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Wednesday, March 28, 2007

Kiev administration is going to get Fitch

The Kyiv city state administration wants to get rating of the Fitch international rating agency before 2008, said Denys Bass, first deputy chairman of the Kiev city administration

"I think we shall get the rating from the Fitch agency, which we have not still obtained, in order to hold a complete set. I think we shall be awarded with it until the end of the year," said Bass. He added that the Kiev city administration wants that the Fitch rating will the same as for Ukraine at all.

Besides, Bass announced the Kiev city administration intentions to take the similar negotiations with the Moody's and Standard & Poor's, regarding increasing the rating.

He thinks that obtaining the Fitch rating and upgrading the two other ratings will help the Kiev city administration in getting the lowest interest-rate on issue of Kiev Eurobonds, which the administration plans to issue in Summer 2007.

In July 2006 Standard & Poor's upgraded Kiev's long-term credit rating from B+ to BB-. In December 2006 the Moody's international rating agency upgraded Kyiv's rating from B2 to B1 due to introduction of a new technique of awarding ratings.

Kiev construction news - 17 Mar

The Kiev city council has given the Stolytsia company a 9.8-hectare land plot between the Novomostytska and the Zamkovetska Streets in the Podil district for construction of a mixed residential complex.

The Kiev city council has leased a 9.98-hectare land plot at 94-102 Zamkovetska Street in the Podilskyi district to Ukrspetstorh company for construction of a residential complex.

The Kiev City Planning Council has allowed the Kiev-based International Automobile Company to construct a car-terminal complex on intersection of Shevchenko and Marks streets in Solomenskiy district.

The Kiev-based San Remo company suggests Kiev City Planning Council reconstruct a nonresidential building into a retail and office mixed-use complex on 4 Suvorova Street in Pecherskiy district.

New master plan for Ternopil

The Ternopil city council has asked its executive committee to guarantee the development of a city master plans up to December 31, 2007.

"The executive committee was ordered to guarantee delineation of the municipal border, completion of land inventory with obligatory determination of land amount required for functional use, allocation of free plots that may be sold or leased out, as well as to draw up plans for land business structure of the city, correction of money norm estimation of municipal areas," the Council press service reported.

The executive committee must also take a look of the previous city council decisions and city head directives on endorsement of acts for the selection and inspection of land lots.

Tuesday, March 27, 2007

Lviv canceled a land auction

Recently, I've wrote about land auction in Lviv planned at 20 March. But it didn't happen in mentioned time. Due to the lack of bids from potential buyers. The new one is planning at the beginning of April.

Local authorities are ready to reduce the price of land, but have not yet decided on discounts. In April, for the sale of re-sold four land plots, three of which are under public and residential.

The last resulted auction held in Lviv on October 5, 2006. It sold 0.02 hectares in the centre of the city of UAH900K . The city with admirable regularity announced tender, but bids from customers were reported.

Rumours say that the developers don't buy because the price is high. But officials persist for several months been told that if local investors were not able to buy land, at the city market should to come non-residents, says Director of the local town planning council Andrei Pavliv. As a result, in 2006 the local treasury got from the land sales of UAH 52 mln. But in this year budget for this is not received a penny.

Berg memories: where art meets rationality: Technical analysis of Kiev real estate market (intoduction)

Interesting point of view from one of the Ukraine Real Estate Market's reader: Berg memories: where art meets rationality: Technical analysis of Kiev real estate market (intoduction)

Monday, March 26, 2007

NEST reported their 2006 results

Kiev development company NEST finished 2006 with a net profit of UAH 6.192 mln.

Assets of the company were valued at UAH 113.232 mln. by the end of 2006, and net profits as UAH 25.838 mln. In 2005 NEST's net profit was UAH 3.071 mln.

In 2006 the company started the operations in business center Renaissance located at 24 Vorovskogo Street in Shevchenkivskyi district. The total spacein this B class center is 17K sqm.

According to data of the Agency for Development of the Stock Market's Infrastructure by late 2005, 95.7% of the company's shares were owned by Volodymyr Trofymenko, a supervisory board member.

Sunday, March 25, 2007

02-16 Mar - Residential rent prices

Ukrainian News

The average rent for one-room apartments in Kyiv rose by 1.5% or USD 7.5 to USD 492.7 per month on March 2-16.

The average rent for two-room apartments in Kyiv rose by 0.7% or USD 5.7 to USD 814.4 per month, the average rent for three-room apartments fell by 1% or USD 13.7 to USD 1,315.2 per month on March 2-16.

The lowest one-room apartments rents in Kyiv fell by 2.9% or USD 9 to USD 303 per month, for two-room apartments fell by 0.7% or USD 3 to USD 403 per month, for three-room apartments rose by 2.8% or USD 15 to USD 553 on March 2-16.

The highest rents rose by 14.1% or USD 136.7 to USD 1,105 per month, for two-room apartments fell by 8.5% or USD 170 to USD 1,840 per month, for three-room apartments fell by 4.1% or USD 150 to USD 3,525 per month on March 2-16.

As Ukrainian News earlier reported, the average rent for one-room apartments in Kyiv rose by 1.4% or USD 6.7 to USD 485.2 per month on February 23 - March 2, the average rent for two-room apartments rose by 0.6% or USD 4.5 to USD 808.7 per month, the average rent for three-room apartments rose by 3.5% or USD 44.9 USD 1,328.9

Saturday, March 24, 2007

17 Mar - Current prices for residential real estate, Kiev.

Current prices (average weighted) for one-room apartments on Kiev primary real-estate market has become USD 1,967 per sq. m., the average prices of two-room apartments on the primary real estate market on USD 2,641 per sq. m., for three-room apartments USD 2,458 per sq. m.

