the most luxurious projects in Georgia, the complex concept of Hotel Radisson SAS Iveria, Rose Revolution Square and Saqanela. The company intends to spend up to USD 1 billion in the upcoming years in the country.
Q. Development Solutions became a well know brand shortly after it appeared on the Georgian market. What has been done since that time and how much has been invested in projects already?
A. In terms of investments made by DS in Georgia so far, the amount is quite impressive, around USD 300 million.
We do have plans to invest an additional USD 300-400 million in the next 3-4 years time, which in total could hit USD 1 billion.
Q. Recently it was announced that McCan Erickson was to be in charge of DS’s new re-branded marketing and PR strategy development. What’s the concept of the re-branded DS brand to be?
A. We don’t want to build the brand of DS as a simple event; we’d like to create special associations which will be related to this brand, because we consider the latter to be an umbrella brand for the implementations of the planned projects. We want to use it as a stamp of high quality, which is attached to the projects that we’re doing.
McCan Erickson is a really qualified team of professionals and they’ll be doing the branding awareness of DS. Their professionalism will bring substantial quality to our projects.
Through the logo DS states that we’re initiating ourselves as the transistors of LIFESTYLE in Georgia.
We don’t want to bud the image of the company simply based on advertising or a PR campaign, we’re focused on positioning ourselves as the company which has a really good purchasing approach in its portfolio and a very professional team in charge of very exclusive projects.
Q. Which type of advertising do you see to be the most effective in terms of real estate? In the case of DS, what media tools will be used to spread the slogan LIFESTYLE all over the country?
A. The best advertisement is a satisfied client and that’s what we’re mostly focusing on. The next best tool in this respect would be events, followed by newspapers. We don’t really want to go further and start an active TV advertising campaign as for real estate projects that would not be the right approach.
Q. Some of the latest news concerning Georgians is the rise of interest rates on mortgage loans. How do you think these non-welcome developments will influence the so-far high pace of mortgage acquisitions? Will the price increases be an issue for the construction sector in general and in particular- DS?
A. The real estate market in Georgia is quite liberal; it doesn’t take a very long time or much expertise to get involved in this sector in the country.
We believe that with the increased cost of money only the most professional companies offering high quality products will remain in the market. We consider it a signal to the country, that there is need for a certain correction or cleaning up of the market.
Q. Do you cooperate exclusively with Georgian-Kazakh BTA Silk Road Bank or with other commercial banks as well?
A. Our strategic partner is certainly BTA Silk Road Bank, but we do have certain relations with other banks. As our projects are development ones, at some stage, when it comes to sales, we’ll be open for cooperation with all banks in Georgia.
We’ve taken credits from BTA Silk Road Bank for all of our projects.
As for cooperation with banks in terms of down payments services, it’s a subject of negotiation; we’re open for cooperation with the banks.
Q. Due to the devaluation of the USD currency, some of the local developers and realtors have switched sales from USD to EUR. What’s your strategic policy in this respect?
A. We can’t talk about our policy before the company starts its own sales. In general, it’s a good idea and most probably we’ll be closing prices in EUR.
As we’re positioning ourselves as authors of the most luxurious products, the final materials are supplied through international companies. Hence, no change of currency will affect the high quality concept DS has been associated with since the very day of our appearance on the market.
Q. As it was reported during its short history the company has developed a clear cut schedule of its projects luxury USD 300 million value portfolio including: Hotel Radisson SAS Iveria, Rose Revolution Square and Saqanela. What’s the amount of feedback you anticipate to get from these top three city projects and in what amount of time?
A. We’ll try to make as much money as the local market permits. No concrete figures can be named at this point, but all the projects DS is engaged in in Georgia are of high importance for the company and for the country in general.
The overall volume of real estate owned by DS at the moment is about half a million sq.m, but what matters most is that each sq.m where the company has construction projects stands for high quality products and services that fully meet western standards.
