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Wednesday, January 31, 2007

Ukraine law info. The Ukrainian legislative system

There are some main Ukrainian legislation acts, related with commercial issues and real estate as well. I guess you have to know that. Thanks to Alexander Biryukov and Myroslava Kryvonos for comprehensive description.

The Ukrainian legislative system is based on the systematically organized legal rules (norms) which are combined to constitute different legal areas – spheres of regulation.

In accordance with the system applied in Ukraine, large law areas are defined in the national legislation.

Download full article here

XXI Century Investments starts to fit-out in the new “Kvadrat” shopping centre

XXI Century Investments starts to finishing out in the new “Kvadrat” shopping centre. This shopping centre – one of the biggest commercial real estate object in Kiev. Architectural project was made by famous Chapman & Taylor design company. They offered a couple innovation for current retail market, i.e. shop front made as glass screen, where is located the food-court. There are many first time new lighting and colour solutions. For example, Scott Lighting has made a special lighting panel.

Some data about new “Kvadrat”. Total space - K41 sq.m., GLA (retail) - 18 sq.m., and land site with 2,45 hectares. There is underground car parking for 589 places. Term of construction – 4 QT. 2007

New public utility for commercials located in residential premises

From 1 February, public utilities for commercial users, occupying apartments in multi-family buildings for offices and retail purposes, will grow in 2 times. From next month pharmacies, shops, retail bank branches and other small business enterprises, taking a place on the ground floors, will pay for new tariff. About it municipality official Vasiliy Yastrubinskiy reported.

It should affect a significant impact on retail, offices etc., there is much more unprofessional premises than professional (shopping centres and business centres). So if the authorities won't revise such decision and (it's very important in Ukraine) will find solution to control it strictly, rent market can feel its uncomfortable.

Kiev hotel market overview (Part 1)

I plan to describe in general Kiev hotel market as one the most attractive commercial real estate objects in Kiev. I hope it would be useful for you. So - there is the Part 1.

Now in Kiev operate 117 hotels at all. 23 objects from them fall into the category of «large hotels» (more than 100 numbers), 60 considered «small hotels» with rooms amount is not exceeded by 100 units. Total rooms amount in Kiev consider as 8700 and contain 15600 places. The Kiev hotels are able to provide a residence about 1 million persons in a year. However this «resource» already today obviously not sufficiently, especially as with every year the amount of guests of city is increased on 14–15%. Approximately the third from a total customers is foreigners.

The international certificates of accordance are possessed by a 51 Kiev hotels:

5-star - 1 (Premier Palace)
4-star - 6
3-star - 17
2-star - 20
1-star - 7

Rest of hotel - is small uncategorised hotel

Obviously (I mean for Kiev), the best place is CBD. Because the main visitors are business groups, businessmen, arriving in the capital on negotiations or other business, and also foreign stars. They prefer the 4–5 stars hotels, located not far from offices and business centers, tourist areas.

Average occupancy in Kiev now is 55%. But for 4-5 hotels this figure increases up to 70%. And Premier Palace shows amazing result with 85% occupancy. But if the demand are constantly growing, the developers have to offer addition supple. Particularly with examining such parameter with other European capital. For instance in Paris, there is 38 hotel place for 1000 population, in Vienna - 25, Moscow - 10. But in Kiev this index average to 6. And the expers say that for full supply in Kiev hotel market there are 4 5-star, 15 4-star and 35 3-star hotel needed.
In spite of limited hotel supply, the prices in Kiev extremely high comparing with other European cities and local service quality. The prices start from USD 30-40 for lowest quality hotels, USD 60-150 for middle class ones and the cosmic prices for top line hotel - USD 300-3000 for night (per room obviously).

To be continued

Tuesday, January 30, 2007

Rumors. Do the prices begin to slide down?

Actually I don't like a rumors, but... At the December biggest construction and development companies suddenly have withdrew out from the market most "hot" offers - 1 and 2-rooms flats. And we've expected their selling at spring time with much higher prices. But for unknown reason they has become to sell them now. Something happened? Do they feel an overheating on the market? Or they have know something that we don't? Anyway, unpredictable moving is strange...

Ukraine law info. The sources of Ukrainian law

The principal source of Ukrainian law is the Constitution, having the highest legal force. The rule of law is recognized by the Constitution. Appeals to the court in defence of the constitutional rights and freedoms of individuals are guaranteed directly by the Constitution.

The provisions of the Constitution of Ukraine are norms of a direct effect. Laws and other normative legal acts should be adopted on its basis and conform to it.

