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Monday, April 16, 2007

Bank expert predicts a decreasing commercial RE rates

Within 2 or 3 years it is expected stabilize, and perhaps a slight fall in rental rates on commercial and office real estate in Ukraine.

Such forecast was made by director of the Centre for project finance of BNP UkrSibbank Valery Povreznyuk.

In his view, the demand for commercial and office properties in the regions remains high but in Kiev, it is close to balance between supply and demand. "Lack of hotels and logistics is everywhere - these segment are behind the current development for a few years," he added.

According to Mr. Povreznyuk, for today the bank finances about 20 big projects for the construction and about 10 are under review process. The largest loan amounts comes for retail (55%), logistics parks-25%, office real estate is 15%, hotels 5%.

60% of commercial projects financed by the bank, built on leased land. That trend, he explains with complicate process of land buying, including the constraints of local authorities, unpredictable economic changes, as well as the specifics of the project.