No MIRAX Any More

March 3, Board of MIRAX, formerly, one of the biggest developer in Russia, has desided to stop MIRAX brand and TM respectively. As official notice says, all obligations will be fullfilled, particularly for projects with back from Sberbank (Moscow City project, for instance)

Mirax Plaza flows away to GazStroyConsult which is, according to rumors, very close to Prime Minister Vladimir Putin.

Most undefined issue is with international projects and desicision will be taken according the mutual agreement with local partners. The same situation with Mirax Plaza in Kiev. No information about its destiny so far

So, say goodbye to MIRAX...but who care the names     

NAI Pickard Short Kiev Market Survey for 1H 2010

NAI Pickard has published a NAI Pickard survey of Kiev property market for the 1st 1H 2010. The survey highlights the main macroeconomic indexes for Ukraine and describes main trends in commercial and residential markets in Kiev.

Download link (PDF)

Kiev Office Market - Absorbtion Rate Is 150% at 1H

According to Colliers International, absorption rate for office space in Kiev grew up to 150% at 1H 2010, comparing with the same period at 2009. The estimated market volume increased to K60 sqm.

In Colliers notes that the increase was due the fact, that companies were moving to higher grade office spaces, as well as companies expanded their presence in the current office centers, where they occupy office space. Most significant figure was the consumption by the financial sector, which rised up to 16%.

Neet to mention, that in Kiev, at 2009, office space demand, showed by the financial sector has dropped significantly because global economic crisis, and reached only 6% of the total number of transactions. Whereas in 2006-2008 share of transactions of the financial sector ranged 35-40%.

Meanwhile, demand for quality office space by large international companies, according to Colliers, is still high, but to satisfy that, it is becoming pretty difficult due to the lack of high-quality office property with large open-space whole areas. There are not enough areas exceed over 2000 which were occupied during 2009 and not presented at the market so far.

My New Challenge

Some of you, perhaps would kile to ask me - where I've been for a while. I have a reason. I'm very busy for now. From Dec 2009 I'm a Chief Operational Officer of ECO Tower - first A-class building in Zaporozhye (approx K800 people here). This is a big challenge for me, not only because Zaporozhye. In current market, to launch brand new property is pretty complicated goal, particularly for the city. The main problem - Zaporozhey has not any experience dealing with investment grade property at all. So, no one know, R/U, OPEX and many other things. But I guess it's just a time issue.


Couple words on my new business. ECO Tower (formerly known as Bayda Business Hall), is first project of well-known Austrian investment group - ECO Business Immobilien. That's public company with project within Austria, Germany, Hungary and Ukraine. The property should be commisioned at summer 2010, so we are very close to the finish line for the moment. ECO Tower is 19-storey office building with 3 retail floors. Total GLA about K11 sqm. There are 2-level underground parking for 92 cars. But greatest advantage is location. We all know "location, location, location". And we are the best one in Zaporozhye. ECO Tower is located in central square of the city, in front of region administration building. Now doubt - this is a best place for commercial building you ever could find.


I'm open for any business contacts, as usual. btw, I'm looking a business contact for corporate apartment hotel opportunity. 15th and 16th floor are great options for that.



So, I will try to back in track with the blog. Keep tuning.

Check the Back To Business!

Hello!
There are some photos from Back To Business cocktail, kindly provided by Europaproperty.

NAI Global Member in Ukraine Wins Major Commercial Real Estate Award

NAI Pickard, NAI Global’s exclusive member serving the Ukranian market, has been named the Best Commercial Property Agency, Ukraine, by the Europe & Africa Property Awards 2009 in association with CNBC Arabiya.

The award is part of the International Property Awards program, one of the world’s most prestigious competitions dedicated to honoring the best real estate professionals around the world.

Terry Pickard, chairman of NAI Pickard, said of winning the award, “It shows that being entrepreneurial and aggressive in difficult times pays off ‘when the going gets tough, the tough get going.’”

The award will be presented in a ceremony on October 16th.

Source: NAI Global


BTW, this was my 400th post in the blog! Congrats myself :)

Kiev Office Market - Fall 2009

According to CB Richard Ellis, from January to September 2009 the number of deals on office lease has decreased compared to the same period last year, at least twice. This is confirmed by Colliers International, adding that to date more than 90% of transactions are due to migration of tenants from one office center to another one.