Codified Laws

As Ukrainian legal system is code-based there are a number of codified laws in the main spheres of national legislation. Among such codes the main ones are the following: the Civil Code, the Economic Code, the Criminal Code, the Land Code, the Family Code, the Customs Code, the Code of Civil Procedure, the Code of Criminal Procedure, the Labor Code, the Air Code, etc.


Only the Verkhovna Rada is entitled to issue normative acts in the form of laws. They are the highest normative acts in Ukraine.

The number of laws increases constantly, which creates the problem of contradictions between them. The imperfectness of Ukrainian legislation lies in its instability, overregulation, complexity of norms etc.

Secondary Legislation

The next layer of Ukrainian legislation is secondary legislation. Different normative acts in the form of decrees, resolutions, orders etc. issued by the President, the Cabinet of Ministers, the National Bank, ministries and other state agencies are adopted on the basis and in realization of the general provisions of laws.

The President of Ukraine issues decrees (ukazy) and directives (rozporiadzhennia).

The Cabinet of Ministers of Ukraine, within the limits of its competence, issues resolutions (postanovy) and directives (rozporiadzhennia). All the documents produced by the highest state bodies are mandatory for execution by every person on the territory of Ukraine.

In pursuance of the laws of Ukraine, the ministries, state agencies and committees issue resolutions, directives, regulations, instructions and orders that concern their specific sphere of competence.

All these normative legal acts and international treaties of Ukraine are registered at the Ministry of Justice of Ukraine.

Local state administrations and bodies of local self-government issue resolutions, orders, decisions etc. to ensure the observance of laws and freedoms of citizens, and the implementation of development programs and regional budgets.

Ukraine carries out foreign policy activity. It is a member to different international organizations and agreements. Ukraine was one of the founding members of the United Nations. International treaties come into force on the consent of the Verkhovna Rada of Ukraine to be binding. Since that moment they become an important part of the national legislation. The conclusion of international treaties that contravene the Constitution of Ukraine is possible only after introducing relevant amendments to the Constitution.

The acts of the official interpretation as well as court decisions are not formally the source of laws but they are taken into consideration when a certain case is administered in lower courts.

Prices for apartments on Kiev real estate market

Current prices for one-room apartments on Kiev primary real-estate market has become USD 1,842 per sq. m., the average prices of two-room apartments on the primary real estate market on USD 2,237 per sq. m., for three-room apartments USD 2,418 per sq. m.

Secondary market shows such figures: the average price for one-room apartments on Kiev secondary real estate market is USD 2,869.2 per sq. m., two-room apartments on the secondary real estate market on was fixed at USD 2,930.6 per sq. m., level, for three-room apartments - USD 2,823.2 per sq. m.

IMF talks about currency and inflation in Ukraine

From Dow Jones Newswires

A more flexible currency would help Ukraine control consumer prices, the International Monetary Fund said Monday.

Ukraine's economy should grow about 4.5% this year, or just slightly faster than in 2006. Inflation is picking up, projected to average 13.6% in 2007 after 12.9% last year, the IMF said in a press summary of its annual review of the economy.

Intervention to maintain a currency peg is now building foreign currency reserves and expanding the money supply, the IMF said.

The IMF "considered that a gradual move toward greater exchange rate flexibility would facilitate external adjustment and help improve control of inflation," it said.

More currency flexibility would also curb dollarization of the financial system and encourage development of markets to hedge foreign exchange risk, the IMF said. The government could support exchange rate flexibility by eliminating the foreign-exchange transaction tax, the Fund said.

The IMF praised the government for meeting a series of tight budget deficit targets which has reduced public debt as a share of the economy to an estimated 17% of GDP at the end of 2006. This compares with more than (USD 21.93) 60% in 1999.

The IMF also urged the government to step up regulation and oversight of the banking system. A long-lived credit boom, with real credit growth averaging more than 40% for the past five years, has made banks and households more vulnerable to financial market shifts.

Raising growth and living standards over the long term will require Ukraine to improve its investment climate, the IMF said.

The IMF "particularly noted the need to adopt legislation to strengthen investor rights, clarify inconsistencies between the economic and civil codes, reactivate a transparent and fair privatization process, and reform the energy sector."

Monday, January 29, 2007

Investors council set up under Cabinet of Ministers of Ukraine

Premier Minister Viktor Yanukovych has become the head of the Investors Council under the Cabinet of Ministers.

The Council is needed to ensure constant dialogue between business and power. Thanks to the work of the Council, investors will be able to take part in formulation of government decisions and improve investment climate.

According to provision On the Investors Council endorsed by the resolution, the Council is a permanent advisory agency under the Cabinet of Ministers. The Council has to hold meetings at least once a quarter.

