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Wednesday, February 28, 2007

Kiev starts preparing for 19 competitions for investment in construction and reconstruction

Ukrainian News

The Kiev municipal administration has started preparing for 19 competitions for the right to invest in construction and reconstruction projects.

This is stated in the relevant directives of the Kiev municipal administration, texts of which Ukrainian News obtained.

In particular, the Kiev municipal administration has started preparation for competitions for the right to invest in reconstruction of the Tarasa Shevchenka and Lybydska squares.

It has also started preparation for competitions for investment in construction of the following: an underground pedestrian crossing from a trading and exhibition center to the intersection of Tychyny Avenue and Shumska Street in the Dniprovskyi district, a yacht club with a berth for yachts at the Volkhovata boat yard in the Obolonskyi district in the section between Moskovskyi Avenue and the Petrovskyi railway bridge, a center for family recreation and a covered skating rink on Poryka Avenue in the Podilskyi district, and the second stage of the exit from the Darnytsia subway station over the Brovarskyi Avenue with in-built nonresidential space.

At the same time, the Kiev municipal administration has invalidated its 2006 directive on organization of competitions for investment in reconstruction of the Lybydska Square, construction of an underground crossing to the intersection of Tychyny Avenue and Shumska Street, and construction of the yacht club.

Moreover, the Kiev municipal administration has decided to implement investment projects involving comprehensive reconstruction of blocks in the DVS village (on the paired and unpaired sides of Dniprovodska Street) in the Obolonskyi district, construction of a residential building with built-in nonresidential space and parking space at 12, Zdolbunivska Street, a shopping and entertainment center at 16-a, Verbytskoho Street, in the Darnytskyi district, two-level parking lots at 5, Ozerna Street, in the Obolonskyi district, and at 4-a, Promyslova Street, in the Holosiivskyi district.

The Kiev municipal administration is also preparing investment projects involving reconstruction of blocks in the Darnytskyi district and construction of residential buildings there: between Rosiiska Street, Volho-Donska Street, Volho-Donskyi and Rudneva Alleys, as well as between Novodarnytska, Rosiiska, Illicha, and Yaltynska Streets.

Moreover, the Kiev municipal administration is preparing investment competitions for projects involving construction of covered space over the five open-air segments of the Sviatoshynsko-Brovarska subway line. These open-air segments are between the Lisova and Chernihivska, Chernihivska and Darnytsia, Darnytsia and Livoberezhna, Livoberezhna and Hidropark, and Hidropark and Dnipro subway stations.

These covered spaces will have pedestrian bridges, trading and office space, entertainment space, parking lots, and accompanying infrastructure.

The Kiev municipal administration has selected the Kyiv Investment Agency to place the relevant orders.

The agency will also perform pre-project work, draft approximate feasibility studies for the projects and submit them to the Kiev Town Planning Council for approval, and hold public hearings on the projects.

The agency has been directed to submit in May the relevant approved documents to the Kiev municipal administration's main department of economics and investment, which is to draft the conditions for the investment projects.

As Ukrainian News earlier reported, the Kiev municipal administration planned to organize competitions for the right to implement nine investment projects with a total cost of UAH 1.548 billion in 2006, but it cancelled six of the investment projects in July 2006.

Short news - Mirax Group starts the sales

Couple days ago I've wrote about Mirax Plaza. As Andriy Khariv, CEO of Ukrainian branch of Mirax Group said, the sale will start at March.

First of all, the selling process starting with 46-floor office part of the "Mirax Plaza" complex with total spaces exceed K200 sq.m. Initially they will sell with single floors only for the USD 3500/1 sq.m. The total space of one floor is estimated 1500 sq.m. Main scenario is bonds issue.

Residential sales of the complex would begin a little bit later. Estimated price for 1 sq.m. is USD 2500.

VR plans serious corrections with construction regulation

The parliament is going to create a vertical executive authority for architecture and construction regulation.

The parliament approved a first reading of the draft law No. 2451 "On Amendments to Certain Legislative Acts of Ukraine Regarding Architectural and Construction Control" with 292 votes.

According to the draft law, state architectural and construction control is to be made by the federal executive committee in charge of construction, town planning, and architecture.

A State control within this organisation will be made by the State Architectural and Construction Inspectorate and its territorial departments.

The draft law states that these inspectorates will be financed by constructors via payments to a special funds of a State budget and that the chairman and deputies will have the rights to apply the penalties.

The draft law also stated that a construction permit is not enough to start construction works without relevant permit from the State Architectural and Construction Inspectorate or its territorial departments.

According to the note to the draft law, the document is called to create state architectural and construction control, since presently the time of examination are too long (45-120 days in keeping with the law, however, much longer in practice) and there is no single expert control of construction projects, which results in unsatisfactory and ineffective work of state expert examination services.

Tuesday, February 27, 2007

19-23 Feb - Residential rent prices

Ukrainian News

The average rent for one-room apartments in Kiev fell by 0.6% or USD 3 to USD 478.5 per month on February 16-23.

According to information of the Real Estate portal, the average rent for two-room apartments in Kiev rose by 1.6% or USD 12.7 to USD 804.2 per month, the average rent for three-room apartments fell by 0.3% or USD 3.4 USD 1,284 on February 16-23.

The lowest one-room apartments rents in Kiev rose by 2.7% or USD 8 to USD 310, for two-room apartments fell by 3.4% or USD 14 to USD 395 per month, for three-room apartments rose by 1% or USD 5 to USD 523 on February 16-23.

The highest rents fell by 1.1% or by USD 10 to USD 918.3 for one-room apartments, fell by 1.4% or USD 30 to USD 2,070 for two-room apartments, and rose by 6.1% or USD 210 to USD 3,650 for three-room apartments on February 16-23.

As Ukrainian News earlier reported, the average rent for one-room apartments in Kiev rose by 1% or USD 4.9 to USD 481.5 per month on February 9-16, the average rent for two-room apartments rose by 0.4% or USD 3.5 to USD 791.5 per month, the average rent for three-room apartments rose by 0.9% or USD 11.6 USD 1,287.4.

25 Feb - Current prices for residential real estate, Kiev.

Current prices (average weighted) for one-room apartments on Kiev primary real-estate market has become USD 1,907 per sq. m., the average prices of two-room apartments on the primary real estate market on USD 2,470 per sq. m., for three-room apartments USD 2,406 per sq. m.

Secondary market shows such figures: the average price for one-room apartments on Kiev secondary real estate market is USD 2,979 per sq. m., two-room apartments on the secondary real estate market on was fixed at USD 3,000 per sq. m., level, for three-room apartments - USD 2,878 per sq. m.

Monday, February 26, 2007

Velika Kishenia expand their presence

Velika Kishenia, one of the leading retailer in Ukraine expand their business in Ukrainian regions. Their new project is located in Kharkiv. That is the third project developed under management of the group of companies with the same name.

The concept and project stage of shopping centers within a group managed by JV "Retail Group", and for the construction and management of the centres and warehouse complex is responsible JV "VK Development".

Total space of the new shopping centre aprox. K10 sq. m. At the centre will be placed 4th "Velika Kishenia" in Kharkiv with K3 sq.m. area, drug store "Velika Apteka" offered a wide range of medicines and medical supplies, as well as mobile communication stores, souvenir shops, jewellery and costume jewellery, perfumes, cosmetics, foto-video goods etc. Parking is suitable for 100 cars.