Now many are trying to rent in a prestigious office spaces, located in CBD. In particular this applies to the pharmaceutical, FMCG and IT-oriented companies working with offshore partners, as well as representative offices of foreign companies that were least hit by the financial crisis.

At Colliers International argue that because of this trend, A class vacancy is now less than 10%, whereas in the 1H 2009, it reached 15-20%. In some properties, for example, Leonardo 2nd phase, Prime or Podol Plaza, almost no vacant space left.

In B and C class average vacancy rate, grew from the beginning of the year with a 5-10 to 15-20%. Most affected outdated and the poor quality office centers, where there outflow is significant.

Situation is even worse with the unclassified D and E properties, where vacancy has increased since the beginning of the year from 18 to 25%. The most tenants such offices on the first floors - are banks, insurance offices, telecommunications companies, beauty salons - suffered from financial crisis stronger than other companies.

This fall in A, B and C classes most demand space is 100-150 sqm, whereas a year ago there was a strong demand for 2500-1000 sqm. That's the fact many companies have reduced the number of staff and no longer need large spaces.

Increased competition for customers has forced the owners of office property slightly lower prices for rent. If in April 2009 base rent for A Class space estimated as USD30-40/1 sqm - now uSD25-38/1 sqm, USD18-25/1 sqm - now USD 15-22/1 sqm for B class spaces and USD12-18/1 sqm - now USD9-13/1 sqm for C class respectively.

Owners of office centers are also ready to fix the base rate at UAH with fixed USD exchage rate with volatility no more than 15%. If it exceeds this figure, the UAH rent rate should be reviewed.

In turn, tenants are now trying to sign non-breaking lease agreements for a term from 5 to 7 years, offering the fixation of current base rates and penalties for the break up. But to get good terms is possible for limited number of tenants - primarily in the business centers, whose owners want to sell property in the next 2-3 years. Others agree to sign not more than 1,5-3 years with a subsequent renegotiation.

Totaly Useless Info About Mirax

Moscow office of Mirax (hey, Ukrainian one has gone, remember?) fired 90% of its staff during last year. Before the crisis, they have around 3000 employee only at back-office. Now this figure down at only 300 people. As well as field workers - the same amount is.

And who knows how it would have ended if Mirax has not agreed with the Alfa Group, which had serious intentions to get his money back. Actually, this is Morgan Stanley loan to Mirax, which Alfa bought. But yesterday they had agreement to resolve that problem and Mirax may sleep well another 1,5 years.

In my mind, Mirax is biggest and brightest example of what's going on in development market across Russia and Ukraine.

Yuri Nartov Left Colliers

One of Managing Directors of Colliers Ukraine, Yuri Nartov left a company these days. I know Yuri as an excellent professional and very kind person. It was a please for me to work together. That's why I'm sure he will be very successful in his new track.

Alexandr Nosachenko is only Colliers' Managing Director now.

Good Luck, Yura!

New Appointment in Colliers International

Colliers International has announced the appointment of Hadley Dean to the position of Managing Partner in Central and Eastern Europe region.

In his new position Dean will be responsible for regional client strategy, as well as implementation of international initiatives and actios to Colliers International offices in the Czech Republic, Slovakia, Hungary, Romania and Ukraine. He holds his current position of Managing Partner of Colliers International in Poland, too.

Under his management office of Colliers International with 20 employee, grew to three offices with 120 people.

Hadley Dean works in commercial real estate market for 13 years. He began his career in London. In 1999 he moved to Prague to develop agency business. In 2000, Dean moved to Poland, focusing on strengthening the presence of Colliers International in this country.

Retail Rates - As Bad As Possible

According to local CBRE' office, Kiev is one of the TOP-3 city with rent rates fall (I even cannot name it as "decreasing"). Ukraine' capital with -32% figure follows to Buenos Aires (-37%) and Warsaw (-33%). CBRE notes that biggest down numbers are in the weak concept and poor location (50-70% fall) while more succeed SCs have about 30-40% rates fall. Actualy I don't understand how the determine the median (-32%) with provided figures. Sergie Sergienko from CBRE predicts that in case of poor consumptions rent rates will continues to move down at least up to 5-10% more.