The Council's crucial tasks are:

  • drafting proposals concerning formation of state investment policy;
  • participation in working out and holding of expertise in bills on investment policy;
  • submission of grounded proposals on implementation of investment projects directed to development of priority economy sectors.
The Council's decisions bear recommendation character and are obligatory for consideration by local governments, enterprises, institutions and organizations.

The Council Secretariat, headed by Economy Minister, provides organizational and information activity. Secretariat of the Cabinet of Ministers provides financing of the council activity.

PM had said that the Council would include leading representatives of Ukrainian and foreign business, and state representatives of different levels.

According to Yanukovych, the council will take part in drafting bills protecting investments in Ukraine, improve relations between investors and the government, and fight corruption in the investment area.

The Premier said the council would allow the government to bring in life its idea of innovation and investment model of state development.

METRO Cash & Carry will build new shopping centre in Ukraine

Alexander Dombrovsky, Head of Vinnitsa regional administration signed and agreement with METRO Cash & Carry for developing new shopping centre in Vinnitsa.

Total investment amount exceed UAH 100 mln (USD 20 mln.) GLA is 7500 sq.m. The construction will start at March 2007 and opening of new METRO Cash & Carry is assuming at June 2007.

Sunday, January 28, 2007

New rules for sale and lease the state and municipal land

Verkhovna Rada passed an bill which will change rules for land sites given for commercial building. All state or municipal owned lots will be sold or leased only through the opened market auctions. It is a very progressive bill which allows to get land with clear and fair procedure. And local budgets will increase their income from land operation.

Before that fact the land often has been issued with inside or hidden relationships between local authorities and some companies. And now in the addition to this bill we have to look out rules and term from this one.

But. Agricultural land (see moratorium tag) and land sites where placed on an object for privatization, will not cover under the auctions. This rule covers land with private property placed on, too. Such land have to be sold with market fair price, i.e. under the similar auction prices.

I have to mention, that such auction have been offered in some cities before that bill, Odessa, for instance. But without given bill the results of such auction could be rejected in a commercial court.

In the last time huge amount of land in Kiev was distributed without any auctions, however Kiev major Leonid Chernovetsky had assuring absolute opposite early.

And some experts say that Kiev has lost USD 120-160 mln. annually, and giving about 500 land site in the same period.

Ukraine law info. Crimea

I analysed what visitors look on Ukraine Real Estate Market and found out that one of the most preferable content is legislation and things around it. So I start publish more detailed info, links and data about law in Ukraine especially related with real estate and commercial property. Let's go!

As I mentioned before, Crimea is amazing part of Ukraine. And for real estate business as well. However not all know that Crimea is autonomous republic in Ukraine State with its own Constitution. You have to know it if you running a business in Ukraine. So here are a little explanation from Alexander Biryukov & Myroslava Kryvonos:

Ukraine is a unitary state with the Autonomous Republic of Crimea in its administrative structure. The Autonomous Republic of Crimea is an inseparable constituent part of Ukraine and decides on the issues ascribed to its competence within the limits of authority determined by the Constitution of Ukraine.

The Autonomous Republic of Crimea has its own Constitution that is adopted by the Verkhovna Rada of the Autonomous Republic and approved by the Verkhovna Rada of Ukraine. Normative legal acts of the Verkhovna Rada and decisions of the Council of Ministers of the Autonomous Republic of Crimea shall not contradict the Constitution and other laws of Ukraine.

When nonconformity of the normative legal acts of the Autonomous Republic of Crimea with the Constitution of Ukraine and other laws of Ukraine occurs, the President of Ukraine may suspend those normative legal acts with a simultaneous appeal to the Constitutional Court of Ukraine in regard to their constitutionality.

Friday, January 26, 2007

Hotels income in Ukraine exceeded UAH 2 bln.

Hotels income in Ukraine exceeded UAH 2 bln.
In 2006 services sales, from hotels and other short-term residence objects in Ukraine, grew up to UAH 2,047 bln. in market prices ($409 mln. aprox.)
For the same 2005 period that figure was only UAH 1,512 ($302 mln.). Thus trend for 1 year has been reached + 26% .

New rate for obligatory social development in Ukraine

There is very important news for all constructors, developers and investors: Cabinet of Ministry of Ukraine was reduced the maximum amount, which companies must bring in development facilities of engineering, transport and social infrastructure of the built-up area.

Prime Minister Victor Yanukovych signed the proper decision of government of N40 on January, 24, 2007. Maximum size of facilities which are attracted on development can not exceed 20% from the construction cost. This rate does not affect on building culture and educational, medical and health projects - in this case the maximum size of the attracted facilities of customers can not exceed 10%.

