In a transaction marking the EBRD’s entry into Russia’s mass housing market, the Bank has committed US$ 20 million in a project to build low-rise housing estates in the Russian regions. These family homes will use new technologies that provide higher quality at lower costs, making them affordable and energy efficient.
The EBRD investment will finance land purchases, the construction of utilities and other start-up costs. Homes can be built in about three to four months to a standard architectural design, using low-cost but highly efficient materials as part of housing estates that integrate shops, social amenities, schools and public transport.
The project, in which the EBRD is a cornerstone investor, aims to help overcome a long-standing housing shortage in Russia by providing good quality but affordable low-rise homes when most developers are focusing on multi-storey housing. This new concept could set a benchmark for future housing developments in Russia.
The first such housing estates, which are being marketed under the Ecodolie brand, are already being built on the outskirts of Orenburg and Obninsk – two Russian cities 1,600 km apart – both for outright private purchase and for families entitled to social housing and participating in affordable housing programmes.
Orenburg, one of the largest cities in the southern Urals, is situated 1,500 km from Moscow while Obninsk, one of Russia’s leading science centres, lies 87 km south-west of Moscow in the Kaluga region. Energy efficiency savings at these two estates alone are expected to cut carbon emissions by nearly 16,000 tonnes a year.
In Orenburg, work is in progress on a land plot of 380 hectares on which over 4,000 homes will be built to house some 14,000 people. Over 350 homes have been sold since sales began last April. The estate’s social infrastructure will include four kindergartens, two schools, a sports centre, numerous shops and other facilities spread over approximately 20 hectares.
The local authorities are expected to co-invest in the project by providing important infrastructure connections to the gas, electricity, water and sewage grids valued at US$ 25 million.
The smaller project in Obninsk involves building over 500 homes on a plot of 44 hectares. About 100 homes have been sold since sales began in autumn 2010. This project will also include all necessary social infrastructure, including a kindergarten. The project was certified as meeting “Ecovillage 2.0” requirements, confirming high ecological standards and a minimal impact on the environment.
The construction of a separate project near the city of Kaluga is due to start in 2012. A land plot of 150 hectares has been acquired and partnership terms are being discussed with local authorities.
The EBRD funding is also ear-marked for additional Ecodolie housing estates whose construction is planned around some of the largest cities in the European part of Russia.
The Bank’s investment, which is subject to regulatory approvals in Russia, will consist of a significant minority stake in the project’s developer, which is owned by Baring Vostok Private Equity Fund IV. The EBRD is one of the original investors in this fund, as well as in other funds managed by Baring Vostok Capital Partners Limited.
Notwithstanding its short track record, Ecodolie has established itself as the leader in Russia’s low-rise housing sector and has already received a number of authoritative awards, including:
FIABCI Prix d’Excellence Awards 2011 (in the environmental category)
international competition for ecological development and energy efficiency “Green Awards” (in the low-rise housing category)
Russian national competition covering real estate, construction and mortgages “CREDO” – (in the category“The best house builder in low-rise and country housing”)
- IV Russian Forum of Real Estate Leaders – in the category “Mortgage of the Year”.