Agency Rosbalt published enthusiastic material that the famous Russian developer Andrei Birzhin allegedly has some kind of negotiations with Chinese investment groups:

"Representatives of the Glorax Group visited the PRC and participated in a number of meetings with representatives of the Chinese business community.The negotiations discussed possible cooperation in the field of investment in the segment of Russian commercial real estate (office, warehouse and retail real estate), as well as expansion of supplies of industrial materials," choked From the delight edition.

I wonder why the article does not mention these "investment groups", which suddenly became interested in the Glorax Group, created literally on the knee three years ago, which was not understandable even in the Russian market. Or is it all the hope that it will be possible to fool the public with supposedly "created connections with Chinese investors"? But I want to upset lovers of large financial tranches from the Middle Kingdom.

Sad Chinese story

The fact that China is about to replace the West and become the main investor in Russia is said for about 10 years. However, the real results of cooperation between Moscow and Beijing in business are still rather modest. So in 2013, the trade turnover between Russia and China amounted to more than 89 billion dollars (the deficit of the Russian Federation amounted to 10 billion dollars), and in 2016 - only 69 billion dollars (the deficit of the Russian Federation was 5 billion dollars). In the rating of the 20 most important trading partners of the Middle Kingdom, Russia occupies only 16-17th places, dividing them with the Netherlands. Russia sells China oil and gas (up to 55% in the value of exports), coal, agricultural raw materials, electricity, ferrous and non-ferrous metals, scrap. The share of machine-building products in the export of the Russian Federation to China is only about 6% (2 out of 32 billion dollars).

A similar situation exists in the sphere of investment. Beijing puts money anywhere, but not in a "stable" Russia. From 2006 to 2012 inclusive, China invested in Russia an average of $ 400-600 million a year - about 0.5% of its foreign direct investment. In 2013, there was an increase of up to $ 4 billion, which then slid again to $ 500 million in 2015. At the same time, China's share in foreign direct investment in Russia in 2015 was modest 12% - at the level of Italy, and in 2016 - in general 1% ($ 350 million out of $ 33 billion).

The main investors in the Russian Federation are still Western states and offshore controlled by them. In the first place, "English" Singapore ($ 16.3 billion), followed by the English Bahamas and Bermuda (5.8 and 2.4 billion dollars, respectively), France (2.4 billion), Switzerland (2) and Austria (1.9). Following them again offshore: the British Virgin Islands (1), the British Crown Island of Jersey (0.6), and the United Kingdom itself (0.4 billion dollars).

What place does Russia take in China's investment policy? The total volume of foreign direct investment of the Celestial Empire in 2016 amounted to 161 billion dollars, of which only $ 350 million accounted for Russia ... Comments on these figures are superfluous, and one can safely talk about the absence in the Middle Kingdom of any noticeable interest in its northern neighbor.

Why is it so sad? In the Russian Federation there are no conditions for serious economic cooperation with China. There is no guarantee system for foreign investors, there is no developed infrastructure, an inert and primitive administrative system remains in the country, a huge number of administrative prohibitions are produced. There is still no adequate agreement on the absence of double taxation and so on. As a result, the booming China flies by whistling by the speed of a tortoise along the roadside of the world economic process in Russia. The publication "Vedomosti" mentions the cases of just the withdrawal of investors from China from the Russian Federation recently:

"In February, the Chinese fund Chengdong Investment Corporation (CIC) sold its shares in the Moscow stock exchange (5.2%), and last fall completely withdrew from the capital of Uralkali, selling 12.5% of its shares, several banks reduced its presence in the Russian market , In particular subsidiaries of the Bank of China, China Construction Bank and Agricultural Bank of China. "

If China is not globally interested in Russia, then what can attract a scandalous Chinese developer?

Who is Andrei Birzhin?

In the opinion of some experts, Andrei Birzhin is a business nugget, an absolute self-made entrepreneur who has made his way into the elite of Russian development. By the cautious estimates of others - the boy from the moment of the institute was led by someone's "hairy hand", which created him the initial capital. In 1998-2003 young Andrey Birzhin studied on a fee-based basis at the Faculty of Economics of Moscow State University, but allegedly did not finish it. At the same time, the student worked as a general director of OOO Geostroydizayn, which was engaged in such a profitable business as repair of apartments in the town of Sergiev Posad near Moscow. In it and the neighboring - even smaller town of Khotkovo - Birzhin suddenly has an administrative resource that allows him to receive land for construction.