Meinl European Land invests EUR 150 mln. in Odessa shopping centre

Big commercial real estate player, Meinl European Land (MEL) announced about their first huge project in Ukraine. They are going to build regional shopping centre in Odessa, south of Ukraine to 2009. But experts say that cost of development is very high, and that fact will reflect on IRR, which is average 12% despite on market conditions with 25-30% in fact. Average construction for such centre is about USD 72 mln, they say.

This project is quite big for Odessa, the 2nd prefferable place for commercial property investing in Ukraine. And retail depelops very dynamicly here. As I stated before, average single purchase for Odessa retailers was set for USD 19-20 level. That’s very good even for Europe market. So MEL project should be successful and we see a beginning of long-term strategic investments in Ukraine.

Transport Ministry of Ukraine is going to buy-out the land

The Ministry of transport and communication is initiated a new bill which allows State to buy-out land plots from the owners without their consent.

A bill which gives such right is already developed by Ministry. Officials explain such bill is needed for building strategically important objects, like roads, highways etc. As explained in a Ministry, the transferring rules of lands under strategic building is not well-regulated now. «As soon as plans appear to build roads around Kiev, the land immediately close to deals", — the minister of transport and connection Nickolay Rud'kovskiy explains. — We will never get an infrastructure, if will not accept a legislation which will allow on legal ways to purchase plots». An official is sure that a government must have a right to buy any land back, necessary for building a transport infrastructure.

Now are examine a few variants of such procedure. Most experts are predisposed to that in the beginning necessary to send a offers with the fair market price. If they will be declined by owners, this problem will solve in a court. The second variant is foreseen by possibility for the forced procedure of buying land back.

A quite similar problem happened with IKEA recently.

Thursday, January 25, 2007

2006 Kiev real estate investments figures

As reporting Jones Lang LaSalle, last year Kiev received $225 ml invested in commercial property. I guess it extremely low, in spite of EU commercial real estate market has absorbed about 26 bln. Euro.

But they guess that current year will become "hot-red" for Kiev commercial real estate.

New info about first Ukrainian mortgage bonds

As I posted here about first Ukrainian mortgage bonds having issued by UkrGazBank, and they got "uaA" rating. It's pretty good for the first one. Issue amount is UAH 50 ml., with 4 years period. And coverage for that securities has been fixed as UAH 56,6 ml.

Real Estate Sector Lands New Players

From Kyiv Post

The Ukrainian commercial real estate market continues to attract more foreign investors and developers with one of the highest yields in Eastern Europe and promising growth potential.

Over the last year, several large business properties in Kyiv have been sold to foreign investors in deals valued hundreds of millions of dollars, with more major purchases on the horizon.

The promising growth potential of the Ukrainian market and sustained economic growth are key factors that have driven foreign companies to buy commercial real estate projects from Ukrainian developers. The new arrivals are betting on long-term returns acting as tenants on the market.

In December 2006, Irish Quinn Group announced the purchase of a 93 percent stake in Kyiv’s Ukraina shopping mall, located on Victory Square. The stake in the 35,000-square-meter mall went for $59 million, the group reported.

The purchase of the Ukraina shopping mall follows on Quinn Group’s acquisition of the upscale Leonardo business center, located across the street from the city’s Opera House, in February 2006.

Vladimir Shimkin, Quinn Group’s general director for Ukraine, said his company spent nearly $95 million for Leonardo and plans to buy an addition to the center when it is completed.

He added that Quinn Group intends to make large investments into Ukrainian retail, warehouse and office real estate, directing a significant part of its billion-dollar budget at Eastern Europe.

According to Shimkin, his group does not plan to renovate the Ukraina mall, which will keep its name.

“The Ukraina shopping mall, with an average monthly rental rate of $50 per square meter, is 95 percent filled up, and no tenants want to leave it,” he said.

Shimkin is equally optimistic about the future of the high-class Leonardo business center, which took a year to fill up with shops and offices since its opening in November 2005. Rent at Leonardo ranges from $50 to $70 per square meter.

Other recent sales of Kyiv commercial real estate to foreign investors include the Pyramida Shopping Center in the city’s newly built, albeit peripheral residential area Poznyaky.

Pyramida was sold to London-based real estate company 1849 PLC for $21 million. According to 1849 PLC’s website, the company “hopes to buy and build five to 10 shopping centers in Ukraine over the course of the next two to four years.”

Last year, Turkish development company Demir Evrasian Investments announced plans to sell its Podil-Plaza business center, located in the city’s low-lying Podil district, for $50 million.

Industry insiders say that the owners of the shopping and entertainment center Globus, located at Kyiv’s epicenter, Independence Square, plan to sell it for hundreds of millions of dollars.

Realtors also expect the 21,000-square-meter A-class business center IceBerg, also centrally located, to be sold soon after its opening this year.