8.6 mln. sq.m. - a 2006 result for residential construction in Ukraine

This said Volodymyr Rybak, Deputy Prime Minister/ Minister of Construction, Architecture and Utility. «10.3% up on the year before,» he added.

Total work performed by construction companies worth UAH 38 bln., Rybak said And this is a growth for 9.8% comparing with 2005. Total budget income from construction activity is UAH 4.3 bln., 30% more than in 2005.

The Ministry of Construction, Architecture and Housing and Utility Economy forecasts a 17.6% increase in residential construction up to 9.4 mln. sq.m.

For comparing -8 mln. sq.m. have been built in Ukraine within 2005.

Sunday, February 25, 2007

Another gigantic project in Kiev

Couple days ago I've wrote about highest building in Kiev at Left bank. But it's just planned, not built. But to be straight with you, I have to note a building is built now . This is "Mirax Plaza" from Russian-based "Mirax Group" company, located at Hlybochitska street. At current, this is a most ambitious project ever.

Complex will be the highest building in the country that meets all the requirements of a modern office building Class A. Of course, if 200-m. towers in Left bank won't being built. The height of the project office centre has been approved for 170 m, the number of floors - 44.

"Mirax Plaza"is mixed-use complex with offices, a residential complex, leisure zone and parking. The upper floors of office centre designed for panoramic restaurant. The roof of the building will be built with helicopter place.

Residential part is consists of five sections, which will be available 381 flats, each with an individual planning and including two-level penthouses. People lived here will be available with 24-h services and utilities assistance, cleaning service, food and grocery delivery etc.

New direction for USFA

At Friday, 23 Feb, I've participated in annual meeting of USFA, Ukrainian Society of financial analysts, where I'm a member since 2001. So there were many interested discussions and opinions about investments in Ukraine, bonds and financial legislation as well. The Chairman of the Society, Yury Prosorov supported my proposition about a new committee for real estate. I hope it would be done in the nearest future. Feel free to contact me regarding a international initiatives within our organisation.

Friday, February 23, 2007

Kiev construction news, 23 Feb

The Kiev Town Planning Council has approved the Prombudindistria project for construction a residential multifamily building with offices at 11, Pechenizka Street, in Shevchenkivskyi district.

Also the Kiev Town Planning Council has approved the Forton company's project for construction of a mixed-use residential and office complex on Saperno-Slobidka Street in the Holosiivskyi district.

R. Oleksenko, keynote speaker about real estate market at BBCU meeting

Yesterday, I've participated in British Business Club in Ukraine. This was a first big meeting of the Ukrainian and British business people featuring keynote speakers, Valery Khoroshkovsky, deputy chairman of National Security and Defence council and Ruslan Oleksenko, managing partner of DEOL Partners with overview of Ukrainian commercial real estate market.

I recorded a speech of Mr. Oleksenko. You can download and listen it. Quality of the record is not excellent but acceptable. Size 11,9Mb

Short news - VR proposes new land valuation rules

The Verkhovna Rada of Ukraine adopted in the first reading a bill "About Amendments to Article 18 of the bill "On land" assessment made by the Cabinet of Ministers.

There was 258 votes from total of 440 MP registered in the session.

The draft bill proposed that the monetary valuation of land was stated out :

  • located into a settlements borders, regardless of their special zoning - at least once every 5-7 years;
  • the non-agricultural land, located out of a settlements borders - at least once every 7-10 years.
  • the agricultural land, located out of a settlements borders - at least once every 5-7 years;

Thursday, February 22, 2007

First real Ukrainian skyscrapper is ready to build

In Kiev can begin construction a giant 86-floor skyscraper near metro station "Levoberezhna", begin at the end of May 2007. The 2,5 ha land plot has already given by Kiev city council. Last question is to examine a geology.

That said Sergey Babushkin, the chief architect of the project.

"A month ago, we signed a contract with the Shanghai Project Institute and is now working closely and learn their experience of the construction of high-rise buildings, "said Babushkin. - "Why Shanghai? The fact is that there are geological conditions are the same as in our city. There is a river, which is pretty similar to Dnipro, and such kind of construction develops well. We will consult with the specialists of the Institute, on process of construction our project, the country's first 200-meter building. I'm sure everything will be OK".

Before construction they decided to reconstruct appropriate transport interchanges. Because even now there are big traffic jams sometimes.

Some info about zoning of a future building. The underground floors placed parking, above wil be the supermarkets, shops, multiplex, leisure and entertainment centres, the next ones are hotel and residential apartments, and offices and conference rooms on top of. Total construction, area reconstruction and road interchanges would cost about USD 1 bln.

Commercial property 2006 annual review

Great job from KOBA International Real Estate Consultants. Very comprehensive and detailed overview on all segments of commercial real estate in Ukraine. Very useful for general using. Download here

Wednesday, February 21, 2007

Short news - XXI Century goes at logistics market

XXI Century is going to invest USD 280 mln. in logistics project until 2012.

It is planned that the logistic complexes would be located at major highways near largest Ukrainian cities.

The company has signed agreements on purchase of three land plots for construction with total area of 78 Ha in Kiev and Odessa. An agreement on designing a complex in Odesa has already been signed. The construction is planned to take place in summer of 2007.

Company logistic department director Andrii Zaitsev said that main task of the project is provide quality multifunctional warehouses with additional e services based on Supply Chain Management system.

Minister of Transport wants a money for roads construction again

Rudkovski wants investments from Citybank to the Ukrainian roads. My old readers should to remember my post about negotiations between Nikolay Rudkovsky, Minister of Transport of Ukraine and French companies. Who doesn't remember, read it here.

So if I got it right , they agreed to develop cooperation in this field. And now there is new message related with American Citybank. Are we changing our priority or there are other reasons? Business?

American City Bank will consider the proposal of the Minister of Transport and Communication of Ukraine on the road development in Ukraine. According to the Minister of Transport and Communication of Ukraine Nikolai Rudkovsky, calling to international banks for the construction of roads is motivated by that the State does not have enough money to pay for construction in the near future of the road network of European quality.

Among the priorities for Ukraine Nikolai Rudkovsky stated Kiev-Lviv, Lviv-Lugansk, Kiev-Odessa, a ring road around the Kiev and 1st category roads from the East to the South, Dnepropetrovsk-Odessa. "The traffic on those roads, and even on their single section may vary significantly", the Minister said. - "We have to calculate all the details, and a mechanism by the government compensation of insufficient traffic".

According to the managing director of the public sector department of Citygroup in Central Asia and Eastern Europe, Middle East and Africa Kathy Pointer, the best option is to cooperate with single company: when contractors, which will build the road will also operate it. "In this way, they will be responsible for the quality of roads built," she believes.

So the meeting' result that further detailed study of Citybank priority for Ukraine ways for the roads construction and offer this to the Ministry of Transport and Communications.

Short news - In 2006 foreign direct investment rose by 37.1%

Foreign direct investment in Ukraine in 2006 grew by 37.1% (USD 6 260,527 mln.) at January 1, 2007, and amounted USD 23 150,576 mln. Goskomstat reporting.

Net capital gain for 2006 was USD 4 027,884 mln: invested USD 4 580,517 mln., withdrew - USD 552,633 mln.

