kyiv apartaments rent

ࡱ> 3 ;mbjbjCC V$!!`Al>>>>& J-J-J-J-,v- -S.///H/444@RBRBRBRBRBRBR$T  WNfR44@444fR7>> /H/WR7774.>R /(H/@R74@R77>Gh"dHH/. `|6*J-5DHdH R0-STHWW7WWdH7>>>> Construction Market Author: Sergiy Polovenko, Bisnis Representative in Kyiv, UkraineINTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2006. ALL RIGHTS RESERVED FOR USE OUTSIDE OF THE UNITED STATES.General Market Overview Construction is a booming market in Ukraine. Ukraines economic development and its current negotiations with World Trade Organization (WTO) make it an interesting target for international construction companies.Domestic sales account for revenues and are growing at a rate of 20 to 40% per year, depending on the market segment. An abundance of local natural resources provides the sector with a major competitive advantage. A low cost skilled labor force and low electricity costs are important competitive advantages. These advantages give brown field investors solid opportunities to generate high ROI. The existence of strong sector leaders presents good prospects to strategic investors as well. According to Engineering News Record (2006), out of the worlds 400 top contractors, four operated in Ukraine, namely Bechtel, CH2M Hill Cos. Ltd, Perini Corp and Washington Group International Inc. Foreign investment inflows within the construction sector accounted for $ 26 million and $ 48 million in Ukraine in 2003 and 2004, respectively and grew by over 40 % in the first quarter of 2006 (State Statistics Committee of Ukraine, 2006).The residential market is the most developed real estate market in Ukraine. Currently there is tough competition between local developers. Foreign developers pay more attention to the commercial real estate market, particularly the office and retail segments. Other underdeveloped segments of the Ukrainian market are hotel and industrial real estate. Industrial and warehousing properties become more and more attractive for investment due to a significant lack of supply. The strategic location of Ukraine between Europe and Asia opens wide possibilities to logistics companies. The hotel segment has high potential, especially in Kyiv. Currently, there are few hotels in Kyiv managed by international hotel operators. The unsatisfied demand for hotel services leads to high prices and high occupancy rates. Growing construction activities result in increasing demand for construction materials. Construction materials constitute a close to $ 3 billion market, and the sector is growing rapidly (Ukraine Trade Invest, 2006). There are already several companies with foreign investment in the market, and these companies generate a substantial amount of sector revenues. Ukraine has a well-developed construction materials industry. In the past few years, annual incremental growth of construction materials output has been 10-12%.Production is done across the country at enterprises representing many industry sectors. There are more than 32 thousand plants, firms, and organizations manufacturing construction materials employing more than 1 million workers. The construction materials industry is mainly concentrated near sources of raw materials in the eastern parts of the country and regions with high construction activity rates such as the capital region. Some regions still have a shortage of many construction materials, due mainly to the underdevelopment of material and building product supplies to the sector. One of the challenges is changing the structure of construction materials production to meet the needs of modern construction and introduce new kinds of architectural and building systems and construction types and technology. Creating aregional network of wholesale and retail organizations is also needed. Residential Construction Sector Kyiv, the capital of Ukraine has the most dynamic residential construction market. During the last five years, about 1 million square meters of residential real estate were constructed annually in Kyiv. The Director General of the Ukraine Trade Guild estimates that current residential construction supply rate would match current Warsaw residential availability by 2030. The annual demand for residential apartments is estimated to be 20,000 flats, mostly for middleclass newcomers. The average annual inflow of people coming from different Ukrainian cities to Kyiv in search of stable and highly paid employment has been 50 to 60 thousand people during the past three years.The construction market is mainly divided into new (new to 5 year old buildings) and used residential segments. Both have experienced a huge price surge during the last five years starting from 50% to 400% (for used flats in particular Kyiv areas).The price for a square meter varies depending on type and location of residential unit as shown in the table 1The current price for residential real estate has overgrown the comparable pricing in Warsaw, Vilnius, Tallinn, Riga and even Saint-Petersburg. Ahead is only Moscow where the average price for a square meter of residential real estate has exceeded 4000 USD.  At the same time, the cost of constructing one square meter of residential real estate in Kyiv, according to Savant, a London-based project and cost-management company specializing in Central and Eastern Europe and CIS on average is 565 USD. Comparative costs of residential space construction is given below:.Kyiv and other major regional centers in Ukraine are undergoing a construction and property development boom, with the housing market being the most popular area of investment due to a high rate of return and the quick turnaround associated with the residential sector. The situation on the Ukrainian real estate market in general, as per Savant, is characterized by an emphasis on achieving high output at the expense of quality, which could change significantly after the arrival of international developers.Among the major problems encountered by foreign developers in Ukraine are non-transparency in assigning land plots for construction by government authorities, and the difficulty in acquiring technical and town-planning permits from local municipal authorities. Ukrainian