Terry Pickard, the managing director of NAI Pickard, the Ukrainian representative of real estate consultant NAI Global, said there are two main reasons why more foreign investors are interested in the Ukrainian property market.

“First is that after the Orange Revolution [in 2004], the Eurovision Song Contest in 2005 and many others sport and cultural events that raised the profile of Ukraine, people became aware of Ukraine as a market.”

“Then, of course, is the massive increase of the money that institutions want to put into property in Ukraine.”

Pickard said investments into some equity markets around the world have not performed very well. “Even the yields on property [in Europe] dropped to 5 percent or 7 percent if you were very lucky.”

Nevertheless, Ukraine is still perceived to be a more risky place for investments.

That’s why one sees 10-15 percent yields on property in Kyiv, which is twice as big as in Warsaw, according to Pickard.

Pickard said foreign investors prefer to buy commercial real estate that can provide “regular annual income for leasing it,” while Ukrainian investors are “far more interested in building and selling it off for a short-term quick profit.”

He added that the growth of the Ukrainian real estate market is driven largely by huge demand that will continue for the next five to seven years, keeping the price for rent in the capital at the same high level from $50 to $70 per square meter in upscale offices.

“The poor office away from the center in Kyiv will cost around $25 per square meter, and for that money you can get the best office in the center of Prague,” he said.

According to NAI Pickard, total available Ukrainian shopping-center area in 2006 was 320,000 square meters, which in 2007 could increase to 460,000 square meters.

Wednesday, January 24, 2007

Short news - Ukrsotsbank forecasts residential prices decreasing

One of the biggest Ukrainian banks Ukrsotsbank (Banka Intesa group) forecasts residential real estate prices decreasing at 2nd half of 2006.

Such forecast has been done after deep research related with real estate situation in Moscow. The experts say that real estate trends in Kiev are pretty similar to Kiev. One of condition is "freezing" of Moscow price index. Secondly - less supply of investments assets, possible NBU restriction for foreign currency crediting and decreasing trends in the world real estate market.

Will the prices on real estate fall down? Russian point of view

I found a very interesting info in Moscow Times from Rustam Tariko about Russian mortgage and residential prices. Probably you know him with "Russian Standart" (Russkiy Standart) vodka brand and bank with the same name.

He won't pander to the latest aspiration of the emerging middle class -- a mortgage to buy a new home -- as long as Russians are gripped by what he calls a "crazy" property boom.

"I believe a crisis will come soon," said Tariko. "Real estate prices are very inflated."

Russky Standart Bank boasts a return on equity of over 75 percent, controls 80 percent of Russia's credit card market and employs 40,000 people.

Despite his ambitious growth plans, Tariko sees risks to Russia's eight-year economic boom, above all from the red-hot property market. But, Tariko says, too many speculators are buying. When he drives down affluent Kutuzovsky Prospekt, he sees that nobody is home in many newly built residential complexes.

"When I see the lights on in all these new buildings, I will start to invest [in mortgages]," he said. "But while the lights are out, I won't."

There is no direct linking between Russian and Ukrainian real estate markets, but I strongly sure that if the prices will down in Russia, such scenario become a reality in Ukraine. These markets connected much closer than you could imagine ever.

Residential rent prices in Kiev slightly down

Ukrainian News

The average rent for one-room apartments in Kyiv fell by 0.2% or USD 1 to USD 478.3 per month on January 12-19. This was revealed in the data of the realty web-portal Nerukhomist (Real Estate).

According to information of the portal, the average rent for two-room apartments in Kyiv fell by 0.3% or USD 2.5 to USD 753.5 per month, the average rent for three-room apartments rose by 1.4% or USD 16.6 USD 1,173.3 on January 12-19. The lowest one-room apartments rents in Kyiv rose by 1.2% or USD 3.5 to USD 306, for two-room apartments fell by 3.3% or USD 13 to USD 384 per month, for three-room apartments fell by 5% or USD 5 to USD 520 on January 12- 19.

The highest rents rose by 2% or USD 20 to USD 1,040 for one-room apartments, fell by 1.1% or USD 20 to USD 1,750 for two-room apartments, and fell by 4.5% or USD 140 to USD 2,960 for three-room apartments on January 12-19.

As Ukrainian News earlier reported, the average rent for one-room apartments in Kyiv fell by 3% or USD 14.9 to USD 479.3 per month on December 29 - January 12, the average rent for two-room apartments in Kyiv rose by 0.5% or USD 3.5 to USD 756 per month, the average rent for three-room apartments fell by 0.6% or USD 6.9 USD 1,156.7.