Among the Ukrainian regions the figures are: Kiev - USD 5 538,2 mln., Dnepropetrovsk - USD 2 331,9 mln. and Kharkov - USD 1 015,4 mln.

The largest investment amounts on the January 1, 2007 was applied in the financial institutions - USD 2 419 .8 mln., retail and intermediate trade - USD 2 264 mln., real estate transactions - USD 1 773,4 mln., metallurgy and metal processing - USD 1 398,3 mln., food Industry - USD 1 274,6 mln.

Tuesday, February 20, 2007

Ukraine should impose a tax on real estate.

The president of the Association of Ukrainian taxpayers Sergei Bychkov said this today.

He noted that in a market economy, real estate is an indicator of ability to pay. "In conditions of a transitional economy, this indicator is very important, especially since part of the private incomes is hidden", assumes S. Bychkov.

According to him, a tax on real estate it is important that the rate was variable - from 0.05% to 1.0%. It should establish local authorities, depending on the type of property, the size of housing and other criteria.

S. Bychkov also noted that in Russia Real estate tax is 9% of the total government revenue.

From RBC Ukraine

VR is going to regulate construction rules and terms

The Verkhovna Rada intends to establish legal and organizational base on regulations in construction and to create conditions for state policy in the market. This is flow from draft bill No.2503 on the regulations in construction.

Apart from the regulations on rules in construction, city planning, and architecture, the draft bill provides for the creation of the comprehensive database of normative and legal documents concerning construction. According to the draft bill, the construction rules are normative and legal acts consisting of the rules in construction, city planning, and architecture.

The draft bill introduces three kinds of rules: the national construction norms, which are endorsed by the central construction authorities, departmental construction norms, which are endorsed by central bodies of government, and territorial construction norms, which are endorsed by local bodies of the executives. The departmental and territorial construction rules should be agreed with the central construction authorities. The explanatory note to the draft bill reads that the bill will form the organizational principles of the work in the field of the regulations in construction and will create grounds for the elaboration of methodological case for the realization of the regulations in construction.

Also, the endorsement of the bill will structure the work on the drawing up of the construction rules, their coordination, endorsement of the rules and amendments.

Kiev warehouse market overview (part 2)

Activity of a large companies constrained by the lack of suitable land sites with the necessary communication and legal status for their use. Most of this is a rural or agricultural, and changes with a view to further build warehouses is a difficult and long-time process. Especially according with well-known land moratorium. Few international companies will not engage in “hidden” transactions that could damage the their brand and image and lead to a legal proceedings. And the construction of new warehouses in Kiev city is limited by high land prices and low offer.

Increasing demand for warehouse facilities leads to an increase in rental rates. During the 2006 rental rates are increased by 15% and amounted to approximately USD 8-12 and up to USD 25 for 1 sq.m. without operating costs.

The building cost of warehouse space, according to the Real Estate Solutions at the USD 300-500 for 1 sq.m, Build & Live Development reports about USD 500-650 for 1 sq.m.. Specialized premises (freeze spaces, pharmacies, etc.) costs up to USD 1000 for 1 sq.m. And PB period for quality warehouse property is estimating at 7-8 years level.

Warehouse grade market share

А class – 5%

В class – 10%

С class – 40%

D class – 45%.

There is big demand for quality spaces. One of the reason is that almost all A class warehouses are build-to-suit project. So market demand for free space still high.

In 2007, the demand for warehouse will continue to increase and the new supply would not be able to meet. This will lead to an increase in rental rates until 2008.

Some planned projects

In 2007, Intereuropa company (Slovenia) plans to set up a logistics center in Ukraine in Kiev suburbia located on 24 ha. They are going to invest EUR 15.6 ml

In 2008, near Brovary will be built logistics hub. It will be places on 250 ha. Total investment amount of the project announced about USD 300 ml.

About their plans to develop new projects say Asnova Holding, FIM Group, Kuehne&Nagel, Komora-S, MLP

Monday, February 19, 2007

Anchor tenant for Dneprovskaya Pristan has been confirmed

As I've wrote before Prizma Beta is building new mixed-use complex Dneprovskaya Pristan. Now, there is an anchor tenant - Russian-based retail chain O'KEI. They will cover K18 sq. m. Opening is scheduled for September 2007, and will be the first phase of the project.

Shopping centre is a part of a mixed-use complex on Gen. Vatutina street in Kiev. The complex, in addition to shopping centre will include a residential complex and yacht club. The total area of shopping centre about K85 sq.m. Exclusive marketing and commercial property agent is Jones Lang LaSalle.

In 2007, O'KEI intends to open 3 supermarkets in the regions of Ukraine. In the first quarter of 2008 they plans to launch hypermarket included in Franzuzski bulvar in Kharkiv where it will cover K10 sq. m.

Shareholder of O'KEI is Saint-Petersbourg company Dorinda Holding Company

Capital outflow threats to Ukraine

Interfax Ukraine

President Viktor Yuschenko says capital outflow poses one of the biggest threats to the country's national security.

"The scale of the capital outflow in the past 4 or 5 years from Ukraine indicates that the phenomena is one of the basic threats to the national security of Ukraine," Yuschenko said at a meeting of the National Security and Defence Council in Kiev on Friday.

Although there are no official statistical data, it is said a colossal $12.9 billion left the economy between 2004 and 2006, with $13.2 billion in direct foreign investment flowing into the country, Yuschenko said.

"We are proud of having this unique investment inflow, especially over the past two years, but we must realize that the same sum was taken out of circulation [in Ukraine]," he said, according to the press service of the president.

Given Ukraine's $6.7 billion trade deficit, the tendency is particularly dangerous, Yuschenko said. "We may soon be facing very serious challenges, disrupting price and monetary stability," he said. The president said law enforcement agencies had been ineffective in preventing capital outflow. He added that the government introduced no reforms encouraging domestic investment.

"At this table, we must ask those in charge of improving the investment climate why we have not yet created a comfortable business environment and why the black economy is flourishing," he said, slamming the State Committee for Financial Monitoring for failing to prevent murky financial transactions.

Unfortunately, in my opinion, this shows that Ukrainian economy has not as enough stability as investors want. The investments come in Ukraine for sure, but economical and political issues don't allow to capitalize this process. And most dangerous, that domestic capital is trying "get out of here". Of course, not total investment amount does it but the significant one. I'm agree with President that we're losing unique chance to develop Ukraine within different directions with investment assets because the outflow are. And not only in real estate market.

Saturday, February 17, 2007

Elita Center investors asking Kiev to stop competition for investment

From Ukrainian News

The people that invested money in the Elita Center company’s housing construction project have called on the Kiev municipal administration to stop the competition it announced for the right to invest in construction of three residential buildings for, among others, the victims of the Elita Center apartment fraud.

They made the call in a statement, a text of which Ukrainian News obtained.

«We are calling for a stop of the investment competition, and we oppose announcement of its results,» the statement says.

It further says that the Elita Center investors have repeatedly made similar calls to the Kiev municipal administration and that the administration ignored these calls.

They believe that the Kiev municipal administration has not drafted a mechanism for providing housing to the victims of the Elita Center apartment fraud, has not established the order of provision of apartments to them, has not determined the location and size of the apartments to be provided to them, and has not selected the legal entity that will be in charge of distribution of the apartments.