Secondary market shows such figures: the average price for one-room apartments on Kiev secondary real estate market is USD 3,031 per sq. m., two-room apartments on the secondary real estate market on was fixed at USD 3,075 per sq. m., level, for three-room apartments - USD 2,934 per sq. m.

Land prices for gated communities construction are growing

Consulting company SV Development (Kiev) pointed out a rise in the cost of land for gated communities construction in Kyiv region from the beginning of the year by 27% on the average because of prolongation of the moratorium on the sale of farmland (agricultural) land until 2008.

The maximal increase in the cost of land, by 55% and 34%, was registered in Obukhiv and Vyshhorod districts, where from the beginning of the year the prices rose to USD 7,191 and USD 3,843 for 100 square meters, respectively, the press release says.

In the Kyiv Sviatoshyn direction, the price of land over the period under review grew by 37% up to USD 7,603 for 100 square meters, in Brovary district by 32% to USD 2,970, in Odesa direction by 30% to USD 3,329, in Boryspil district by 10% to USD 4,307, and in Makariv district by 22% to USD 1,892.

"As seen from the results of the poll of market experts and land lot owners, the main reason for such price rising is prolongation of the moratorium, as well as the lack of new ways for legal suspension of its provisions.

SV Development has been functioning since 2005.

The company is working in the consulting services market.

Association of Realtors of Ukraine considers the prolongation of the moratorium on farmland sales until 2008 to be a reason for the appearance of inside activities in the land market.

Friday, March 23, 2007

Only 3 from Top-10 best commercial real estate brands operate in Ukraine

"Lipsey" consulting company announced 25 World Best brand in commercial real estate. But only 3 of them presented in Ukraine. Sounds not optimistic, but that's just beginning.

The study examined the activities of more than 25,000 industry leaders, investment trusts, mortgage banks, commercial brokers, companies specializing in the management, and other industry organizations.

From the Top-10 only three companies in the market in Ukraine - Jones Lang LaSalle, which started only last year, Colliers Int. - from 1996, and NAI Pickard - in 1992.

So there is the 2006-2007 Gold List, something like Hall of Fame :)

1 CB Richard Ellis
2 Cushman & Wakefield
3 Colliers International
4 Grubb & Ellis
5 Jones Lang La Salle
6 Nai Global
7 Coldwell Banker Commercial
8 Trammell Crow Company
9 The Staubach Company
10 Oncor International

Short news - Alef Estate finished a new office complex in Dnipropetrovsk

Alef Estate (Dnipropetrovsk) built a 14-floor office centre "Prizma" with 8245 sqm. total space. Prizma is located in Glinka str, in Dnipropetrovsk's CBD.

There is retail at 1st floor (360 sqm.) and office premices with different sizes: from 85 up to 440 sq. each with full communication options.

The 2 speedy elevators serve the building. There are full autonomy HVAC services, video control, security, of course. Construction of the complex was 3 years.

Wednesday, March 21, 2007

Short news - Investors believe in Kiev

63% of the asked investors believe that Kiev has the greatest potential and the most attractive investment climate in Ukraine.

This is stated in the study conducted by the Institute of Adam Smith. 11% of total investors believe the most attractive is Donetsk, 10% Dnipropetrovsk, 5% - Kharkov, 4% - Lviv, 3% - Odessa. Other regions got 5% of the votes.

Investors also consider real estate as the most attractive sector for investment in Ukraine with 44% share. The second place - retail (15%), followed by financial services (13%) .

The study was conducted in February, surveyed 250 representatives of foreign and Ukrainian companies. The Adam Smith Institute, is a non-profit organization.

Tender in Chernivtsi for shopping centre construction

Chernivtsi city council announced tender for leasing of 4.01 ha land plot for shopping and leisure centre construction.

The tender was announced for leasing of a land plot on Chervonoarmiiska Street until January 1, 2037.

According to tender conditions, the leaser has to retain purpose of the land plot and complete the construction in three years after signing of the leasing agreement.

The leaser also has to transfer residential house providing them with housing. Leaser’s fee for development of engineering-transport and social-cultural infrastructure cannot be lower than UAH 3 ml.

Money pledge for participation in the tender is UAH 784,503.

Tuesday, March 20, 2007

Monthly Economic Monitor Ukraine, February 2007

There is a new macro review #76 for economy from Institute for Economic Research and Policy Consulting.

  • The Law on the Cabinet of Ministers became the focal point of political conflict in January.
  • Real GDP grew by 7.0% yoy in 2006 thanks to strong domestic demand growth.
  • The Parliament passed the law allowing privatisation of several large enterprises.
  • New steel trade agreement with the EU was initialled in January.
  • In 2006 the central fiscal deficit was 0.9% of GDP.
  • Real wages grew by 18.4% yoy in 2006 maintaining the previous year trend.
  • Consumer prices moved down to 10.9% in January.

MLP is building a new logistic complex

International Logistics Partnership (MLP) has acquired land for the construction of a A-class warehouse complex. The sire is located in Borispil city, near Borispil airport, 15 kilometres away from Kiev. На участке размером 20 га планируется построить складской комплекс класса «А» общей площадью 100 тыс. Size of the site is 20 ha and they are going to build warehouse complex with K100 sqm. total space. This project is a logical continuation of the MLP's developing a single logistics network in Russia and Ukraine.

This land site has been chosen because of the potential demand in this destination and the ckose positions to major transport routes. Land for the construction is situated on the left bank of the Dnipro in the area of the main transport traffics.

Investment in the project is estimated to be about USD 80 mln. Construction of logistics facilities will be held for a 2007-2008.

Interesting notes from the picture: on the lift machine I see a Aerobud logo. If you you remember, it is a another company was included in Privat Group interests.