Tuesday, January 23, 2007

Ukraine real estate tips - Mortgage and lease

Mortgages (Hypotheck)

The Mortgage Act defines a mortgage as a type of performance security for an obligation, whereby (1) real property which remains in the possession and use of the mortgagor is used as security, and (2) in the case of non-performance of the obligation secured by the mortgage, the mortgagee has a priority right to satisfy its claim from the mortgaged property.

Parties wishing to establish a mortgage agreement should bear in mind that, to be effective, a mortgage agreement must be concluded in writing, certified by a notary and registered in the State Registry of Mortgages. A mortgagee should be aware that, although the mortgagee's rights under a mortgage contract take effect from the moment of its notarisation, the priority right of the mortgagee over other possible registered claims to the mortgaged property, including under other mortgages, only takes effect from the moment of the state registration of the mortgage agreement and applies only with respect to subsequently registered claims. The state registration of mortgages is governed by the Resolution of the Cabinet of Ministers of Ukraine of 31 March 2004 On the Temporary Procedure for the State Registration of Mortgages (Mortgage Registration Procedure).

Under Ukrainian law, a mortgage may be enforced based on: (1) a contractual agreement on the settlement of the mortgagee's claim; (2) a decision of a court; or (3) an endorsement on enforcement by a notary. Banks typically enforce their mortgages by contractual agreement or through a notary in order to avoid the time and expense required for court enforcement.


Leases of offices, residential dwellings and buildings may be validly granted, including to and by foreigners. Leases must be made in writing in the Ukrainian language (but may also exist in dual or multi-language versions). Furthermore, the Civil Code requires a lease agreement for a term of one year or more to be notarised and registered in the State Registry of Agreements.

However, because of some procedural complications and the requirement to pay 1% of the state duty for such registration, many lessors adopt practices intended to avoid this lease contract registration requirement.

Short news - First Ukrainian mortgage bond is ready to go

The State Security Market Department prepares for a registration a first mortgage bond issues in Ukraine for Ukrgazbank.

As Aleksandr Okhrimenko said, these bonds issue for 3 years, with 10,5% rate. Management of issue is providing by HVB Ukraine (UniCredit Group). Ukrgazbanks plans to place most of the issue volume within non-residents. But at the autumn 2006 National bank of Ukraine has included such type of security as refinancing tool. If so, local banks have good option for such operation instead State treasure bonds (OVGZ), Mr. Okhrimenko said. Now NBU refinances only for State issued securities.

Some time ago some banks (Raiffeisen Aval, Ukrsibbank) has stated about own mortgage bonds issues, but it didn't happen.

Cap rates for offices in Kiev

Here some info and forecasts about cap rates for professional offices real estate in Kiev for A and B grades premises .

Class A
2005 - 11.5
2006 - 10.5
2007 (forecast) - 9.5

Class B
2005 - 12.0
2006 - 11.5
2007 (forecast) - 10.5

Monday, January 22, 2007

Short news - WB confirmes Ukraine GDP

The World Bank has confirmed its forecast for Ukraine's GDP in 2007 to reach 4.5% and inflation of 10.7%, World Bank lead economist for Ukraine Martin Raiser said.

Ukraine should expect continued growth in foreign investment in 2007, although the possibility of a fall in metal prices on the international market and consumer demand will also remain in place, he said.

The World Bank could revise its forecast for the Ukrainian economy based on results of the first quarter of 2007, Raiser said.

Commenting on the 2006 results, Raiser said GDP growth is expected to reach 7%, which would be a surprise to World Bank experts and is much higher than previous forecasts.

Final point in land moratorium switchback

As I stated early here and here we all have watched a huge "blockbuster" called "land moratorium". Now all this gone.

Viktor Yushchenko has signed the law prolonging the moratorium on the sale of agricultural land sale until 2008, which was passed by parliament.

The president signed the law "On amendments to the Land Code of Ukraine regarding the ban on the sale of agricultural land before respective legal norms are adopted.

The signed law is considered to be adopted on 19 December 2006. That day, MPs approved the amendments to the Land Code, which banned the sale of agricultural land until 1 January 2008.

According to the effective Land Code, the sale of farmland in Ukraine was allowed as of 1 January 2007. The law signed by the president comes into effect on the day of publication.

In six months, the cabinet shall refer to parliament draft laws on amendments to the laws "On mortgage" and "On land lease" to consider the possibility of putting up land ownership rights as collateral in order to receive loans, including long-term ones, and to Article 20 of the Land Code
of Ukraine in order to improve the procedure for changing the purpose of land.

The cabinet have to rework and approve the legislation with regard to appraisal of agricultural land.

Short news - French companies plan to build new roads in Ukraine

French companies Vinci and Bouygues Construction are going to build 1500 km of new highways and roads in Ukraine within 5-10 years. This information reported Pier Berge, Head of Vinci.