«The consequence of announcement [of the results] of the investment competition will be enrichment of investors and deprivation of at least one-third of the victims at the expense of the remaining victims,» the state says.

It also says that the Elita Center apartment fraud victims will go to court if the Kiev municipal administration ignores their call and announces the results of the competition.

Meanwhile, acting head of the Kiev municipal administration and head of the administration’s main department of economics and investments, Denys Bass, said that the competition commission would study the call and respond to it in some way.

However, according to him, the call contains only emotions and no concrete proposals.

As Ukrainian News earlier reported, the Kiev municipal administration’s main department of economic and investments intended to select companies that will build three residential buildings for, among others, the victims of the Elita Center apartment fraud on February 15.

Kiev construction news, 17 Feb

Kiev plant "Hranit" proposes to Kiev planning council to approve the construction of a mixed-use complex (retail and offices) at 17 Vyzvolyteliv Avenue in Dniprovskyi district.

Stolytsia company is proposing the Kiev planning council to build a residential-office complex at 16A Urytskoho street in the Solomenskiy district.

T. & E. company iis proposing the Kiev planning council to adopt planning verifications for construction of a Coliseum multifunctional complex at 19 Voziednannia avenue in the Dniprovskyi district.

Friday, February 16, 2007

Moscow is preparing for the collapse of the real estate market

The fair price for 1 square meters in Moscow residential market is less than 3000 USD say "Rosgosstrakh" analysts, the biggest Russia insurance company.

Now, according to "Indicators of the real estate market", the average cost per 1 square metre in Moscow exceeds 4,200 USD. Researchers claim that their assessment is fair and equitable, with the balance of supply and demand in the Moscow real estate market.

Thus, according their words, in the next 1-2 years, the price of Moscow real estate could drop by more than 40%. Calculating based on Rosstat, "Expert-Data" marketing agency and the "Public Opinion" fund info. The press release noted that the cost of housing, the capital of Russia comes on the basis of price to Geneva and Madrid.

As you know, I don't see direct connection between Russia and Ukraine real estate market but some feeling tells me that we'll follow any Russia trends, 'cause there is strong psychologic moments...

09 Feb - Current prices for residential real estate, Kiev.

Current prices for one-room apartments on Kiev primary real-estate market has become USD 1,874 per sq. m., the average prices of two-room apartments on the primary real estate market on USD 2,270 per sq. m., for three-room apartments USD 2,444 per sq. m.

Secondary market shows such figures: the average price for one-room apartments on Kiev secondary real estate market is USD 2,893 per sq. m., two-room apartments on the secondary real estate market on was fixed at USD 2,987 per sq. m., level, for three-room apartments - USD 2,852 per sq. m.

Thursday, February 15, 2007

Karavan group goes further

Karavan group of companies is going to increase the number of its shopping centres up to 15 until 2010.

In current year, Karavan plans the opening 1st part of new shopping and entertainment centre in Dnipropetrovsk, and start the construction more than 10 others to increase their total amount up to 15. For that purposes the company has 12 land sites already in Ukraine. And they are going to get more, especially in Eastern regions of Ukraine - Donetsk and Lugansk.

So, they want to become biggest retail chain in Ukraine. Intends are big, let see on moving on.

Kiev warehouse market overview (part 1)

Despite the in industrial and retail growth and the demand for warehouse real estate, the market in Kiev and in the regions is far filled demand. There is not only huge demand for warehouses, but also low supply that meets Western requirements.

In 2006, a significant improvement in the situation has not happened. Demand for professional warehouse facilities will continue to grow rapidly, outpacing the offers. Coming on the market new built logistics complexes could be expected only by late 2008. Rents will be raised.

Regarding to the improvement of the investment climate in the country, lower investment risks in the industrial production, rising imports and other factors, demand for warehouse real estate is growing constantly.The capacity of Kiev warehouse property market is about 1 million sq.m. But at the end of 2006, total professional warehouses space in Kiev and the area was just over 200,000 sq.m. And all the high quality warehouses in Kiev and the Kiev area is already filled by customers almost at 100%.

At the same time, some 80% of the warehouses in the city and the area did not meet international standards can be assigned to class C at most. As a result, the warehouses are located on the non-professional premises, which in the past were factories and plants So they did not meet the basic requirements : no special loading platforms and equipments, no conditions for the appropriate staff and cargo security, not complied with the height conditions, accessible is difficult. The estimated amount of such space is about K 500 sq.m.

The demand for specialized warehouses partially meet former fruit and industrial base, usually situated near major transportation routes, roads, railways. An important advantage is the availability of loading ramps, as well as facilities supporting proper temperature for storing food or medicines for example. But among such objects only a few ones meet the necessary standards.The total area of such facilities in Kiev about K100 sq.m.

In 2006 the market was filled with only K60 sq.m. of warehouse and 2007 it would go up to K170 sq.m. But only in Kiev must build at least K300 sq.m. of warehouses Class A. Now, as on the Ukrainian market is increasingly facing international logistics company we can expect to increase a market. Thus, there is new “MLP – Chaika” mixed-use (office-warehouse) with total area about K110 sq.m., located on Kiev-Lviv higway. GLD Invest Group planned opening at 2007, their first logistics complex - East Gate Logistic with area more than K40 sq.m.

My opinion (and other experts as well), the most suitable for the development of warehouse real estate is the Odessa and Zhitomir destination. Areas near Gostomel and Irpen (Warsaw direction), Glevah (Odesske direction) and Obukhov (Dnepropetrovsk direction) outside Kiev in 35 km distance are good as well.

Right bank is preferable for the warehouses is defined as congestion bridges connecting the right and left banks, and the absence of district roads in the Kiev' eastern part.

Ukraine macroeconomic situation, January 2007

Ukraine macroeconomic situation

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1. Summary
2. Economic growth
3. Fiscal policy
4. Monetary policy
5. International trade and capital
6. Other developments and reform affecting the investment climate

Download full report here

Wednesday, February 14, 2007

Rivne residential construction up by 198.6%

In 2006 Rivne construction figures rose by 198.6% or 56,200 square meters more in residential, comparing with 2005, in all 84,500 square meters. 61.3% or 51,800 square meters of the total amount are apartments in multi-family buildings and 38.7% or 32,700 square meters - are private houses.

Besides the construction department, the major developers in Rivne in 2006 were the Region and the RivneMiskBud companies.

Rivne has a population of 240,000 people.

West Ukrainian retailer Rovex goes to cash&carry market

Rovex goes to a segment cash & carry. One of the biggest retailer in the Western Ukraine, Rovex expands in a new segment. The company is going to complete the construction of the first shopping centre in Ternopil by the end of the year. Funding for the project will be received through bond issues for UAH 6 mln., as well as bank loans.

According to market analysis, a construction a cash & carry centre (from K12 to K17 sq. m.) costs approximately UAH 120 mln. (USD 24 mln.) , with PB about 8-10 years.
In the Western Ukraine Rovex did not face significant competition from national retail chains, who are don't go to the region due to the low citizens' purchasing power .

At Western Ukraine average check retailers two to three times less than in Kiev, about UAH 10 in hypermarkets and 5 UAH in the discounters.

According to the Renaissance Capital Ukraine, retail market the western region of Ukraine in 2006 amounted to UAH 15.073 bln. (12% of the Ukrainian market). The largest operators in the region are "Intermarket, Rovex, Pakko", "Nash kray (Our Land)" and "Agrocontrakt.

