Kyiv is entering the world market of investment in commercial real estate
This year Ukraine took part for the first time in MIPIM, the largest international real state exhibition held in Cannes. This event annually attracts the world’s leading representatives of the construction industry and finance. In the latest, fifteenth, exhibition 290 cities, 5,500 companies, and thousands of investors took part.
Unfortunately, Ukraine made a weak show. There were just a few kilograms of handouts in our delegation’s baggage, while other participants generously exchanged information about their cities, countries, and projects by way of electronic gadgets. Yet, as the Ukrainian delegates noted, the debutantes aroused interest: our display stands attracted a host of visitors who kept asking questions, including such as, “Can we trust Ukraine?”
Mykhailo Yermolenko, HCN Group development manager, believes that our country evoked active interest not only because it is big and situated in the center of the continent but also because “the risks that investors face in Ukraine are just a little bigger than in the rest of Europe, while cost-effectiveness is higher — and very much so.” According to the Ukrainian experts who visited Cannes, the pace of our market development is also impressive: while Kyiv is three to four years behind, say, Moscow in real estate construction, it will be just eighteen months behind a year from now. Oleksandr Ovchar, general manager of the Kvadrat shopping mall, says, “We still have several years for intensive construction, for the market is still quite vacant.” However, the Cannes guests found it difficult to name the amounts of potential investments that may come shortly to Kyiv. At the same time, they admit it is possible to assess the market capacity indirectly. For example, Kyiv is not going even to discuss $20-million projects: it will exclusively take up the ones worth at least $50 million. Will this approach not scare off the bashful bride?
The MIPIM participants noted that “the investor is prepared for this.” He is interested, above all, in building hotels and large shopping and entertainment centers (Kyiv is expecting representatives of some investment companies and big-time operators, such as Hilton and Intercontinental, to arrive rather soon for negotiations on this issue). The investors are sure to see that Kyiv can qualitatively implement and take a serious approach to projects. However, the MIPIM visitors claim that foreigners still have “great fear because of our image and rather low culture of mutual understanding between the government and business.” In addition, one of the obstacles to investment contracts is that our companies are often unable to draw up projects in the European format. For example, the projects exhibited at MIPIM have gone through the process of package solutions: all the investor has to do is put in funds, receive the required documents, and see to it that his money works effectively. The West has taken a rational attitude toward land resources, revised its construction standards, rules, and procedures. Thus there can be practically no conflicts between the existing architectural surroundings and newly-built structures.
The Ukrainian participants of the exhibition also noted that Warsaw, Vilnius, Moscow, Saint Petersburg, and some other cities of the postcommunist world are, by all accounts, MIPIM regulars. For example, Russia’s Krasnodar region installed a 130 square meter stand (a stand of the same size was put up by Italy as a whole) with information on city- building and the architectural concept of several cities, as well as presented several real estate and transport development projects. Our experts say this is the right approach to investment utilization. What struck them even more was that the firms and administrations of the cities that took part in MIPIM usually act in unison. This is logical enough. Ihor Petrovsky, president of Inter-Continent Bank, thinks that the city authorities thus show interest in investments and emphasize their good attitude to business, while entrepreneurs demonstrate that they respect the authorities and do legal business. The display stand of Vilnius was strikingly large. The Ukrainians think this allowed the potential investor to have the right picture of what programs the city is going to implement soon and to make a prompt decision on possible participation in them. “We still have a long way to go,” the Kyivans sigh, looking back on MIPIM. At the same time, participation in the Cannes exhibition significantly boosted optimistic expectations. The exhibition debutantes are convinced that, as soon as Kyiv drafts detailed planning projects, investors will come to the city.