Main option is new law regulations, which allow to use concession rules in Ukraine. Without such condition, it would become quite risky, said Cristian Gazen, CEO of Bouygues Construction

Early an agreement about such kind of cooperation was discussed with Ukrainian Minister of Transport Nikolay Rud'kovskiy.

Sunday, January 21, 2007

Info about Ukrainian macro economy

Sure, the primarily goal of Ukraine Real Estate Market - to overview issues have involved in that business in Ukraine. But, I've found good source about Ukrainian economy in general. I guess it should be useful and interesting for you as well.

I need your opinion: should I to present such info here, in Ukraine Real Estate Market?

And, of course, here an macro review for economy from Institute for Economic Research and Policy Consulting.

Ukraine real estate tips - How to check and buy

To purchase a building, or office or residential premises within a building, the buyer should verify the seller's title by reviewing the title documents. Traditionally, most state notaries and the Title Registry, where titles are currently registered, would ordinarily only register a transfer of title based on short-form types of contracts, which typically merely state brief details on a transaction without providing for contractual protections for the buyer. However, as the legislation on misrepresentation and fraud is not yet well developed in Ukraine, it is strongly advisable to have more elaborate agreements like those common in the West guaranteeing, for example, the transfer of absolute and unconditional title, the good physical condition of the premises and the absence of any encumbrances, adverse claims and defects or any knowledge thereof.

(a) Information on the Seller

Turning to the title documents that should initially be presented by the seller, ordinarily this includes (1) a certificate of privatization, a purchase contract (usually notarised), evidence of inheritance or gift, or other documents as provided by the law, (2) an extract from the Title Registry confirming the seller's title to the property and (3) certificates from the State Register of Mortgages, the Unified Register of Prohibitions on the Disposal of Immovable Property and other appropriate state registries on the absence of mortgages, arrests, liens and other encumbrances. An individual should also show his or her passport and personal tax number. A corporate seller will need to prove that it validly exists and that its representatives are duly authorized to conclude the purchase transaction.

(b) Documents Required of the Buyer

On the buyer's side, an individual needs to show his or her passport and a corporate buyer must prove its valid existence and the authorization of its representatives. In addition, a foreign company should have a permit from the General Direction for Services to Representative Offices (based in Kiev and known as GDIP) or from the regional state administrations (depending on whether the transaction is in Kiev or elsewhere in Ukraine) for the particular purchase. The notary involved should require the submission of receipts confirming that the state duty and pension fee (each constituting 1 % of the amount of the transaction) have been duly paid. The parties can negotiate who pays the state duty, but the buyer must pay the pension fee.

(c) Due Diligence for Purchases

Before a purchaser completes any acquisition of real estate in Ukraine, a complete due diligence of title, starting with the original transfer from state ownership (if applicable) should be conducted. If a building or other construction was built by the owner, the necessary construction documentation (permissions for construction, and project approvals documentation including the Government Act) should be verified, since the absence of any of the required documents may subsequently lead to a prohibition of any use of the structure that was constructed without proper permissions. The technical description of the property being purchased should correspond exactly to all official records (the technical passport for the property), which should be confirmed in the extract from the Title Registry. This is often a problem in Ukraine where improvements to premises have been made by an owner without the required permissions. The importance of exhaustive due diligence, including practical verifications, for title transfers in Ukraine cannot be overemphasized.

(d) Completion of the Purchase - Notarisation and Registration of Contracts

According to Article 657 of the Civil Code, the purchase contract must be executed in a notary, and the transaction should be listed by the notary in its register of notarial acts. The buyer should then apply for the transfer of the property to be registered at the appropriate Title Registry. Note that under the Civil Code, a purchase contract for real property enters into force only upon its registration by the state.

According to the Resolution of the Cabinet of Ministers of Ukraine of 26 May 2004 On Approval of the Temporary Procedure for the State Registration of Agreements (Temporary Procedure), the registration of a contract for the purchase and sale of real estate must also be carried out in the State Registry of Agreements by the notary who notarises such a contract. The notary should submit the necessary information concerning the contract to the State Registry of Agreements simultaneously with the contract's notarisation, assuming that the notary is for this purpose a registrar and is connected to the state registry's computer system. If the notary does not have access to the State Registry of Agreements' computer system, such a notary should send one copy of the agreement to this State Registry of Agreements on the same day when the agreement is notarised.

Saturday, January 20, 2007

Ukraine real estate tips - State registration of proprietary rights

The State Registration Act introduced into Ukrainian law a state registration by which the state now officially recognizes and confirms the arising, transferring and termination of proprietary rights to real estate property and the limitations on such rights. The State Registration Act requires the following proprietary rights to be registered: (1) ownership rights (title); (2) proprietary rights, including rights of possession, servitudes and rights of use (including leases) of real estate having a term of one year or more; and (3) limitations of proprietary rights arising, for example, out of mortgages, court injunctions and decisions of courts and other competent authorities as provided by the Registration Act.