Bank Forecast : 2010 hryvna will be convertible

There is expected until 2010 Ukrainian hryvna become fully convertible currency, although the final decision for the Board of the National Bank of Ukraine (NBU) and the government. This point of view was from Alexander Savchenko , Vice-President of NBU. According to him, NBU is ready to develop all the necessary legal documents, but convertibility depends not only on Ukraine, but on the state of the economy, as well as economic policy.

He added that, "in general, in Ukraine, all the prerequisites for convertibility does have : State finance, gold reserves and the economy growing, and have to raise the question of currency convertibility; it is, we already convertible on current transactions, not only capital transactions".

Tuesday, February 13, 2007

The economic effects of corruption

As I stated before, I'm going to place some info and analytic not related with real estate in Ukraine directly. But I'm sure that I have to give you essential and vitality info impacted on real estate indirectly for sure. Here it is - "The economic effects of corruption" article, printed in The Ukrainian Observer

“Privat” group, Dnepropetrovsk, is going to set up a construction holding based on “Aerobud” company

The shareholders of Kiev based Aerobud company agreed on the establishment of branches in Dnepropetrovsk, Kharkov and Odessa. This step gave a reason to speak, that the Igor Kolomoiskiy, co-owner of Privat seeks to strengthen its position in the future construction and development market.

Recently Aerobud has been a leader in monolith construction technology and several years has been very widely presented in the market, getting the prestigious orders regularly. For example, the redevelopment of the Borispil airport, hotels Ukraina, Russia and Turkmenistan embassies, hotel Oreanda in Yalta and many other. But now Aerobud almost lost among the many companies working on Kiev market. So, the decision to go to regions where the volume of construction has steadily increased, could compensate for the failures the former flagship.

Most likely, the increase activity in the company related to its coming under Privat umbrella. As for November 1 2006, the nominal holder of 99.99% stake became Privatbank, and in December of last year, shares of the construction company approximately equally distributed among well-known Privat offshores: Ballioti Enterprises LTD, Melchett Invest Limited, Geveld Holdings INC, Ravenscroft Holdings Limited and Mortondale Assets Limited.

The need to come seriously into this business, Igor Kolomoiskiy faced with stadium construction in Dnepropetrovsk for the his football club , they say.

Likewise, set up of industrial holding, which will in construction market is very timely, and, given the Privat ambitions makes sense starts with capital company.

Bratyslava company suggests building entertainment centre

The Kiev-based Bratyslava company suggests that the Kyiv City-Planning Council approve its pre-design propositions for building an entertainment centre on Raisy Okipnoi street in Kiev's Dniprovskyi district. The project foresees the construction of an eight floor centre on the area of 0.13 hectares.

It is planned to arrange bowling and billiard facilities on the ground floor, and a large Internet cafe on its first floor. Offices will be located on the centre upper floors.

According to the project, the centre will have a restaurant for 50 seats, a cinema (80 seats), and cafe (40-45 people) and a gym. It is also planned to build a parking for 25-30 cars.

The council members recommended that the project be elaborated; particularly the building’s height should be brought down to 2-3 floors while the parking lot should have more places.

Monday, February 12, 2007

Real is real

The first major Europe grocery retail chain is coming to Ukrainian market. In early February, German Real, a company of the Metro Group, registered Ukrainian branch and to seek staff. Head of "Real Ukraine" is a Christian Gepfert. Information on "Real Ukraine" opening confirmed in the Ukrainian Metro Cash & Carry.

Kiev planning council asks Ukrrestavratsiia to redesign project of office centre on Mykhailivska

The Kiev Town Planning Council has recommended that the Ukrrestavratsiia corporation redesign its project for construction of an office center at 18, Mykhailivska Street, in Shevchenkivskyi district.

Members of the Kyiv Town Planning Council criticized the architectural design of the facades of the building, its volume, and the proposed transport network.

The project involves construction of a seven-story building with 4,560 square meters of space on a land plot with an area of 0.1 hectare.

Early, Council recommended in November 2006 reduce the volume of the office center it plans to build at 18, Mykhailivska Street. According to the project, the office center will have 4,560 square meters of space.

Ukrrestavratsiia, a specialized scientific, design, and production corporation, engages in restoration of buildings.

Kiev Planning council approves project of reconstruction Kozatskyi hotel

Here some news from Kiev building and construction "world". I'd like to get your comments is this interesting for you.

The Kiev City Planning Council has approved a project of reconstruction of the Kozatskyi hotel, located at 1/3 Mykhailivska Street in the Shevchenkivskyi district.

At the same time he noted, the board's permission is valid only on condition of the project approval by agencies, protecting cultural heritage and the Kiev city council's decision as to land plots, which would be used for expansion.

There are two land plots by the hotel, which would be built up when developing a free space between the hotel building and the neighbouring house.

The project foresees one-floor addition over the hotel, in which apartments are planned to be built. Two additional floors had been proposed before.

The project authors (Oleksandr Moskovchuk architectural bureau) on recommendation of the City Planning Council members retained architectural style of the existing facades.

The reconstruction is ordered by the Defense Ministry’s subsidiary Kozatskyi hotel. The Kozatskyi hotel is located in the Kyiv center on Nezalezhnosti Square.

Saturday, February 10, 2007

Vinnytsa region offers 116 land plots for investment projects

Vinnytsia regional state administration has approved a list of 116 land plots for investment projects to be realized in the Vinnytsia region during 2007-2009. This is reported the Head of Vinnytsa regional administration's economy department.

In his words, the allotments in the region's 18 districts and two towns will be offered to investors at tenders or auctions.

In February 2006 Vinnytsa regional state administration regulated order of selling and leasing land plots in the region, according to which land plots can be sold only at auctions or by tenders with equal access t everybody, by this the executive power bodies undertake performing all the procedures for allowing land appraisal.

The Vinnytsa region has 27 districts and six towns, populated with over 1.7 million people.

A fair land market or a land grab?

Gary Reusche & Stephan Vitvitsky, Kyiv Post

The question of a land market in Ukraine has yet to make the transition from the Soviet past. Under the Soviet Union, private property was illegal.

After 15 years of independence, land reform in Ukraine is still unfulfilled. At stake is perhaps the best agricultural land in Europe, and its current owners are the poor and mostly neglected rural inhabitants.

The roots of the current situation are in the Soviet era and are directly related to the Holodomor, or Great Famine. During the reorganization of rural Ukraine by the Soviets, residents were uprooted, and during the famine their population was decimated. In their place were established collective farms.

These collective farms are now history, with the exception that the inheritors of the collective farms have ownership of the land, but not the right to sell it. Roughly 7 million rural Ukrainians have, or will soon have, land acts for approximately 25 million hectares of the best farmland
in Ukraine (and in Europe).

How to move from the current situation to the future is the crux of the problem. Will there be opportunities for the current residents to develop farms and small businesses and create a decent life, or will vested interests and elites grab the land? This drama will be played out in the
upcoming years.

What seems to be lacking is a vision for the future that gives realistic hope for the current landowners to consolidate and utilize this land in ways that are viable in a market economy.

In most transition economies, the creation of a land market and clear property rights is essential to successful market economy transformation. Ideally, land that is bought and sold within a market should change hands to those who seek to enhance productivity, efficiency, and growth.