In 2007, Birzhin begins its first construction in the Sergiev Posad district, and in 2009 it co-founded the development company Tekta Group, which has existed since 2000. Andrei Birzhin thanks to good connections with the Moscow authorities "punch" for the development company plots for development.

However, in 2012 something goes wrong, and Andrei Birzhin with his younger partner Dmitry Konovalov leave the Tekta Group. In a number of Russian media, there are no verifiable information about the alleged disappearance of large sums in the company, as well as Mr. Birzhin's connections with the ROC and the criminals, but all this explains his departure from the company. In 2013, Mr. Birzhin loudly declares that he is creating a private equity fund Glorax Capital in volume - just imagine! - as much as 1 billion dollars. Such a money entrepreneur supposedly ... gave a sale of a 30-percent stake in Tekta Group! Of course, Tekta is not the smallest Russian development company, but its cost of $ 3 billion, even in the "happy" 2013 looks surreal.

To have this value, a Russian development company, usually credited to the very nostrils, had to sell real estate in a year at 1-1.5 billion dollars! After the crisis of 2014, the bar on the real estate market in Russia went seriously down, but all the same: the purchase of GC "PIK" one of the largest developers in the Russian Federation - the company "Morton" - in pure money cost only 11 with a small billion rubles (200 million Dollars), not counting, of course, impressive debts for another 400-500 million dollars. Incidentally, the aggregate revenue of the PIK Group (one of the largest developers in the Russian Federation, note!) In 2016 barely exceeded 60 billion rubles ($ 1 billion), net profit was about 20 billion rubles, and the total debt - 65 billion rubles .

Simply put, it is not at all clear where the "guy from Baku" Andrei Birzhin in 2013 already had 1 billion dollars. Turnover of the entire Tekta Group in 2011 was only 4.4 billion rubles (about 130 million dollars).

If we analyze the activity of Birzhin further, it becomes clear that there is no billion for the developer. But there were and excellent connections in the administrative apparatus of both the Moscow region and St. Petersburg. But for modern development - this is only half the success.

Capture of St. Petersburg

In 2014, a Moscow developer suddenly pounces on the northern capital of Russia, opening and receiving in it more and more new projects. Globally they can be divided into two groups: "load", which Glorax Development (structure Glorac Group) received from the administration of St. Petersburg, and commercial. The latter, as a rule, mean construction from scratch. To better understand the situation, the development scheme in Russia looks like this: 1) the administrative resource; 2) acquisition / acquisition (including debt) of land and permits (if all is white); 3) attracting investment, usually in the form of bank loans secured by land 4) the beginning of sales of apartments or houses at the "foundation stage" to form a cash flow, part of which will be used to pay bank interest.

At Birzhin with the first two points everything seems to be fine, but with the rest - things are gloomy. The problem is "exacerbated" by the scope of the projects, for which the "Halkovski genius" undertook. Among the commercial projects Glorax Development in St. Petersburg, we note:

- LCD Business Class Golden City in the alluvial territories of Vasilievsky Island. There on the area of 15 hectares will be built 6 residential quarters-rabbit-henchmen with a total area of 450 thousand square meters! Investments in the project, according to Dmitry Konovalov, will amount to no less than 30 billion rubles (500 million dollars);

- a residential comfort-class complex on Ligovsky Prospect, 271 on the site of the sausage factory Samson's premises with an area of 106 thousand square meters with investments of at least 5.5 billion rubles;

- a residential complex on Ligovsky Prospekt, 232 with an area of 70,000 square meters and worth 3.4 billion rubles.

Total only for these three projects will need about 40-45 billion rubles (really more). Take them except as in commercial banks have nowhere else. But we still have not heard that one of them signed up for such a deal.