Natalia Kravets from Colliers notes that vacancy is pretty predictable: from 1-2% for prime SC up to 5-7% for unlucky ones. Some figures: Globus rent rates (USD120-150 for now comparing with USD 200-250 the same period last year), Karavan (USD 100-140 for now; 150-200 last year), Piramida (USD 50-70 for now; 80-190 last year)

XXI Cenury Is Waiting For The Better Times

XXI Centuury is not going to re-concept their shopping centers in development phase. They're speaking on Sevastopol and Lviv projects as well as Kvadrat on Miloslavskogo str (cheers to Colliers and Vladimir Timochko! :) CEO of the company said that initial concept is pretty good.

Also he did confirm XXI Century doesn't want to sell their flagship properties - Kvadrat shopping centres, at list on current bid.

Bye Bye C&W

Cushman & Wakefield close their Ukrainian office (as well as local entity) and terminate all activities here.

It's very pity, because they are very professional and stable team within other markets, friends of mine were working there and I had a bit relations with them in the past.

CU next time. Hope so.

O'Key Ukraine Change Strategy Again

Till now «O`Key» declared the looking for a strategic investor to keep operations, but now the company is considering to sale the whole business.

The company was ready to sell 50% of the equity to raise funds necessary to maintain the growth - till 2011 the company had planned to take a 3-5% retail market share. Then, experts evaluated 100% of the chain approximately USD56 mln.

«The negotiations are almost done. Three strategic investor came in the last round of and in the next two weeks will be open the buyer», - reported «Renaissance Capital Ukraine», which is consultant of the deal.

There are the few details of expected transactions. In the «Panorama Group», which are the developer of shopping centers (have a same owner with the «O'Key») stated that the intention to terminate the lease with the «O'Key» in 3 SC. This is a "Sky Mall" in Kiev, "Sunny Gallery" in Kriviy Rog and "Flagman" in Zaporozhye.

«O'Key» develop four hypermarkets (total shopping area K36 sqm) in Kiev, Kriviy Rog, Zaporozhye and Kharkiv. Income in 2008 - UAH 740 mln. 100% share of the company (through «Expert Capital») own by estonian investor Hillar Teder.

Shoking Numbers

All of you, who remember situation in commerical real estate in Ukraine, as well as some of my old posts, should be shocked with current cap rates in Kiev. Particurlarly, for property owners. For example 1-1,5 year ago a prime office property deals could be negotiated at 7-7,5% yeild only. But now these figures completely different: 16-17% for offices, 15-17% for retail and 18-20 for logistics.

Feel the difference? Credit crunch in action

About Mirax

Someone of you definitely know that Mirax, one of the leading developer in CIS, stopped its activity in Ukraine. It covers tallest complex in Kiev - Mirax Plaza on Podil district. They have decided to close head office (even if they're taking about lease end-term). The building will be frozen at 11th floor and they who bought the properties can move in or get the payment back. But I do not understant clear how they going to offer uncomplect building, which did not pass the state expertise.

And last details - today I did not watch the huge Mirax roof sign on Maidan. Total cost cutting. How long it will?

Couple Words On My New Project

You asking me about my new job and project.

I’ve been in Colliers not so long as many others guys there, but I happy that it was, really. But some forces lead me to New Park as a new project. Currently, I am a Managing Partner in New Park - the first Ukrainian company, which specializes solely on the development, design, construction and facility management of multi-storey automatic parking solutions, ground and underground. We have our own equipments, designed last year, as well as equipment from Italy, Korea and Turkey. You can visit New Park web-site, but it is still in Russian only

It was not so easy to deep in completely new and unpredictable market. But all of you who know the situation with parking lots in Kiev quite clear what I’m taking about. And do not forget about Euro02012. I believe that parking as property is very attractive in Ukraine, particularly in Kiev, Odessa, Lviv and Dnepropetrovsk. For instance, 1 parking lot in Kiev costs K70-130 USD in CBD (I meant in residential buildings). Why not to develop that sort of property? I have a very strong and reliable partners in that projects with own funds and side business. I’m responsible for all operational activity. Our target markets are:

• Office buldings
• Multi-storey residentials
• Single familiy residentials with lack of land

And we are seeking freehold land plots for our own development, for sure.

But one of the biggest idea(I guess so) to establish an investment fund for developing 5-10 parking property and sell them out with 12-13% yield.

That’s what I’m doing now. Hope a credit crunch won’t be too long.