For the purposes of such state registration, the State Registry of Rights to Real Property and their Limitations (State Registry of Rights) is to be created by the State Committee for Land Resources which, according to the Registration Act, will be the holder of the State Registry of Rights. This State Registry of Rights has not yet been created, however, and until it is, such registrations of titles to real property continue to be handled by the appropriate local Bureau of Technical Inventory (BTI) as the Registry of Title to Real Estate (Title Registry), with other registrations being handled as described below.

The State Registration Act has also introduced a significant guarantee for acquirers of proprietary rights who register these rights - in case of any dispute over particular real property, registered rights to real property should prevail over non-registered rights. Furthermore, by virtue of the State Registration Act, until such registration is completed, no further transaction with a property by a new owner (buyer) of such property should be able to take place.

Notwithstanding the above, the State Registration Act has left some unresolved issues and controversies concerning the registration of title to real estate and agreements on real estate, in particular, concerning the reliability and timing of the registration process, as well as on how the State Registry of Rights will be integrated with other state registries related to real property. Hopefully these problems will be successfully resolved in the near future. Until they are, wherever possible, there is recommend that payments for real estate being purchased be withheld or escrowed until the successful registration of the purchase is confirmed.

Friday, January 19, 2007

Kiev – the fastest growth of real estate prices in the world

Ukrainian press analyzes annual real estate index report published by Global Property Guide (GPG).

Property boom in Ukraine
Ukraine has caught a virulent strain of the property boom virus. In the capital city of Kiev (pop. 2.6 million) house prices rose by around 65% in 2005, according to Kiev real estate agents In Real. This extraordinary growth follows 30% price growth in 2004, and 35% price increases in 2003. In January this year (2006) the situation was reported to have stabilized, but of course no-one is sure what comes next.

The average price for properties located in central Kiev is now around €1,240 per square meter (sq. m.) in 2005, according to the local estate agents Teren Plus. The prices range from €700 per sq. m. to around €2,350 per sq. m., depending on the district where the property is located. The most expensive apartments in the city center or the Dniper River cost around €3,900 to €7,800 per sq. m.

This is curious, because there is no hyperinflation in Ukraine. The official inflation rate for 2005 was only 8%.

The hryvnia was introduced in 1996 and initially steeply declined against the US$, but the currency has been rather stable against the US$, fluctuating for the past five years between H5.5 to H5 to the US$, reflecting a semi-peg.

There is clearly a speculative element in a situation in which monthly real estate prices are rising at an average rate of 5% per month, but there are other factors too.

Original source


Prices for residential real estate in Ukraine

Prices for residential real estate in Ukraine



Price for 1 sq/m, USD

Population (thousand)


Kiev (Kyiv)




Odessa (Odesa)












Kharkov (Kharkiv)








Lvov (Lviv)




Nikolaev (Mikolaev)








Chernovtsy (Chernivtsy)












Ternopil (Ternopil)




Rovno (Rivne)
























Chernigov (Chernigiv)



























Average price for Ukraine is 1369 USD /sq.m

Thursday, January 18, 2007

Odessa - great place in Ukraine for retail real estate property

Today Odessa has 7 shopping centres with K70 sq.m. total space approximately. Only during the last 2 years there was launched 40 sq. m. But demand for commercial property (and for retail real estate particularly) is still extremely high.

According the market research, Odessa retail market could absorb K60-70 sq.m. every year, at least. And this situation will be actual within 5-7 years. Some sources reporting that until 2008 the total usable retail space in Odessa will increase up to K195 sq.m. and total space of shopping centres reach K290 sq.m.

Some well-know Ukrainian developers are going to start operation in South of Ukraine. XXI Century Investments plans to build megamall with total space with K35 sq.m. And there is some buzz about new Karavan Megastore with.

So, why is Odessa so attractive for retail companies? There is one of the highest average single purchase amount – $15-18. So this figure testifies that buyers are ready to spend money and retail property should be pretty profitable.

Development cost for 1 sq.m average is $700-1000. And if the average rent rate within Ukraine (excluding Kiev, for sure) is 20-80 sq.m/month, but the similar rent rent in Odessa range 30-150 sq.m/month. Vacancy rate is one of the lowest in Ukraine and set up to 2-3%.

Main existing Odessa shopping centres


Total/rentable sq.m.


"7 Ya"

16 000/




19 000/












25 500

/19 000



17 000/

12 000



14 400/

12 720