Money growing: Clubs for Riding Interests

Above all it’s about "noble" sports - golf and riding have gained popularity in leaps and bounds. While golf courses in the Moscow suburbs are a greater rarity equestrian clubs for a long time have been a popular place for relaxation for well off Muscovites not only outside the city, but also in Moscow. However the business of creating such clubs is bothersome and laborious, not everybody who wants to go can afford to and their prospects in terms of profit is put under doubt by market experts.

"In Russia the horse racing club segment has developed rather poorly, the most advanced regions are Moscow, St. Petersburg and the Moscow region, in other regions of Russia there are fewer of such clubs. It is possible that it can be explained by the fact that equestrian sport is a rather expensive pleasure, and one horse can be compared in cost to a car, and its maintenance and care much more than a car. Therefore the number of people who are engaged in equestrian sport is insignificant, though stable," says Maria Litinetska, executive director of Blackwood. According to Ilya Shershnev, director of development at Swiss Realty Group, "the culture of riding in Russia during any moment has come to a state of neglect, but those who can return it to its former glory, can skim the cream off this market."

Rules of the game

In actual fact the maintenance of horses is rather demanding. "The main requirements for a stable are the following. First, it should be dry, spacious, have enough light and be warm. Secondly, it is recommended to be built elevated with deep-bedded subsoil waters. The most necessary equipment in a stable are extractor and ventilation pipes as oppressive vapors - carbon gas and ammonia - accumulate at the bottom of the premises and must be effectively removed. The temperature inside is recommended to be maintained at a level of 10-12 degrees. The floors in a stable should be waterproof, with a low level of heat conductivity, non rigid and non slip," Litinetska says.

The quality of the ground is also important. According to her, there are special requirements for the ground of race fields. "The ground should provide good cohesion with the hoof of a horse at turns, and be elastic for jumping and landing. The ground should also maintain its performance attributes during all races," she says.

According to Mikhail Arutsev, manager of the Pradar international horse club, "there should be a special drainage system and special soil - it can be just sand or sand mixed with artificial felt which is used in road works, as this material suits compact soil, however for to be most valuable it should be watered daily." In addition he adds, a stable should be equipped with the correct ventilation system which, for example, will provide inflows of warm air in the winter: owing to such systems the air in a stable will always be fresh, on which the health of the horse depends on.

According to Arutsev, there are certain restrictions on the design of buildings. "The height of ceilings in a stable should be no less than 3 m, and in an arena usually reach 10 m, however they can be higher: there are arenas where ceilings are 15 m high. As a whole equestrian complexes can be constructed as one building in which, for example, only one part is used for stables, or can consist of several buildings located in immediate proximity from each other," Arutsev says. Irrespective of which variant the potential investor chooses, stables should be equipped with special premises for the care of the horse. For example, there should be storage for equipment, and it is a little bit more convenient, if it is located at different ends of the stable: this way the horse breeder has better access to the equipment. In addition it is necessary to place washing where there is a large industrial machine in which, for example, you can wash horsecloths - without this, although it seems an insignificant detail, an equestrian complex cannot exist.

"It is necessary to also have an area for fodder, for changing clothes, for persons on duty, a hangar with a roof for storing sawdust, and a spacious premises for the storage of hay. If you make reserves for the winter it is necessary to also equip a back courtyard with a place to store manure. Daily this manure is taken out to the enclosure, which, in turn, is also made according to special technology - as a small house without one wall and without a roof. The horses stand in such enclosures. A standard enclosure measures 3 х 3 m with ceilings up to 1.5 m, and has a lattice so that the horses can communicate with each other," Arutsev adds. In addition the arena should have wooden sides measuring 1.5 m, and it is also necessary for it to be equipped with places where horses can pasture and animals can walk around and breathe fresh air." "Generally, a pool for horses is necessary, but we do not have one, and a sun deck is very healthy for horses, and has begun to appear in many clubs. The club should also be equipped with a step machine, which teaches the horse to run correctly," he says.

There are no uniform standards which experts would apply to all equestrian clubs like other kinds of sports. For example, there is a uniform system of assessing suitable golf courses for championship status. Owners of equestrian clubs are frequently guided simply by their own possibilities. "International requirements are only put forward to those equestrian clubs which apply to hold competitions with the corresponding equipment. Whereas only state standards which regulate ventilation systems and water supply apply to premises for keeping animals," says general director of HomeHunter Vladislav Suharev-Pogozhev. According to him, "the list of requirements for an equestrian club includes areas for training, a racing circle, tribunes, stables, an administrative complex and infrastructural objects."

