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Tuesday 17.10.2017 | Name days: Karīna, Gaits

Merks Board Chairman: construction the last to exit crisis

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Baltic news, News from Latvia, BNN-NEWS.COM, BNN-NEWS.RU, Ivars Geidāns, Merks

Ivars Geidāns

SIA Merks Board Chairman Ivars Geidāns forecasts 2011 will be one of the toughest for builders, thus he is glad the company did not win the tender on the Castle of Light (Latvian National Library) construction, similarly Geidans does not believe apartment prices are ever to return to the pre-crisis period.

When do your owners forecast construction sector revival in Latvia?

2011 will be one of the toughest. Construction is the last to exit the crisis, as it depends in the processes on the national economy. The construction sector is to recover only when the national economy reaches a certain developmental level, businessmen are connived about tax policy lasting more than a year, financial resources are accumulated and there is a demand for goods and services, propelling private investors interest about Latvia. The following two years will not show growth. Efficient and sensible EU funds investment in the infrastructure, as well as state and municipal facilities will be the key of ensuring future activities of the sector. Consequently, these authorities skills of organizing tenders and managing projects should be improved.

Did you re-evaluate the projects you miscalculated in «the fat years»?

The crisis did not hit us as hard as the whole sector in general, because we took the right decisions very timely – we optimized costs not corresponding to the crisis period. Merks had prepared projects on about 2.5 thousand apartments construction in 2007 and 2008, in accordance with the market characteristics of that time. Currently we are going through them again in line with the current demands and purchasing power. We started to feel the consequences of the crisis in the second half of 2008. However, at the same time, when the construction market halted in late 2008, we concluded two Skanstes virsotnes buildings and we are about to finish the third one this year. To contradict the view that no one is to buy these apartments, I assure we see that apartments in favourable locations and for a reasonable price are always of great interest. Speaking about the company in general, we had a wide portfolio of concluded agreements, ensuring to maintain 40 000 million lats turnover in 2008 and 2009.

Do you regret loosing the public tender on the Castle of Light construction?

On looking back at the development of this project, satisfaction replaces regret. It turns out we were right. We had set a more precise and more beneficial construction price, compared to the competitors’ one. Those who now should regret something are officials and public authorities who opted for building the national library for an unreasonably high price.

What is the actual price of apartments in the so called sleeping districts secondary market?

Demand determines the secondary market prices. Along with a growing demand, prices surge as well, but they are never to return to the pre-crisis level.

What should be done regarding the unsuccessful projects low quality houses that have not been bought – tearing down, waiting or reconstructing?

Time will show. Currently banks have taken over most of these projects. They will sell them for a beneficial price some day. It is clear the price will ensure maximum recovery of the invested funds. Thus one should not hope for new apartments for low prices, the same applies to the so called «unsuccessful» projects. Most likely they will not be sold cheaper than the funds invested. Moreover, it is not profitable to reconstruct and renovate them at the moment. Consequently, some projects are doomed only to serve as an evidence for «the fat years» and the crisis.

Do you hire construction workers only from Latvia or from Estonia as well? What is your attitude to workforce inflow in general?

We collaborate by attracting highly professional managers and engineers with specific skills from all over Europe, because we care for these skills, not the place these persons come from. As for today, we are not hiring foreign builders.

If the Latvian economy start growing at a more rapid pace and we want to develop to recover from the crisis and live better, the whole society, not just builders, will be forced to face workforce inflow issues, because we lack qualified experts already. Moreover, this problem is arising not only in Latvia.

Are you satisfied with 4.55 million lats profit in 2009, when the crisis was still ongoing?

The results of 2009 show the objectives set in the beginning of the year – to maintain the production output in the key sectors of construction and real estate projects development, for example, Merks built apartments sale – were reached. Merks turnover even increased a little in 2009, compared to the previous year, due to agreements concluded before and good results in apartments sale. I am glad about that. We will inform the Tallinn Stock Exchange about the 2010 results in mid-March.

Which 2009/2010 projects you are proud of?

We concluded many projects in Riga and Latvia in general in 2010, the reviews of customers and local municipalities officials were positive. I am proud of both the projects and Merks employees who ran to construction work. DnB NORD Bank’s new office building with joint features of sophisticated architecture and energy saving is one of the most technologically advanced building in Riga. I would also like to single out Tallink Hotel Riga on Elizabete Street, which maintains the historical facade, also Strenči Mental hospital construction and renovation, as well as water and sewage treatment plants in Jaunpiebalga and Aloja, built with the EU co-financing.

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    Hope this sector also learns something from the crisis.

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