Sunday, March 18, 2007

New business magazine in English

I've got a first issue a new magazine about Ukrainian business, with such simple name :). I've scanned and download it specially for Ukraine Real Estate Market's readers (23 Mb).

Main topics:

News in brief
The week in review
Banking Energy
Real estate

And I kept only one ads - from Opera Hotel. It's very nice :)

Antimonopoly Committee will check the real estate prices

The Antimonopoly Committee of Ukraine (AMCU) intends to check grounds for prices of Kyiv construction companies they set on the new housing market. AMCU chairman Oleksii Kostusev disclosed this in a statement in the Business weekly. He said that currently, regional constructors are being checked.

«Housing construction markets are regional markets. In this, we have started checks at regions,» Kostusev said.

He also said that currently, construction market has no competitiveness between the companies, as the situation can be influenced only by large construction companies.

«We have facts to say that large construction companies have real market power. As the result, there is no full competitiveness on the market,» Kostusev said.

Saturday, March 17, 2007

Another big European developer in Ukraine

The one of largest in Europe developer and retail operator, German ECE Projektmanagement (ECE), is coming to Ukrainian and Russian real estate market.

For operations in these countries dozen in the next five years, the owners have established an investment fund of more than EUR 1 bln.

ECE Projektmanagement plans to build in the near future about five shopping centres with total space exceeds K80 sqm in each of the countries. Experts estimate that the cost of constructing one shopping centre would cost the company approximately USD 80 mln.

"With good conditions the first centre in Ukraine can be built as early as the end of this year, ECE Head of the Press Saadhoff Christian said.

The Head of the International Department Jorg Banzhaf, in an interview with the Wirtschafts Woche told that for projects in Russia and Ukraine, the head of ECE Alexander Otto and his family registered private equity investment fund. Fund investors are several American investors as well, whose names were not revealed.

"It is quite enough for the first 10 shopping centres", says Banzhaf. Total ECE plans the opening of about 50 shopping centres , and the total amount of investment in the economy of eastern Europe and Turkey over the next five will be around EUR 5-6 bln.

In many ECE centres anchor tenants are the Kaufhof, hypermarkets Media-Markt and Saturn.

Friday, March 16, 2007

New Business Development Director in Jones Lang LaSalle, Ukraine

Elena Kravtsova appointed as Director of Business Development in Jones Lang LaSalle, Ukraine. She will be responsible for the development of key customers, as well as new projects in Russia and Ukraine. Before to joining JLL Kravtsova was Director of office real estate department in Capital Group. Elena responsible for the development of the office real estate direction, which included the creation of project concepts, the development of marketing strategy and commercial real estate sales.

Elena Kravtsov graduated from the Kiev Polytechnic University (Ukraine), also holds a diploma in finance and banking from the Central European University, and Yale University.

LOGOS opened new shopping centre in Dnipropetrovsk

Dnipropetrovsk-based LOGOS company has constructed and leased multifunctional city shopping center. Company CEO Borys Balynskyi disclosed this at the opening ceremony.

"During drafting of the construction project, we paid considerable attention to provision of wide range of goods, services and entertainments at the centre to satisfy needs of the whole family and each person as well," he said.

One-floor retail part of the centre consists of Furshet supermarket with the total space over 3,000 sqm, Smik children supermarket, Brocard cosmetic and perfume supermarket, Intertop shoe store, entertaining zone with food court, and many other shops.

Seven-floor tower have B-class office premises, with 5,497 sqm. space and 600-car parking is located near the center. The total centre area is 25,585 sqm and shopping space is 12,737 sqm.

LOGOS corporation, which is registered as a limited liability company, also includes the First National Winemaking Holding. The holding unites the following producers: Inkerman winery (Crimea, Sevastopol), Tavria agro-industrial firm (Nova Kakhovka, Kherson region), Chornomorets agricultural firm (Crimea), Winemaking Institute (Dnipropetrovsk), and Kachynskyi+ primary winemaking factory (Crimea).

Thursday, March 15, 2007

Ukrainian tycoons undervalued in Forbes ranking

From Kyiv Post

By John Marone, Kyiv Post News Editor

A ranking of the world's richest individuals published by Forbes magazine has apparently undervalued the assets of Ukraine's wealthiest tycoon, Rinat Akhmetov, by about threefold.

The US-based business magazine Forbes has included seven Ukrainian billionaires in its annual list of the "World's Richest People" for 2007 - four more than last year - but at least one of them, the country's wealthiest person, has had his fortune seriously underestimated.

Last week, Forbes rated 40-year-old Donetsk tycoon Rinat Akhmetov, a member of Ukraine's parliament, 214th in its list of 946 billionaires, estimating his net value at around $4 billion.

For comparison, Microsoft founder Bill Gates topped the Forbes list with $56 billion, and Russia's Roman Abramovich came in 16th place with $18.7 billion.

To the seven Ukrainian billionaires listed by the US-based magazine, there were 19 Russians.

However, Kyiv-based analysts say the influential industrialist from Donetsk, who boasts significant interests in metals, mining, energy, telecommunications, food processing and even his own top-ranked football team, is worth as much as three times more than Forbes gave him credit for.

"All our numbers are based on a snapshot of balance sheets taken on Feb. 9, the day we locked in stock prices and exchange rates," reported Forbes, which boasts an international readership of 4.6 million.

Big Four international auditing firm PricewaterhouseCoopers estimated the consolidated assets of Akhmetov's holding company, System Capital Management, at $7.2 billion at the end of 2005.

Andriy Bespyatov, head of research at Kyiv-based investment bank Dragon Capital, puts the figure now at almost $12 billion, based on the current market value of Akhmetov's assets, not all of which are traded publicly.

"We don't know what kind of methodology Forbes used, but the figures were greatly deflated," Bespyatov told the Post.