As discussed by agricultural expert Andriy Yarmark in a recent interview in the Kyiv Post, a well-functioning land market also encourages investment and increases revenue through land sales, which helps create jobs and enhance rural livelihood.

The Ukrainian parliament's recent prolongation of the land moratorium shows again the government's reluctance to complete its market economy transition (though only the most naive will think that this situation is not benefiting someone).

Although Ukraine needs an open land market now, it must be implemented in a context of programs designed to assist the rural population to make the transition, and encourage small business development.

If a small number of rich individuals or banks accumulate large tracts of land by cheaply buying land from the rural poor, the outcome would be at best an industrialized agriculture or at worst asset-stripping and environmental degradation.

Such a land-owning oligarchy would reap millions of dollars and gain huge political influence, and rural residents would speed up their migration to cities.

If Ukraine is to create a land market, the government must make sure that it is done legally, transparently, and most importantly, for the good of the more than 15 million people living in rural areas.

Extreme poverty rates are highest in rural areas, with roughly one-third living under a dollar a day. Simply creating a land market without certain conditions in place will not necessarily improve the lives of Ukraine's poorest residents.

First, the government initially should regulate land transactions in order to ensure a fair and socially equitable distribution of land. Quotas may be placed that limit how much land an individual may purchase, which would prevent oligarchs from purchasing large tracts of land at low prices.

Incentives should be given to the middle class and even to poor rural dwellers, such as tax breaks or subsidies, to encourage them to purchase land or cultivate the land they already own. Opponents of this policy would scream that government regulation would counter market reforms and lead to poor results.

Nevertheless, at least in initial years, the government must play a role in regulating the land market to ensure that land is distributed fairly. Only when a land market has demonstrated functionality and stability should the government step away.

Secondly, and of equal importance, is that credit must be available to new landowners. For what is a new landowner, especially if he is a former household plot farmer, going to do with 20-30 hectares if he has no access to credit?

Without it, many would be forced to sell - probably to a wealthy individual who can invest his own money, thereby increasing the likelihood that a land oligarchy develop.

Rural areas are currently vastly underserved by Ukraine's credit market. Although many major banks, such as PrivatBank, Raiffeisen Bank Aval, and ProCredit Bank, now offer small and micro-loan products, they primarily focus on urban areas. Agricultural loan products also are limited in their scope.

According to statistics from the Ukraine Micro-Lending Program, an EBRD-sponsored program that helps banks create micro-loan products, as of mid-2006 only roughly 4,000 agricultural loans have been disbursed worth $20 million.

Various donor aid agencies, including the EU, USAID, and the World Bank, have also tried to build up the credit cooperative system, known in Ukraine as credit unions and cooperative banks.

The government has approved a strategy for the development of a credit cooperation system, but in order to effectively implement the system, changes to the legislation are required.

These are not encouraging signs for potential landowners. Therefore, banks, NGOs, and credit unions should be encouraged to extend credit in small towns and rural areas, helping fill a major void in Ukraine's credit market.

Lastly, there must be strong institutions and courts in place in order for land transactions to be processed efficiently, ensuring that laws are upheld, and disputes settled. A land market without institutions would lead to chaos.

Transactions would be made very slowly, disputes would be settled through bribes and threats, and individuals would easily disobey the law. This state would be devastating for rural areas and would further encourage corruption, already a major problem in Ukraine.

Unfortunately, there is no quick and easy solution that can solve the current land dilemma. It is high time that the government, along with NGOs and development agencies, took steps to ensure that institutions and courts are functional and transparent; as well as ready to handle the huge workload once a land market is established.

Friday, February 9, 2007

Ukraine's credit rating may be raised by Moody's, S&P on growth

Bloomberg News, 08 Feb 2007

Ukraine's credit ratings may be lifted this year by international credit agencies including Moody's Investors Service and Standard & Poor's as high prices for steel and grain drive economic growth.

Ukraine is the biggest former Soviet state with credit ratings below investment grade, a legacy of political instability and delays in selling state assets and gaining membership of the WTO.

"Ukraine's rating is B1, which is very low," said Jonathan Schisser, a Moody's analyst in London by telephone. "We may raise it" though the timing "depends on political stability and the government's ability to carry out structural reforms."

Foreign direct investment since the collapse of communism in 1991 totals $20 billion, less than a fifth of the amount lured by neighboring Poland. Higher credit ratings mean lower debt costs for the government and Ukrainian companies.

Ukraine's 7.65% benchmark government bond maturing in 2013 yesterday yielded 6.09%, down from 6.66% in October 2006.

"The situation there is not fantastically improving, but it is stabilizing," Standard & Poor's analyst Helena Hessel said in a telephone interview in New York. "The main constraint" on a ratings upgrade"is the political situation, as the president is losing power and the prime minister is opposing him."

Still, economic growth averaged 8.4% in the past five years and GDP has more than tripled from $30 billion in 1998, when the nation defaulted on hundreds of millions of dollars in debt, devalued its currency and eroded reserves.

"We expect the rating agencies to respond to the improved credit fundamentals by delivering rating upgrades this year," Tim Ash, the managing director at Bear Stearns International Ltd., said. "Ukraine's rating at four to five notches behind Russia appears somewhat unjust."

Russia is rated Baa2 by Moody's, BBB+ by S&P, BBB+ by Fitch. Poland, which joined the EU in 2004, is rated A2 by Moody's, A- by S&P, A- by Fitch.

Although Ukraine is likely to be subject to political noise for the foreseeable future, Fitch believes that political risk is of a lower order of magnitude than two-three years ago."

Moody's raised Ukraine's outlook to positive from stable in November, indicating it is ready to improve the rating. The foreign and local issuer default rating was affirmed at B1, four steps below investment grade. Fitch raised Ukraine's outlook to positive a month before that.

The foreign and local issuer default rating was affirmed at BB-, three steps below investment grade. S&P kept its long-term foreign debt rating at BB-, its long-term local debt rating at BB and its short-term sovereign credit rating at B, the company said in a statement in July. The outlook remained "stable," S&P said.

Useful links and docs - Cabinet of Ministers of Ukraine web portal

There is a lot useful info, related with economics and current events in Ukrainian executive power.

The website contains comprehensive information divided into 2 parts: activity of authorities and topical articles about Ukraine. It contains powerful legislative data basis, as well as documents of the Cabinet of Ministers and draft bills, prepared by the Cabinet of Ministers.
If you has involved in Ukraine deals. business or so, or planning that in the near future read it.

Current prices for residential real estate, Kiev.

02 Feb 2007 snapshot

Current prices for one-room apartments on Kiev primary real-estate market has become USD 1,860 per sq. m., the average prices of two-room apartments on the primary real estate market on USD 2,258 per sq. m., for three-room apartments USD 2,433 per sq. m.

Secondary market shows such figures: the average price for one-room apartments on Kiev secondary real estate market is USD 2,873 per sq. m., two-room apartments on the secondary real estate market on was fixed at USD 2,966 per sq. m., level, for three-room apartments - USD 2,830 per sq. m.

Thursday, February 8, 2007

XXI Century confirmed new shopping centre in Desnianskyi district

Kiev department for control over architecture and construction permitted the XXI Century company to build a shopping centre on Balzak Street in Kiev's Desnianskyi district.