Q. By when will the Radisson SAS Iveria hotel be ready for opening? In regards to preliminary estimations, what’s going to be the annual income of the top luxury hotel? What’s gong to be the minimum and maximum prices of accommodation?
A. The hotel will be ready to host guests from January 2009, but the grand opening, which is required by the brand operator, will coincide with the Independence Day of Georgia, May 26.
In total Georgia has 400 rooms in all of its 4 star hotels, which is nothing for a country with around 4 million people. I don’t believe there’s even an issue of competition. I don’t think there’s such severe competition that we’d be stealing clients from each-other.
Radisson SAS Iveria will be targeting business travellers during weekdays and a certain portion of tourists visiting from abroad. The hotel will be able to offer 4 star service, a very good location and additional features like: for units in bathrooms: bath, toilets, shower, sink. The other issue is that all Radisson rooms are bigger in size compared to its competitor brands.
Q. Experts estimate that by 2010, a total of one million visitors will be flocking to the Adjaran shore. By that time DS will have completed part of its projects in the region. Could you define, will there be any completed projects by DS for holiday makers in Adjara this year?
A. We do have ongoing constructions in Adjara and we hope that some of them will be ready for exploitation next summer, so that we have something to offer next year.
The development and construction process itself takes huge effort and particular time to get the final high class product. Since DS is offering only the best projects possible, we pay a great attention to details and provide a constant follow up of each and every construction till it’s completely finalized and ready for exploitation.
In regards to construction companies, we always hire international ones, the services of which are much higher than local ones.
Q. In order to develop Georgia’s first modern, high-class seaside resort complex on 50 hectares of land along the coastal village of Bobokvati, DS intends to invest over USD 200 million in the project. What’s the due deadline of the project and what’s the construction situation like at the moment?
A. We’ve developed the project, which diversifies the types of products, and besides the size of the hotels we’re planning a residential construction as well, which will be villas and will be sold to the upper segment of the market.
Q. As for cultural activities, The Silk Road Group has taken the Georgian cultural heritage Tsinandali site on lease for 49 years. What’s the goal of this initiative and how is it going to impact the infrastructure development of the region in general?
A. I can’t name figures, but what I will say is that we do support tourism development in Georgia. This is why we’re trying to promote Georgia as one of the most attractive countries to visit.
Q. Which of the numerous projects initiated by DS are luxury ones and which is the most expensive? (Please provide a brief description of the most expensive project)
A. That would be the Hotel Radisson SAS Iveria, Rose Revolution Square and Saqanela complex project, which is around USD 300 million.
In order to get such kinds of luxury projects dealt with proper professionalism we do become the clients of international recruiters in some cases.
The property that we’ve bought takes DS out of competition; we possess such locations in this country that it’s simply difficult for other companies to compete with us on the same level.
Q. How commercially beneficial could the sale of fully renovated apartments furnished and equipped with all necessary home appliances be for a developer?
A. We only operate fit-up, which means high class conveniences, best quality mechanical and electrical appliances, window frames, Italian doors, Italian sanitarian appliances and tiles.
International and sometimes local design companies take care of the interior design for our projects and by the way we’re very satisfied with the services offered by the local ones as well.
Q. As far as the city’s architecture is concerned, how would you evaluate the quality and standards of the modern design of Tbilisi? Who are the people whose views you consider while working on projects?
A. I must complement the city’s authorities and say that they’ve done a good job by being supportive of all the new and innovative ideas. The image of Old Tbilisi is one of the best examples to recall in this case.
Q. How would you compare the construction business development in Georgia to the situation with its neighbours: Armenia, Azerbaijan, Kazakhstan, Ukraine, Turkey, and Russia? Do you have or plan to start operations in any of the above mentioned countries? If so, please define in which countries exactly?
A. The advantage that Georgia has is high quality governance and a welcome atmosphere for the investors.
Written by Kate Tabatadze
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