Famous Colliers Maps

I'd like to offer you a famous Colliers' maps, which present rent rates, yields and pipeline across Europe. You can download they here

Ukraine: Catching Up With The Neighbours

From Financial Times By Roman Olearchyk

Published: February 27 2008

Ukraine’s hot property market has produced some superior returns over the past eight years, providing investors with double-digit annual price growth rates.But it was not until last year that structured investment instruments appeared, such as real estate funds, offering international investors exposure to this fast-growing market.Most of the benefactors over the past decade were privileged domestic investors who snapped up flats and land in a frenzy, often at very low prices.Many who managed to close several acquisitions, typically with cash, turned into millionaires overnight as annual prices surged for seven years at double-digit rates.

Residential flats that a decade ago were selling for about $50,000, have reached astronomical levels, typically more than $2,500 per sq m. That is enough to make Kiev (pictured above) one of the world’s 20 most expensive cities in terms of property prices.

The sharp surge in purchase prices and rental rates is tapering off, but Kiev real estate experts do not expect a big downward correction in the immediate future. Demand consistently exceeds supply, particularly for commercial space, where the most growth is expected in coming years.The market holds ample opportunities for large foreign investors seeking strong returns by investing in a new wave of real estate funds and property developers, some of which have listed on the London Stock Exchange’s Alternative Investment Market (Aim).

“To keep up the pace of development and raise money for future development projects and land acquisition, large local developers started to more actively explore capital raising opportunities through IPOs and private placements,” says Tomas Fiala, managing director of Kiev-based Dragon Capital.

Dragon raised one of the largest sums from an IPO on Aim when it listed Dragon-Ukrainian Properties & Development, bringing in $208m, followed by secondary private placement for $100m.One developer, TMM, raised $105m. AISI Realty raised $33m, adding to a flurry of private placements by developers and funds.“These placements raised $664m in the aggregate, or 39 per cent of the total amount of capital attracted by Ukrainian companies through IPOs/private placements last year, says Mr Fiala.“To compare, there were only two real estate company share placements in 2006 for a total of $85m.”

Cast back in time by virtue of its membership of the USSR last century, and the collapse that followed the end of the USSR, experts say Ukraine’s real estate market is about seven years behind its peers in central Europe.While the foreign investment raised thus far is small, the expectation is its growth will imitate its neighbours’. New shopping centres, office space, warehouses and residential space continue to sprout up across the country.

“Foreign capital is a latecomer to the Ukrainian real estate market, having become active in the country only in 2006 due to complex legislation and intricate legal procedures. In addition, international property buyers were restrained by a lack of available stock for sale,” says Mr Fiala.But investments in both property development and property acquisition will continue to grow as local returns are much higher than on the alternative central and east European markets, according to Mr Fiala.

Petro Radchuk, vice president, at KDD Group, the developer that raised $130m last year in an IPO on Aim, says the listing “has allowed investors to get exposure to the fast-growing Ukrainian real estate market”.Like other developers and funds, KDD Group can offer large scale investors a chance to take part directly in some of its projects.

“Real estate consultants estimate that supply will equal demand not earlier than in 2010-2011. This explains why office rent rates grew 40 per cent in 2006 and 35 per cent in 2007. Retail centres increased rates by 15 per cent in 2007,” says Mr Radchuk.Last year saw acquisitions bring new landlords to top retail and office space in Kiev.

“The simple fact is that there are opportunities to invest here, whether through direct investment or via a vehicle like one of our groups’ non-listed funds or future listings like the ones we have seen on the Aim,” says Paul Niland, director of Primeros Property Fund.

GLD Takes Good Speed

GLD Invest (Austria), one of the leading international player in Ukraine, is going to to expand own activity in Ukraine. Recently company sold its K40 sqm logistic project East Gate to another Austrian investor, Akron Group for EUR 35 mln. At the same time, another their logistic property West Gate is very successful and almost rented out. Also they are going to Odessa with new logistic property, as well as Kharkov and Zaporizhia.

Besides, a company intends to go next level of the operations, taking into interest to office market, too. In this market, company announced funds about EUR 200 mln. This fguure quite correspondent with funds amount which is announced for Ukraine' project and exceeds EUR 450 mln.

That's pretty clear, because for now, GLD has good experience on local market with comprehensive expertise, with own experience and feeling of Ukraine market. And good relation within professional community. I could wish to Clemens Lehr (GLD' Head in Ukraine) and company in whole good results and noticeable project.