While caring for the horses one should not forget about the members of the club. "Visitors should also feel comfortable in the stable. In rendering services for the people it is necessary to have convenient locker rooms, rest zones and restaurants. If an equestrian club positions itself as a club, it should do everything to make sure that its members are a collective, instead of simply coming to ride and then leaving. For this purpose we, for example, organized poetry evenings," says Arutsev.

A question of money

The facilities of an equestrian club manages do not come cheap for the owner. "We can keep dogs and cats at home but when you get close to horses not everybody has the opportunity to be near their favorite animals. The cost of horses varies widely. It is possible to go to Ryazan and buy a horse for $10,000 just so that you have a horse. A reasonably good horse from a European breeder can cost $70,000. And there are horses that cost millions," Angela Kuzmina, director of the sales department at IntermarkSavills says. It is for these clients that equestrian clubs are also created.

"The minimum volume of investments in constructing such a project is $7-8 million. The minimum cost of maintaining such a premises taking Into consideration expenses for holding competitions is approximately $60,000-80,000 a month. The profitability of equestrian projects in many respects depends on the location and the marketing concept of the specific complex," says Suharev-Pogozhev. According to him, the market average parameter of profitability of such projects varies from 12 per cent to 20 per cent. "The equestrian club business is built on two things: the keeping of private horses and the organization lessons with horses that belong to the club," Arutsev says.

According to Litinetska, "construction of a high class equestrian club will cost in the area of $16 million without taking into account the purchase of horses and the costs of the land." "The main means of income for clubs is the tenancy of enclosures and maintaining the care of horses. On average the rent of one stall costs $350 in month, and the care of a horse - nearly $500. If you take into account that in a standard club there are roughly 100 stalls, the gross revenue from this kind of activity is $1.02 million. Clubs also make returns on the resale of horses. A club buys a foal, trains it for 2-3 years and then sells it for more money. On average a club earns $3,000-$5,000 from such transactions," she says. In addition the club receives money from successful participation of horses in competitions - victory can bring $10,000-$20,000. However the club spends $300 to keeps its own horses per month. "Basically, it is not difficult to calculate that time it takes it recover all outlays of the project is more than five years, and during this time you can forget about profitability," she concludes.

First examples

According to Sukharev-Pogozhev, in Moscow and the Moscow region there are about 50-60 equestrian complexes and clubs of which 20 are located in Moscow, for example Zolotaya Podkova, Bittsa horse club Mustang. "In the Moscow suburbs the Zavidovo recreation complex comprises a number of recreational centers, of which its equestrian complex is most well known. Equestrian clubs are also popular in the west: Batyr on Novorizhskoye shosse, Amadei in Volokolamsk, and stables at Le Meridien Moscow Country Club. It is necessary to note the Gorky-10 equestrian club on Rublyovka, the expert says.

One of the most famous and interesting clubs, in Maria Litinetska's opinion, is the Otrada equestrian club. "The club focuses on people engaged in professional sport, and fans of horse riding. In addition it is equipped with all the necessary infrastructure for keeping horses: stables, pastures, step trainers for horses. For competitions it has a show field, racecourse and covered arenas (as well as for training beginners). In addition the club offers the services of grooms, trainers, horse breeders, blacksmiths and veterinaries. The builder has taken care of the rest of the visitors of club, having equipped it with a restaurant and hotel. Confirmation of the high level of the club is the fact that the Governor's Cup of the Moscow region is held here, and also a stage of the World Racing Cup," Maria Litinetska says.

As Kuzmina adds, at the Moscow hippodrome there are some small private mini-clubs in which one owner keeps only 2-3 horses, these clubs are more focused on business. "In such clubs there are polo competitions and they usually have very well equipped stables. The optimum number of horses for a private stable is 20. If it is not so much a hobby of the owner, but a business project, it is necessary to make the stable popular, with democratic prices, as, for example, at Sokolniki or Bittsa which, in my opinion, are economy class," Kuzmina says. Near Sergiev Posad there is a private stable where many Muscovites come, she says. "In the Zavidovo cottage settlement there is a club. One more example is the Nikolskaya Sloboda cottage settlement, close to which is situated the Novy Vek equestrian club, where inhabitants of the settlement can keep their horses" adds the sales manager of elite real estate agency New Quality.