Permission for construction works is a legal document, which certifies a developer's (a customer's and a contractor's) right for performing construction (extension, reconstruction, technical re-equipment, restoration, overhaul) works of the object, stated in the permission.

Total amount of the XXI Century's investments into the project makes up USD 4.7 million.

Opening of the shopping centre is planned for the second quarter of 2008.

The center will have an area of 4,600 square meters, including 2,800 square meters of shopping space. The new center will have three levels, including a basement store.

The shopping centre will include a food supermarket, public services, dry-cleaning, bank branches, entertainment, catering, a children's room, mini-shops for commodity goods (clothes, footwear, optics, accessories and souvenirs etc.

The XXI Century company will redevelop the territory, including renovation of a playground and construction of a sports ground.

As Ukrainian News earlier reported, the XXI Century company intends to start construction of a shopping center on Balzaka Street in Desnianskyi district of Kyiv in March this year.

The Kvadrat Ukraine company (Kyiv), which is part of the XXI Century group of companies, intended to construct the Kvadrat shopping center on Balzaka Street in Desnianskyi district of Kyiv by 2008.

The XXI Century group of companies decided in 2006 to reorganize itself into a single development company. The company was registered on October 31, 2003, as a closed joint-stock company.

According to information from the Agency for Development of the Stock Market's Infrastructure, Twenty First Century Holding (Overseas) Limited of Cyprus owned 99.99% of the shares in the XXI Century company as of November 10, 2005.

"Elita-Center" fraud exposure anniversary

Ukrainian News

Around 100 people are staging a protest outside the Kyiv city state administration building on the occasion of the anniversary of revelation of the Elite Center fraud.

The protesters are carrying posters reading "Hovels to people!", "Mr. Chernovetskyi! Elite Center is awaiting problem settlement!", "Mr. Chernovetskyi! You were elected to protect our interests!", "Rogues took our homes!".

The protesters also built a cardboard house symbolizing the interests of the Elite Center fraud victims. Apart from this, the protesters started to build a brick wall, but police officers broke it down. From time to time the protesters chant "Hanba!" (shame). After the police destroyed the unfinished brick wall, they surrounded the place, preventing protesters from approaching it.

As Ukrainian News reported, the municipal administration registered 1,220 investors who suffered from the Elite Center construction fraud, and need housing. In early February 2006 the investors committee of the Elite Center investment construction group reported a stealth by the company heads of over USD 100 million invested in the Elita-Center housing construction.

Jones Lang LaSalle hired by the Ernst&Young top-manager

Well-known international commercial property company Jones Lang LaSalle announced Andrey Nazarenko as head of the Ukrainian branch. Previously he has employed by Ernst & Young Ukraine.

Nazarenko will be responsible for business development on Ukrainian market. He will involve in new projects, the development of customer relations.

Before this position Nazarenko worked Head of real estate advisory in Ernst & Young Ukraine. Prior to that, he was editor-in-chief of the commercial real estate magazine, also taught at the Banking Academy.

Nazarenko graduated Sumy State University and the Ukrainian Banking Academy.

Useful links and docs - "On the Regime of Foreign Investments" bill

Hello. Next useful document which is essential to any organisation or private person who doing business in Ukraine, and with real estate, too. Its name is "On the Regime of Foreign Investments", adapted by Baker&McKenzie Ukraine.

Unfortunately, there are huge amount of additional documents and appendixes for this bill make no sense and restrain investments activities in Ukraine.

Wednesday, February 7, 2007

Contracts for State real estate property will be reconsider

The State Property of Ukraine Committee (FGIU) will reconsider all rent contracts for the lease of real estate owned by the State. The order signed FGIU Chairman Valentyna Semenyuk.

In accordance with the order, subject to review all contracts for the lease of real property signed or agreed FGIU, its regional offices, as well as the Crimea State Property Committee, with the exception of the treaties signed state budgets organisation, the Pension Fund and its organizations.

Revision of contracts should be conducted in accordance with the approved bill "On the State budget of Ukraine for 2007" on the determination of rent in accordance with the market value as determined by the Cabinet of Ministers of Ukraine rule N1846 of 27 December 2006. This rule assumed that the rental rates are seen as starting in the auctions for the right to lease state property and the rates significantly changed.

Review contracts to be implemented through the signing of additional agreements to lease. The base for a month and the first month payment on the new rates determined in January 2007. Rents for January calculated on the basis of the rental rates established by the rule N1846, and the inflation index for January 2007.

In 2006, the income in the State budget from the lease of state property amounted to 326.5 million. Income from rental of a state 116.6% of the annual plan. Since the beginning of 2007, the amount of rental income exceeds UAH 28,980 mln. According to the approved plan by the end of the year FGIU to list in the budget from the lease of state property UAH 310 mln. The number of active leases public property contracts now stands at 26,633.

New labour system would affect on real estate prices

A short news, connected with all labour market but it should depends on constructors as well.

Parliament's Speaker Oleksandr Moroz offers to change a remuneration of labour system in Ukraine.

Member of Socialist party Ivan Bokiy has submitted the draft on hourly wages according to which unqualified workers will earn UAH 10 ($2) per hour and qualified ones UAH 25 ($5) and more.

Mr. Moroz stresses a strong need to implement such a model starting 2008 to change the remuneration of labour system and to get rid of shadow schemes of earnings payment.

The Speaker is aware “it will be a tough decision” but it will help to reinforce the government control of the remuneration of labor system and social protection of workers as well.

I have to note that this bill affect on construction market no doubt. Now ordinary worker gets one of the lowest salary in labour market. And this figures correlate with cost of building. But if the such bill will be approved, the labour cost will increase and total cost grow as well. As you understand it would be affect onto the housing market price.

Alef Estate is going to build new commercial property complexes in Dnipropetrovsk in 2007

Alef Estate is going to build new commercial property complexes in Dnipropetrovsk in 2007

Ukrainian News

Alef Estate, a Dnipropetrovsk-based property development company, will start construction of a shopping and business center called Brama and a multifunctional complex called Kaskad Plaza in Dnipropetrovsk in 2007.

The Kaskad Plaza complex is fundamentally a new facility for Dnipropetrovsk. The combination of style and comfort in it exceeds the standard requirements for the deluxe level.

The company plans to start construction of the 48-storey Brama shopping and business center with an area of 129,900 square meters and the Kaskad Plaza elite multifunctional complex with a total area of 64,515 square meters in downtown Dnipropetrovsk in 2007.

The first six floors of the Brama shopping and business centre will house shopping and parking space while the remaining floors will be residential space.

The Kaskad Plaza will be a 13-storey building plus three parallel 5-9 residential blocs will consist of a 4-storey platform (in which supermarkets, boutiques, restaurants, a casino, discotheques, and parking lots for the residents of the complex will be located).

The roof of the Kaskad Plaza will serve as a backyard of the residents of the complex.

Alef Estate also plans to start construction of a multifunctional complex with residential (7,423 square meters), shopping (190 square meters), and office (7,192 square meters) space plus a bank (2,960 square meters) on Shevchenko Street in 2007.

Construction of each of these facilities is expected to last three years.

The company plans to commission a 14-storey business center called Prizma (with a total area of 8,245 square meters), a 23-storey mega-complex called MOST City with a shopping and entertainment center, luxury apartments, and parking lots (a total area of about 116,000 square meters), and an automobile sales and service center called Drivers City (13,712 square meters) in 2007.