For its part, PricewaterhouseCoopers might have used the book value of SCM to get its figure of $7.2 million, he said. PricewaterhouseCoopers' Kyiv office declined the Post's requests for commentary, citing client confidentiality.

Following Akhmetov in Forbes' "Richest People" list was Viktor Pinchuk, who placed 323rd with assets of $2.8 billion. Pinchuk, the son-in-law of former President Leonid Kuchma, controls Dnipropetrovsk-based Interpipe, one of Ukraine's largest business holdings, in addition to significant assets in media, machine building and agriculture.

Bespyatov said Forbes' estimation of Pinchuk's wealth was more or less correct, as were those of Ukraine's third and fourth richest individuals: CEO of the Industrial Union of Donbass, Serhiy Taruta, and National Security and Defense Council Secretary Vitaliy Hayduk, also co-founder of the industrial holding.

Forbes said both are tied for 488th place with an estimated $2 billion in assets. Pinchuk's spokesperson, Nikita Poturaev, declined to confirm or deny Forbes' estimate of his boss' monetary value, adding only that "we were very honored to have been included in the rating of such a prestigious publication."

The fifth and sixth richest Ukrainians, according to Forbes, were the co-owner of the so-called Privat business group (in Dnipropetrovsk) Igor Kolomoysky, at position 799th with $1.2 billion in estimated assets, and a major shareholder in leading Ukrainian bank Privatbank, Hennadiy Bogolubov, thought to be worth the same. Like their wealthier co-patriots, both control
a diversified business holding with assets in various sectors.

Dragon's Bespyatov said the evaluations of Kolomoysky and industrialist Kostyantin Zhevago, who placed last among Ukraine's rich and 891st overall with $1 billion in assets, were also distorted, but not as much as with Akhmetov.

The Privat empire includes lucrative holdings in oil, chemicals, machine building, metallurgy and finance, while Zhevago, at only 33 years of age, is known for his mining, automobile, pharmaceuticals and banking interests.

In Forbes' 2006 "World's Richest People," Akhmetov's worth was estimated at $1.7 billion, or $700,000 less and 191 places lower than in the previous year.

In the U.S. magazine's 2006 list, Zhevago, Bogolubov, Kolomoysky and Hayduk didn't appear at all.

Wednesday, March 14, 2007

Two Ministry instead one

The Cabinet of Ministers decided to reorganize the Ministry of Construction, Architecture, Housing and Utilities Economy into two ones: the Ministry of Regional Development and Construction, and the Ministry of Housing and Utility Services. This reported First Deputy Prime Minister, Minister of Finance Mykola Azarov

Azarov noted that the state budget for 2007 allocates about UAH 650 million for financing reform of housing and utility services, and said that the new ministry would have to rationally distribute this amount.

In keeping with Cabinet resolution No. 323 of March 1, the two new ministries are legal successors of the reorganized construction ministry in appropriate areas of work. The Cabinet established that the regional development and construction ministry is the main authority in the system of central bodies of executive power for implementation of the government's regional policy, as well as policy in the fields of construction, architecture and town planning. The housing and utility economy ministry is the main organ in the system of central bodies of executive power in charge of implementation of government policy in the field of the housing and utilities complex, as well as the housing policy.

The financing of the new ministries' activity in 2007 will proceed within the limits envisaged by the national budget for the maintenance of the construction ministry.

Auchan is here

Many people have talked about it and this comes true: Auchan is going to operate in Ukraine. But not alone and with well-known retailer Furshet. They signed strategical agreement about future cooperation.

French retail chain Auchan and the Ukrainian Furshet signed an agreement to set up two new companies and joint development of entertainment t network.

One of the new companies will operate under Auchan brand. 66% of its shares will be owned by Auchan, 19% to Furshet, 15% - Furshet Supervisory board Chairman Igor Balenko personally.
The second company is created for the development the entertainment complexes, and each of it will contain Auchan store or Furshet supermarket.

50% of the company's shares will be owned by Auchan, 40%, Mr. Balenko, 10% for the third financial partner. Furthermore, the agreement provides that Auchan acquire 20% Furshet stake which will remain under the Igor Balenko's management .

Deal closing expects after obtaining permits of Ukraine government, which is scheduled for the end of May or early June.

Total transaction amount not known exactly, but it should be about USD 120-125 mln.

Tuesday, March 13, 2007

Disneyland in Kiev. Is it real?

Kiev regional State administration is considering 3 land plots for construction of Ukrainian park similar to Disneyland. This surprising news told Vera Ulianchenko, Chairwoman of Kiev regional State administration.

"Priority plot is located in Obukhivskiy district, another is in Brovary district and the third I would say a land plot in Borodianskyi district," she said. According to Ulianchenko, there is certain competitiveness the complex between local districts governments .

The governor said that people living in the districts also support for construction of the complex on their territory. Ulianchenko said that the regional state administration wanted potential investors to introduce national features into the complex during the construction.

In particular, the regional state administration prepares investment proposals foreseeing Ukrainian folklore and national fairytale characters.

Ulianchenko said that the first stage of the theme park construction might become construction of roofed aqua-park.

She said it was necessary to have about nine hectares of land for aqua-park construction and development of relevant infrastructure and cost of the construction might vary from USD 45 to USD 70 mln.

At the same time, Ulianchenko said that the obstacle for developing of the investment project was land moratorium. She said that as soon as the moratorium was cancelled, the regional state administration would be able to organize construction of the park.

Kiev construction news, 13 Mar

Multinet company offers the City construction council of Kiev approves project of construction of residential 24-floor building with one-, two- and three-room apartments (88 apartments in total) in Dniprovska Quay, in the Dnirpovskiy district.