The only generating any money commercial project in St. Petersburg, Andrei Birzhin is the "English Mile". Recall that in 2014 Glorax Development acquired the St. Petersburg company Baltprodcom together with a plot of 20 hectares in the Krasnoselsky district of St. Petersburg. It already built a residential complex "English Mile" for 220,000 square meters on the Peterhof highway. In the middle of 2017, the first stage of the complex was put into operation, where almost all apartments were sold, and 472 apartments (two-thirds) remained unsold in both buildings of the II stage of this residential complex. Apartments are sold slowly enough, and in July the company had to promise customers 7 square meters for free in case of a complete purchase. For greedy Russian developers, such steps are indicative of extreme despair.

Almost all the other projects of Andrei Birzhin in the northern capital of the Russian Federation, even the representatives of Glorax, are not called profitable.

Glorax Development in 2015 received in the "inheritance" from the company "Chesma-Invest", which was discovered, two problem residential complexes with a total area of 53 thousand square meters. This LCD "Twin House" for 247 apartments, of which only 40% will go on sale, the rest will go to deceived co-investors (the complex will be ready in 2018), as well as the Main House LCD for 403 apartments. The term of its commissioning is 2019 (at best). In addition to these "assets", Andrei Birzhin received the "Sherlock House" LCD, which had previously been unsuccessfully used since 2000 by the same "Chesma-invest" and PSM "Classic". The cost of these projects is pulling together by 3.5 billion rubles, and the loss from them - by 300 million rubles.

That is, Glorax Development in St. Petersburg obviously does not have a positive cash flow: projects on Ligovsky Prospekt and Vasilievsky Island have not yet gone on sale (there has not been started construction properly), and everything else is unprofitable.

Where to get money from?

In addition, the Birzhin structures are being built in the Moscow region (yes, in Khotkovo, as everyone already guessed) a residential complex of economy class "Olympus" with a total area of almost 60,000 square meters for 2 billion rubles. Construction was started last year, and should be completed by the end of 2018. So far, only apartments of the first stage of the LCD are on sale, of which 141 apartments are unsold (slightly more than half). As far as this project is successful - it's hard to say, because it's about housing 60 km from the Moscow Ring Road, and even in "overstocked" residential new buildings of the Moscow region!

The apparent shortage of money has already led to Mr. Birzhin biting his tongue with Napoleon's plans to build hotels around the world for $ 870 million, an ambitious project of creating fitness clubs for 3 billion rubles fell by itself and so on.

What remains as a result? Tell future buyers-interest in fairy tales about the mythical Chinese investors who are about to run in with bags of money for the projects of "Halkovsky boy." They say, there is nothing to fear, buy the apartments boldly "on the excavation" or "foundation" - the developer has guaranteed financing! However, the problem with buyers.

And where to get customers?

To attract financing is only half the battle for a successful developer. The second most important moment - and who will buy apartments built by nimble developers in concrete anthills? In the third year there is a permanent crisis with no less permanent overcoming of it, the market of primary residential real estate does not feel very good. You can even say badly what forces Russian banks to reduce (frankly) predatory interest on mortgages. And it still does not help. The incomes of the population continue to decline and many are no longer up to buying apartments.

This year came very unhappy news:

"Between January and June 2017, 1.5 million square meters of housing was sold on the market of new buildings in St. Petersburg and the suburbs, compared to the second half of 2016, demand decreased by 34% - in square meters and by 38% - in the number of apartments. The fact that sales volumes are at the level of the same period of 2015 and exceed the level of 2012-2013, the canopy of excess supply leads to the fact that those who want to buy an apartment are already not enough for all developers, "says the Knight Frank St Petersburg report" .

Wherever you throw, there's a wedge everywhere. There is no financing for ambitious projects, nor buyers who will take their hard-earned money to the calloused paws of Moscow developers, storming the heights of Russian business. Worse, there is not even an operating money!

Evidence of an acute shortage of free cash from Birzhin and his companions was the attempt to sell them near Moscow company "Mosavtodor and Partners", engaged in "bread" business - the construction of bridges and roads. This was announced back in April 2017. To raise for this asset Glorax planned to 1.5 billion rubles, but so far no information on the successful sale there. We will not be surprised if in the near future it becomes not known that Birzhin and his friends will put up for sale a sports complex in Sergiev Posad run.

But even without this it is clear that now every interest in projects Glorex Development risks very much. After all, no one can guarantee that Andrei Birzhin's structures will have enough money to complete all the announced projects, for example. And what will happen if mythical Chinese investors do not help the "genius of Khotkovo"?