In 2005 and 2006, the company built and commissioned the Magnat shopping and business center with an area of 1,956 square meters, the Bosfor shopping and business center with an area of 14,128 square meters, a commercial complex an area of 2,960 square meters on Zaporizhia Highway with, and a complex with an area of 1,480 square meters on Myronova Street.

Alef Estate is one of the largest construction companies in Dnipropetrovsk.

Tuesday, February 6, 2007

Useful links and docs - On Companies bill

I'm going to publish some useful links and docs. Here is first of it, On Companies bill, adapted by Baker&McKenzie Ukraine. Very important for starting company in Ukraine.

LV Holding discusses with Kiev authorities new mixed-use

The Kyiv Town Planning Council has recommended that the LV Holding (Kiev) split the office and residential sections of the mixed-use complex called Livoberezhnyi Public Centre that it plans to build on Mykilsko-Slobidska Street in Dniprovskyi district in Kiev.

The Kiev Town Planning Council's architects have recommended that the designers of the project (the Architectural Union) design a transport layout that will allow entry to and exit from the territory of the complex. They also recommended that the designers of the project create a pedestrian zone along Dnipro and make a recreation zone that includes an aqua park and dolphins pool.

The project provides for construction of three separate high-rise buildings: an office centre with apartments, an office centre, and a residential building. The building will have 650 apartments, and a fitness centre will be located on its first floor.

The buildings will be located on three separate land plots with a combined area of 15 hectares. According to the project’s chief architect Maria Suska, implementation of the project will require about three years. Construction is scheduled to start in 2007.

Sounds good, but there is one strange remark: this company is absolutely new in Kiev construction market, no previous projects and the owners on LV Holding are some unknown persons. Main question is: who is behind the deal?

Kiev Mayor is going to check out city construction plan

Kiev Mayor Leonid Chernowetsky initiates audit of the construction plan of Kiev (Genplan) by foreign architects. In his view, the current Genplan Kiev only nominally exists solely on paper.

"I'd like the city plan was checked by specialists, well-known known in the architectural world" said Chernowetsky. He added that the lack of clear Genplan feared him with any new construction.

Chernowetsky added that the selection of architectural firms, which will prove Genplan, will be made on a competitive basis.

Chernowetsky said that, during the meeting with the Mayor of Astana (Kazakhstan) Askar Maminam asked him to help with selection foreign architectural company to audit Kiev Genplan.
Chernowetsky told journalists that similar requests he has or intends to ask the mayors of Moscow, Geneva and Warsaw.

Friendly speaking, I'm just bored with many new Chernowetsky initiatives, which mess all of it and sometimes have no sense absolutely.

Monday, February 5, 2007

Couple words about investing in real estate in Ukraine

I'd like to express some minds about relations between real estate prices and renting it out. It would be pretty interesting, because many private investors put the money in real estate as in valuable asset which produces rent income.

From the investment point of view, the most important index for the real estate market, and not only for Ukraine, is the rent rates. Specifically, the ratio of the rent rate and the cost of 1 square meter. In recent years, the demand for rental increased significantly, and particularly attractive received this type of business, as buying real estate, with further lease. Only 2006 rental rates, according to the official statistics, increased in Ukraine on average by 31%. The rapidly increasing rents in Kiev and other big cities (1 million population and more).

Today, the apartment lease, the lessor can easily obtain 12% ROI. This is roughly the same as the deposit rate, but owners are expected to increase in the value of his property.

The second indicator is the ratio of the rate of growth in housing prices and the interest. Over 2006 flats in the secondary market made about 50% comparing almost five times cheaper currency deposit rates. Some investors, getting a revenue from the increase in housing and rental income, earned in the housing market for the year about 60%. A property investments made at the beginning of 2005, fully recovered in less than two years!

None of this works well with a good and the constantly increasing lease rates and the real estate prices. If the annual rent amount less than 1 / 12 the cost of apartments, such business, already become less attractive than deposit money in a bank.

So main question is: how long it would be continuing? Even real estate professionals in Ukraine have no one opinion on such phenomena. Anyway I don't believe in the same growth in the near future. Now the time for "smart" investing.

McDonalds Ukraine is going to open new outlets

In 2007, McDonald's Ukraine intends to invest about UAH 38 mln into development of its network. Mykhailo Shuranov, the head of company state and public relations department has disclosed this.

'Investments into the development will amount to UAH 38 million,' he said. He said that in 2007, the company plans to open four restaurants in Kyiv, Kryvyi Rih, Odesa and Kharkiv.

In 2006, McDonald's Ukraine opened three restaurants in Kiev, Lviv and Dnipropetrovsk. Currently, McDonald's Ukraine network consists of 57 restaurants in 16 largest cities of Ukraine.

McDonald's has worked in Ukraine since 1997. It is one of the world leaders in the sector of fast-food services.

Current rent prices for apartments on Kiev real estate market

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 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.

Another big deal in roads development

Recently I've posted about negotiations between Ministry of Transport and Communications of Ukraine and French companies about highways development in Ukraine. There is a new info about that very important Ukraine' issue.

Few days ago there was a meeting between Ukraine and Russia ministers - Mykola Rudkovsky and Igor Levitin. They agreed to build up new big road - Kiev-Moscow highway. I have to tell you that it is absolutely overload destination and such object should increases the traffic quite significantly.

Very important that Ukraine Parliament and Cabinet of Ministers promise to support this project. So, in this way it should be done quick.

I have to mention when Kiev-Odessa highway was finished, there was a huge transportation and related business increasing. We hope to see that and for new infrastructure Russia-Ukraine project.

Sunday, February 4, 2007

New mixed-use complex in Kiev

Rele-Invest company is going to build new mixed-use complex at the Gorkogo str, in Goloseevo district in Kiev.
Total space for new complex will exceed K440 sq.m. including K243 sq.m. in residential, K29 for offices and about K65 for retail and entertainment. And I forgot about parking. Sure, it is, more than K96 sq.m. as underground one.
Rele-Invest was set up as SPV espesialy for this project, which has been bought from well-known Kiev company TMM.

Friday, February 2, 2007

Kiev hotel market overview (Part 2)

So, regarding such figures, market has to show significant growth for new hotel development. Some sources reporting that total desired investment volume in hotel market exceed USD 600 mln. But we dont see the dynamic.

Why it is happen? Main reason is much longer payback period comparing with office, multi-family and retail development. And more risky as well. Taking into that Live has not official zoning, any land plot could be built by any building. And investors put the money into more profitable project as I stated above. Look on this: PB for office building – is 3-7 years instead of hotel PB with 7-8 years.

One of the way is small hotels with 40-60 rooms. This one of the best way to invest in hotel market in Kiev. And local authorities sighed off an bill supporting the increasing of the small and middle-sized hotels. They predict a up to 70 new objects until 2010 with 4-6 years PB period.

As Build & Live Development reporting for such European city as Kiev is, it should provides 3-4 five-star hotels, 14-17 four-star hotels and 45-50 three-star ones. If the all developed projects will come on the merlet such figure could be reached.

Some forecasts for near future:


Hyatt Regency Saint Sofia (but some troubles now)
280-room 5-star on B. Zhitomirska
192-room on Antonovicha
99-room on Sagaydachnogo


270-room Hilton on T. Shevchenko
330-room on Luteranska