Centr Budinvest company proposes Kiev City construction council approves the project of construction of residential 6-floor building with 3,630 sqm. total space in Hoholivska street in Shevchenkivskyi district .

Etreks company suggests that Kiev City planning council approve conceptual project of hotel construction on Volodymyrskiy Uzviz Street in Pecherskiy district. It is planned to build a small hotel complex with the 4-floors.

Monday, March 12, 2007

02 Mar - Current prices for residential real estate, Kiev.

Current prices (average weighted) for one-room apartments on Kiev primary real-estate market has become USD 1,912 per sq. m., the average prices of two-room apartments on the primary real estate market on USD 2,640 per sq. m., for three-room apartments USD 2,417 per sq. m.

Secondary market shows such figures: the average price for one-room apartments on Kiev secondary real estate market is USD 3,009 per sq. m., two-room apartments on the secondary real estate market on was fixed at USD 3,040 per sq. m., level, for three-room apartments - USD 2,925 per sq. m.

Short news - METRO expand their operations to Zaporozhia

METRO Cash & Carry Ukraine has leased land in Zaporizhia.

5 March, Zaporozhye City Council leased 6.04 ha land plot for 49 years to METRO Cash & Carry for the shopping centre construction.

The land located on the Kharkov - Simferopol highway

Out of blog

Hello all,
Perhaps, you've noted that blog didn't update a couple days. I was in Odessa and bring back some interesting info and impressions about Odessa real estate and its developing in South Palmyra (the Odessa' second name). So it will come shortly.

Sunday, March 11, 2007

Kiev construction news, 07 Mar

Stolytsia company is proposing to the Kiev city planning council to build a mixed-use complex (residential and offices) at Urytskoho street in the Solomenskiy district.

T. & E. Company is proposing to the Kiev city planning council to adopt planning verifications for construction of a Coliseum mixed-use complex with a family leisure centre at Voziednannia avenue in the Dniprovskyi district.

Wednesday, March 7, 2007

Velyka Kishenia opens "Ekvator" shopping centre in Chernivtsi

Velika Kyshenia (Kiev), one of the largest retail chain in Ukraine, opened a shopping center Ekvator in Chernivtsi.

There are a furniture salon, children's playgrounds, Velika Kyshenia hypermarket, a MonAmi cosmetics shop, mobile communications shop, Velika Apteka drugstore, a domestic appliance supermarket, a bank branch, a restaurant, clothing and shoes stores. An entertainment zone that includes a bowling, a pool, and a food court are located on the third floor. A parking is situated for 500 cars.

The tenants at the centre include the Domotekhnika domestic appliance supermarket, the Pizza Celentano, Colin's and SELA clothes shops, a Melafon mobile communications shop and a Monarch shoe shop.

The Ekvator shopping and entertainment center in Chernivtsi is Velika Kyshenia's seventh hypermarket and 34th commercial facility. Recently, Velika Kyshenia opened an Ekvator shopping center in Kharkiv, Kirovograd and Sevastopol.

The Retail Group company plans to obtain USD 250 million for financing a developing up to 10 shopping centres in Ukraine regions during the 2006-2008.

According to International Finance Corporation, 88% stake in Retail Group belong to its Board Chairman Roman Lunin while 12% belong to eight financial institutions (mainly European private equity funds and asset management companies).

Short news - Ambitious transport project for Odessa

Odessa local authorities introduced City project in the city highway alongside the sea coast

The concept of the construction presented chief of the Reregional architecture and urban planning council Vladimir Kolokolnikov.

According to the concept, the road begins from Primorskaya str. and extending up to Arkadia area. In the future they're planning a construction of the bridge across the Arkadia bay to the 10-th Bolshoy Fontan station. The total road length is about 10 km, the height of the highway is 6-8 m.

It is expected that 4-line road will join the tunnel, which will be held from Gagarina avenue to to Odessa movie studio.

Mr. Kolokolnikov noted that the talk about the cost of the project is too early. The concept will be submitted for city public debate and to the City council.

Monday, March 5, 2007

Fitch is rating Privatbank mortgage eurbonds

From Ukrainian News

Fitch Ratings, an international credit-rating agency, has assigned the BBB-and B+ ratings to the Eurobonds issued for USD 171 million by Privatbank, one of the largest banks in Ukraine.

Fitch announced this in a statement, a text of which Ukrainian News has obtained. The Eurobonds consist of Class A notes with a volume of USD 134.1 million, which were assigned a BBB- rating, and Class B notes with a volume of USD 36.9 million, which were assigned a B+ rating. The transaction is a securitization of first-lien US dollar-denominated, Ukrainian residential mortgage loans together with their ancillary rights. The ratings address timely payment of Class A interest, ultimate payment of Class B interest and ultimate payment of principal at the final legal maturity of the notes in accordance with the terms of the notes.

The ratings do not address payment of step-up interest on the notes. Moreover, the ratings are based on the quality of the collateral, available credit enhancement, the underwriting, and servicing capabilities of the originator and the legal structure of the transaction. Credit ratings in the B group indicate that significant credit risk is present, but a limited margin of safety remains.

As Ukrainian News earlier reported, Moody's, an international rating agency, earlier assigned its Ваа3 rating to the USD-171-million Eurobonds. Privatbank floated USD 171 million worth of Eurobonds on February 13. The Class A notes were issued for USD 134.1 million for an average of 3.5 years at an annual yield rate equal to one-month LIBOR + 2.1%. The Class B notes were issued for USD 36.9 million for an average of 7.17 years at an annual yield rate equal to one-month LIBOR + 3.75%.

Privatbank sold five-year Eurobonds for USD 500 million at 8% annual interest in January. Privatbank's net assets increased were valued at UAH 33,777.2 million, its loan portfolio at UAH 28,767.5 million, and its equity at UAH 3,288.3 million as of January 1, 2007.