Actually equestrian clubs very much differ in class and the cost of services. For example, at Pradar a one-hour individual lesson under the direction of a trainer will cost 1,750 rubles. Keeping a horse is also not cheap. "We have a whole range of services for taking care of horses. Usually you buy a horse, then pay for the rent of a stall, and then it is necessary to agree with the blacksmith and veterinary. The whole business. All these services are included in the cost [of membership at the club]," Arutsev says. As a result accommodation of a horse belonging to a member of the club in a club stable will cost from 35,000 rubles. Per month. This price includes a separate 3 х 3 m stall, equipped with an auto drinking bowl and sawdust, an eight feeds per day, daily cleaning of the stall, cleaning of the feeding troughs and walls of the stall as is necessary, horse-holder, horse breaker, veterinary and blacksmith services, pasturing, and also the most important - daily to use of the arena, except for in special cases. "Gold" membership here costs 52,000 rubles, and includes a twice as wide stall and the opportunity to use the clubs trainers for your own horse at a reduced price.

Moreover, in each of the listed clubs there is a set of additional services. At Pradar club it is possible to organize banquets, at the Bittsa complex offers hypo therapy for 500 rubles for half an hour and 1,800 rubles for four sessions, and at Zavidovo it is possible to arrange horse riding outside the club's territory. In addition such clubs rent out horses for celebrations, for example weddings.

Complexes in projects

According to Kuzmina, some constructors of out-of-town real estate plan the creation of stables within projects, for example within the limits of the Pirogovo settlement. "Recently constructors of business class settlements have also begun to consider such possibilities," Kuzmina says. "I know about several such projects within the limits of cottage settlements, one of which provides the concept around polo. The project is on Novorizhskoye shosse and currently only has a working name. I think similar projects will appear on the market in several years," says Shershnev.

"Of projected complexes the largest scale is the National Horse Project on 1,300 hectares in the Odintsovskoye area, belonging to joint-stock company Moscow Horse-breeding Centre No. 1. Besides horse-racing infrastructure the complex will perform the functions of a multi profile cultural-sanitary center," Suharev-Pogozhev says. Plans to create such clubs are also appearing outside the Moscow region. The Gagarinland settlement will have its own equestrian club in the Smolensk region." "As our project is conceived as a sports-recreational complex we plan to organize a small horse club for the inhabitants of Gagarinland on its territory for 10-15 horses. The out-of-town location allows us to let animals out to graze in the meadows, instead of feeding them all-year-round with artificial additives which it is necessary to do within the boundaries of the city," Vasilya Bazhenov, project head of Gagarinland says. According to him, horse riding is "is a pastime and a sport, and a way of treatment and rehabilitation. Hypo therapy - treatment by the means of horses - is applicable even in cases with cerebral paralysis. Contact with a large, strong animal is a healthy thing. In Gagarinland horses will not so much be for playing sport, but for a hobby."

On the whole, market participants ambiguously assess the future of equestrian clubs as infrastructural premises. "Equestrian clubs are not necessary for infrastructure, moreover, the demand for such premises is very limited, therefore there are hardly no settlements with clubs. It is possible to say that the expenditures on maintaining a club will be made back due to the members of the club, rather than the inhabitants of the settlement," Litinetska says. According to Ufimtsev, "in general, no tendency has been observed whereby clients are interested in this given element of infrastructure. In our experience no client has ever come to us and said: "I want to live near an equestrian club!" According to Sukharev-Pogozhev, "in listings offering out-of-town real estate the number of settlements with equestrian complexes is minimal." As the expert explains, such projects are a big rarity and, as a rule, horse premises are not included directly in the infrastructure of cottage settlements as the maintenance of such complexes is too unprofitable for the owner of the building and the project does not usually self-repay. As a result the managing company has to open access to the use of the equestrian club to outside clients, which contradicts the concept of an expensive settlement.

"The prospects of the development of equestrian complexes as separate segment of real estate are limited: target demand is insignificant, and, as a rule, clients perceive them as accompanying services within the limits of large recreational complexes. In connection to this the greatest dynamics of the development of equestrian clubs will be as components of the entertainment segment of large out-of-town projects, such as Drugiye Berega and Ruzskaya Switzerland," Suharev-Pogozhev predicts. According to Shershnev, the market can swallow several of such projects, but further development of this area will depend on the demand of the first samples. "Today golf looks like a more [circulated] concept," he says.