New automated land valuation system presented

State Committee for Land Resources presented the Single automated land cadastre (land valuation) system in Ukraine. As described by Andrei Kotov, the Chairman of "Center of State land cadastre", the system is nationwide and single database, which contains information on all land in Ukraine, as well as the landowners.

Today, the system works only in the Kiev region. Planned that during three months it will cover the all Ukraine. Such system would greatly simplifying the procedure of acquiring land. This system will help to identify the real cost of the Ukrainian lands, and establish transparent mechanisms to calculate fair payment for the land and minimizes cover of land tax. The Goskomzem Chairman, Nikolai Sidorenko said that the system' implementing is useful only after the approving the State Land Cadastre by Verkhovna Rada.

Useful links and docs - National Network of Auction Centers

There is another useful link for who make deals with real estate properties, especially the State ones.

National Network of Auction Centers was founded under the technical and consultation help of USAID in February 1995. The Company includes twenty five branches locate in Autonomous Republic Crimea, regional centers of Ukraine and in Kiev. In compliance with Resolution of the Cabinet Ministers of Ukraine #2066 dated 25.12.1998 National network of auction centers was transformed into State Joint Stock Company "National Network of Auction Centers".

Short news - Lviv plans to sell 20 land sites for UAH 43 mln

There are already identified 20 sites for sale in the land auction. "The city plans to get from it UAH 43.02 mln. ", says Director of the Lviv Department of Town Planning Andriy Pavliv.

In 2006, in Lviv, income from the sale of land amounted to UAH 32.66 mln . In fact, in auction was sold 5 land sites in the total amount of UAH 19.6 mln. And from the sale of land for the facilities properties were still UAH 13.06 mln .

"The demand in the land market for the freehold sites for residential and commercial construction, over the past years has subsided. This happened in spite of the increasing in land prices. In 2006, the average cost of 1 sqm. of land in Lviv reached UAH 314.92 (USD 62)", says Pavliv. "However, there is the increasing demand for free land for others purposes, such as industrial land, transportation, energy projects".

XXI Century plans to build on 55 ha in the centre of Poltava

Company is developing an investment project of major construction 55 hectares in the centre of Poltava. The project includes the construction of residential and commercial real estate, as well as the creation of infrastructure for the new neighbourhood, to be composed of houses, shopping centre with entertainment facilities.

However, XXI Century to arrangements with the authorities of Poltava, and the duration of the project, has invested 27 million USD in reconstruction of heating systems, state-owned houses and transport and social infrastructure of the city, in the reconstruction of the external street lighting, etc.

"Unlike many Ukrainian developers, we do not want to build, sell it and leave. Going into regional centres of Ukraine, the company offers local authorities to the long-term projects that will develop the infrastructure of the city", noted in a press release of the company.
As a result of the developing of the project the city will get over 6% of built housing, which is about K30 sqm. Now, the project development is in progress.

Sunday, March 4, 2007

InterContinental goes to Kiev

In Kiev, at 2008 will open the first five star international hotel chain InterContinental, which last week signed an agreement with Kiev development company, Yaroslavov Val. According to the Baker & McKenzie, which provided legal support to Yaroslavov Val, Inter will manage hotel complex with 280 rooms. The building will be owned by Yaroslavov Val. The terms of the agreement foresee the prolong of the hotel operation under InterContinental brand if the owner of the building will changed.

Intercontinental Kiev coming to InterContinentals Hotels Group, which owns, manages, leases and the gives right to use its trademark through local branches. The Inter has 3,680 hotels in almost 100 countries around the world.

InterContinental Kiev-third project which Baker and McKenzie provides advice and support for international hotel operators at the Ukrainian market. The company, consulted the owner of Hyatt Regency Kiev (Industrial Union of Donbass, Donetsk). As well as Hilton Kiev.

This project of a hotel complex on the B. Zhitomirskaya str. , Yaroslavov Val started at 2001. Then Kiev city council recommended to decrease total floors number, which has been planned as 10 floors.

Yaroslavov Val created in March 2001, has worked in the construction, leasing, real estate sales in Kiev. The company has some significant projects in commercial real estate, in particular K13 sqm "A" class business centre "Leonardo" was sold to Irish "Quinn Group" at 2006.

Saturday, March 3, 2007

Chronicle of Ukrainian legislative developments – January 2007

Another useful documents - Chronicle of Recent Developments in Ukrainian Legislation, a monthly summary of the most important legislative developments in Ukraine in the areas of business and corporate law from Russian-Ukrainian Legal Group

New powerful player in real estate market

"Seven Hills LLC", a unit of international Scorpio Real Estate Group, announced its serious plans to become a major international investor in Ukraine in real estate market.

"We are starting to work on the Ukrainian market with confidence and complete set of tools necessary for the implementation of the new standards. We are going to restructure the Ukrainian real estate market in favor of building owners, office space users and industrial business. We aim to become one of the largest foreign investors in Ukraine over the next three years", said Ari Schwartz, CEO of "Seven Hills".

"Seven Hills" announced already about the construction in the Ukraine the first mixed -se complex with residential, office and industrial premices valued at USD 1 bln. In particular, "Park Avenue"- a residential complex (1 200 apartments) in front of Golosievo park in Kiev, "Podil Center " mixed-use with offices Class "A" and shopping-centre with total space exceed of K30 sqm. at the Podil's centre, "Airport City" is the first in Ukraine integrated suburban complex, which would consist of a modern office space, warehouses and logistics facilities, shopping centre, restaurants and hotels. It intends to build on a 50 ha site near Borispil highway. Furthermore, "Seven Hills" is considering several potential sites for the construction the first in Ukraine large shopping mall. Another project is related with the construction of two power plants in the Odessa region.

The company engaged in the sale of real estate property sales, design, construction and property management. "Scorpio Real Estate Group", is from Israel and involved in the construction and investment in real estate. They built more than 12.8 mln. sqm. of prestigious residential and commercial real estate in many country. Over the last seven years has focused its activities on the Central and Eastern Europe markets, particularly Romania, Hungary, Latvia, Czech Republic, Slovakia, Bulgaria. They are the part of the "BSG Group", a developer operating in the United States, Canada, Great Britain, France and Italy.

Friday, March 2, 2007

50% of total land deals in Kiev region are the speculations

And their share is rising rapidly. Somebody talks that this figure will grow up to 100 % this year. According to Yaroslav Lomakin , such a rush by speculators desire to concentrate in their hands most of the land before the end of the moratorium. Perhaps, the moratorium was prolonged with given reason.

As you know
on December 19, 2006, Verkhovna Rada passed a bill that extended the ban on the sale of agricultural land until January 1, 2008 Mr. Lomakin gave, as an example, the concentration of speculative capital near Obukhov highway : “I know sites that was resold five times, and there was still no construction.

Experts believe that the increase in speculative capital in Kiev region contributes to increases in the price of land and the the moratorium cancelling does not down them because speculators will control the offer.

oday in land deals involved many private persons and companies. Many tycoons do not shy to make that business. They are traditional operate trough affiliated structures so no evidence is possible to get.

Vladimir Stepenko, CEO of SV Development, says the main landlords are large construction companies. Such organizations have a strong lobby in the administration and authorities. Among the biggest land owners experts note Andrei Ivanov and his Kiev Investment Group (KIG), Deputy Prime Minister for Humanitarian Affairs Dmitry Tabachnik, his brother Michael and company HCM Group. And deputy HCM Group, Radomir Tchurkan said that they really looking a big land plots for their logistic projects.

Today the average price in the Kiev suburbia is USD 3 600 for 100 sq.m. which is 25 times higher than the price of land in the country as all. The maximum price increasing in last year was in Borispil destination, where land price increased up to 89%. Second largest growth is in Kievo-Svatosinski district (Zhitomir destination) with 62% growth.

Yanukovich speech at German business meeting

This is a PM speech during his meeting in Germany with local top business. It's pretty interesting and little bit funny (especially regarding a mistake with German president). Of course it wasn't in English :) Just read and comment it if you want...


My last visit to Berlin was four years ago. During this time the city has been distinctly changed. I have been stuck by the change scale.

I absolutely agree with the words of former German President Richard von Weizsacker: The amenities of Germany are its cities. Berlin is among them – neither the oldest nor the most beautiful. But the life is so vivid here”.

Thereby, Berlin reminds me of Kyiv which experiences now rapid development and changes almost every year. A number of building sites is a sign of sound economic situation in the country.

I would like to stress that we go through real building boom in Kyiv, Odesa, Dnipropetrovsk, Donetsk and other cities. I know that the last year have been extremely successful for German economy.

The economy of Ukraine, in spite of significant rise in energy resources prices and complicated inner political situation, shows high rate of growth.

I do not want to burden you with figures, I only say that in 2006 real GDP of Ukraine increased by 7% and in January of the current year - by 9,3%. The real incomes of the population and wages increased twofold. The economic growth and real incomes of the population resulted in the increase of customer demand more than fourfold. The export is increasing again. The import has to a greater extent the investment and innovation character.

Therefore, in spite of political challenges the economy of Ukraine has demonstrated high stability. In particular, I am glad to note that dynamic investment activity has been resumed. The inner investments increased by 16% last year.

The foreign investments amounted to 4,3% USD during the past year. It is three times as much than three years ago. To my mind, it is a sign of the investment climate improvement in Ukraine. By the way, the International Rating Agency Fitch has officially noted the fall of political risks in Ukraine for business and investors. Today, the Government poses new tasks - speeding-up growth and providing stable economic development and increasing common weal.
With this purpose the Government of Ukraine completes the Development Program till 2011 aimed at stable economic growth. We understand that opportunities of the extensive development are exhausted.

And so, we task to use the innovation-investment model of development based on high technologies and scientific, energy saving, export-oriented production. We want in full measure to use transit potential of Ukraine, create long-term guarantees of energy security of our state and transit energy stability for our neighbors.

The Government focuses attention on the problem of competitiveness of the Ukrainian enterprises at home and foreign markets. But, the matter does not concern the protective measures. The equal and transparent regulations will be established both for native and foreign businessmen.

In 2007 the Government intends to stir up privatization of state property and guarantee transparency in this sphere. We expect privatization of such giants as Ukrtelecom, Ukrnafta, Odesa Port Plant. We are working at the sale mechanism of shares of these enterprises at fund platforms.

The Cabinet focuses significant attention of creating favorable conditions for attracting foreign investments in innovation sphere, in particular. The Council of Investors has been established recently under the Cabinet of Ministers of Ukraine. The Council is a constantly active consultative-deliberative body with the assistance of leading, native and foreign investors.
Profiting by the occasion, I would like to invite German businessmen to the work in the Council.

At the same time the Ukrainian Government will hardly take measures directed at fighting corruption as a key reason for impeding the economic reforms and obstacles on the path to increasing foreign investments in the country. Recently, the Government has adopted the Concept of reforming the tax system aimed to form the transparent tax system and lessen tax load onto the economy.

We are also working at creating efficient judicial authority.

The economic stability will be a guaranty of steady strengthening of the institutions of democracy, ensuring basic rights and freedoms of people. We aim to make every Ukrainian family be confident in the future. After all, the reforms are not unreasonable if they provide increase of common weal, security and stability in the country.

You, probably, observe on the events in Ukraine. I would like to note that they are not always objectively reflected in the German and western press, sometimes usual models and stereotypes are used. The reality is much more complicated, it cannot be painted using only black-and-white colors.

Ukraine is passing a complicated stage of transformation from the presidential-parliamentary to parliamentary-presidential model of the political system. The objective is the point that such scale changes in the division of powers between the different branches of power entail aggravation of the inner political contradictions.

I want to ensure you that despite the emotional and violent discussions on the Ukrainian political stage, the Government of Ukraine has succeeded in arranging a constructive dialogue and cooperation with the President and Parliament.

Sometimes we have different ways of looking but our common view concerns the main directions of the development, key priorities of the foreign policy of Ukraine. The Ukrainian Government will consistently pursue the course of the country’s integration into the European and world political and economic structures.

We hope that already in the first quarter of 2007 all procedures necessary for Ukraine’s membership in the WTO will be completed. We also expect that after Ukraine joins the WTO, the formal talks on concluding Agreement on creating free economic zone between Ukraine and the European Union will be initiated.

The European integration remains a strategy priority for Ukraine.

In a few days, we start negotiations with the European Union on a new base Agreement on cooperation which, to our mind, should contain a message for clear European prospect of Ukraine. Ukraine understands the institutional problems of the EU and problems concerning the constitutional process. We hope to see the same understanding of our stand from the direction of the European Union.

We will not give up our European aspirations and continue to insist on the EU openness toward Ukraine. At that, Ukraine will not waste time. We will carry out reforms in all spheres of life with the purpose to join the European community as an economically strong, stable and equal partner.

I recall the words of one of the authors of the German economic miracle of the years of 50-60s of the past century Ludwig Edhard who dreamt of “Europe of free and equal people”. Realizing the scale of our tasks, we are grateful for your readiness to support Ukraine toward the high European economic and social standards of life. In this context, Germany has always been and still remains an important political and main economic partner of Ukraine in Europe.

Today, according to the volumes of foreign-economic operations with Ukraine Germany takes the second place after the Russian Federation and the first one among the European countries. Germany is the biggest foreign investor of the Ukrainian economy. Germany is restoring with confidence its role of a locomotive of economic growth in Europe, integration processes within the EU framework. And this fact makes an impact and significance on the development of cooperation between our countries.

Today, during the meeting with German Chancellor Angela Merkel we have concentrated special attention on deepening bilateral economic cooperation. In spite of stable increase of the commodity turnover between our countries we consider the potential of our economic cooperation is very big yet.

The revival of economic market of Ukraine and Germany, great interestedness of the Ukrainian and German enterprises in deepening cooperation are prerequisites for significant broadening of bilateral trade-economic cooperation.

Together we have great opportunities for deepening cooperation in the spheres of high technologies, energy, mechanical engineering, transport, implementation of scale economic projects.

During our discussion with Mrs. Merkel we have agreed to actively support the ideas of business circles of both countries. I believe that exactly business forms the potential of the Ukrainian-German economic cooperation. We have a unique chance to search for new forms of cooperation, original investment projects, promising ideas.

You realize your opportunities. And we have a chance to attract the German experience, capital and progressive technologies. The Ukrainian-German High Level Group on Economic Issues is working in this direction. The Group held two sittings, the last one in October 2006 in Kyiv.

As you know, according to the results of this sitting, the sides have determined the priority directions of the activity. We hope for active participation of German businessmen in the work of the High Level Group and respective working groups.

We also expect to achieve concrete results and agreements in the framework of the visit to Ukraine of Minister of Economics and Technology of Germany Michael Glos who will be accompanied, as far as we know, by big delegation of German businessmen.

I strongly believe in successful cooperation of Ukraine and BRD and invite you to Ukraine.

From my part, as Prime Minister of Ukraine I am ready to support every new idea, efficient program, every investment project.

Thursday, March 1, 2007

Short news - XXI Century have recieved a permit for new shopping centre

XXI Century received an approval for construction of the new shopping centre at Balzaka str. Construction is expected to start in March 2007 and operation will start at 2nd quarter 2008. Total investment amount that the company intends to invest in the project is USD 4.7 mln. The total space of new shopping centre at Balzaka str. - K4.6 sq.m., GLA – K2.8 sq.m. There are 3 floors including the basement and the parking for 70 places.

Some info about single family construction in Kiev region

Consulting company SV Development completed comprehensive study of the single family houses (cottage) towns in Kiev region.

The study showed that during 2005-2007 number of small towns in the suburbs of Kiev tripled and became close to 80 (including projects at different stages of complete). The total market share of in the Kiev area of 1.8 mln. sq.m. (4 000 houses), which K360 of them finished and 1,44 mln. are under design and construction.

During 2007 are expected to be offered 1920 houses (K500 sq.m.). In 2008-09 respectively they say at least 11 projects (K250 sq.m.). The time of completion of the rest projects unknown.
According to company calculations on the assumption that the average cost of one square meter in the houses is about USD 1,600, the total market volume is about USD 2.9 billion.

Currently, developers mainly trying to get nearest Kiev area covering 20 kilometres around the capital. Киева. Results of the research showed that the majority of small towns located in the 20 km zone from the urban area - 50%, 27% - at 20-25 kilometres distance and 23% of more than 25 km. from Kiev. Main market share is covered by "premium" and "de-luxe" houses with 70%, economy and town-houses represented poorly - market share up to 30%.

At the same time, given the share of the total planned houses (1.8 mln. sq.m.), the objects valued up to USD 200 000 consist 48% of total supply. The second place (28%), placed houses over USD 500 000, the third is took by houses from USD 350 000 to USD 500 000 (15%). Slightly presented houses from USD 200 000 to USD 350 000 (9%).