developers have gained experience in settling issues. Therefore international developers with potentially strong financial capabilities may find the most appropriate way to enter the market is to cooperate with local Ukrainian developers who already have permits in hand and have passed the initial stage of the project. Trade Center construction Currently, the demand for space in large-scale trading centers significantly exceeds the supply. This fact, combined with the fact that rent level in such centers, especially in Kyiv, exceed the respective rates in other Eastern European countries opens the way for foreign developers and operators. Matching of supply and demand in this segment is predicted by many experts to come not earlier than 2010-2011. Meanwhile, lack of supply causes the constant growth of rental rates in the trade centers. For the first six months of 2006, the average rent for a square meter in a large trading center has increased on 10-15%. Below is a chart of average rental cost per square meter per month at the top large trading centers in Kyiv.Trading Center (TC), Trading-Entertainment Centers (TEC)USD per square meter per monthTEC Caravanmore than 100TC Metrogradmore than 100TC Globusmore than 100TC Magellanbetween 90 to 100TC Pyramidabetween 90 to 100TC Arena Citybetween 90 to 100TC Mandarinbetween 90 to 100TC Macrosbetween 60 to 90TC Metropolisbetween 60 to 90TC Promenada Centerbetween 60 to 90TC Alladinbetween 60 to 90TC Ukrainabetween 60 to 90TC Kvadratbetween 60 to 90TC Gorodokbetween 60 to 90TC Olympiyskiybetween 60 to 90TC Rytmbelow 60TD Eurosportbelow 60High demand in the market of trading space in Kyiv is one of the major reasons for the payback period of 4 to 5 years. Experts project this to continue for the next 2-3 years. Alternatively, there are projects of multifunctional residential real estate under development, which will include large trading space, but still experts see them rather as a small relief to the trading space deficit.4. Office Construction The office market in Kyiv is in the growth stage. The total volume of office area on spring 2006 constitutes 560,000.00 square meters. Annually more than 100,000.00 square meters added, which still leaves demand far exceeding the supply. The vacancy rate at Kyiv business centers is at the 0-5% level. The demand for high-level A class office space is growing significantly which reflects on the office rent rates, which increased 10-50% depending on location and quality of services during 2005 and is expected to grow another 10-15% during 2006. More than 25 new office centers are planned during 2006-2008, which may match demand. Experts agree that the supply-demand match will take place not earlier than 2009-2010, making this segment as one of the most attractive with the payback period of 5-8 years.Major Office area indicationsTotal area of office premises (, , !)560 000 sq.m.Professional office premises (class  and )388 000 sq.m.Rental fees range:Class $60-80 sq.m. per monthClass +$50-60 sq.m. per monthClass $35-40 sq.m. per monthClass !$25-30 sq.m. per monthOperational fees$2-6 sq.m. per monthPrice for office premises$1500-5000 sq.m.Share of vacant spaces3%VAT20%Insurance deposit 1-3 month rental volumeBusiness centers of A and B class are 100% occupied. The share of foreign companies occupancy versus Ukrainian has changed from 80% /20% in 2005 to 60/40 % in 2006 respectively. Still the biggest demand is for office premises in central Kyiv districts (Pecherskiy, Shevchenkovskiy, Podolskiy, Obolonskiy, Solomenskiy).The following business centers were launched during 2005-2006: NameAddressTotal area, in sq.m.A ClassLeonardoSt. B.Khmelnitskogo17/5227 000Arena-City (offices) St. Basseinaya 1-37 000Dneprovskiy Spusk, 18 233Botanic TowersSt. Saksaganskogo 119-12135 000Total in Class 77 233Class BSt. Avtozavodskaya 217 000OlympiyskiyB.Vasilkovskaya 7213 000RenessansSt. Vorovskogo 2416 000Merks-center 2St. Leipzigkaya 156 000Forum Park PlazaPt Moskovskiy 932 000Europa-PlazaBlvd Shevchenko/ St. Saksaganskogo.16 000IcebergSt.Zhilyanskaya. 73-79 21 000Total in class 121 000Grand total198 233The following is the list of business centers planned to be launched during 2006-2008: Name area launch dateEuropa Plaza12 000 15 0002006Elsburg Plaza (a.k.a Surf)30 0002007Lybyd Plaza20 0002007Botanic Towers35 0002007Olimp (Esplanada) 17 0002007Business Center30 0002007Busines Center39 0002007Merks12 000 31 0002007Toronto-Kyiv28 0002007Business Center12 0002007International Business Park105 0002007Total in Class :340 000  352 000Class  +Dom Techniki16 0002006Lvivska Brama14 7002006Iliinskiy35 0002007Capital Center ( or +)64 3002008Business Center41 0002007-2008Total in Class +:171 000Class BBusiness Center11 0002006Forum Park Plaza 235 0002007Vinogradar18 000 2007Aliance Center14 5002007Business Center18 0002007Business Center10 0002007Chokolovskiy60 5002007Business Center13 5002007Ambassador (NTBC-2)10 0002007-2008Business Center10 0002007-2008Business Center20 0002007-2008Total in Class :220 500Total722 500  734 500During the first six months of 2006, the price for office premises has gone up from 20-50% reaching 2000-3000 USD per square meter in the central city districts, 1500-2000 USD per square meter in districts adjacent to central, 1500-2000 USD in so-called second line and 1000-1500 USD in the suburbs (residential areas).Hotel Construction The hotel sector also possesses great potential, though growth is less active since developers are focusing on residential, trading and office space construction. The hotel business requires higher investment, strong knowledge and experience in this field and is more dependent on the development land plot location. Still experts observe an increase of investors interest in this sector due to a number of factors: a) inability of existing hotels to fulfill the rising demand; b) stable world level apartments demand growth; c) fast-payback construction segments saturation; d) increasing volumes of investment capital; e) relative stability of Ukrainian economics; f) advancing EU borders to Ukraine; g) growing frequency of business trips to Kyiv from abroad as well as from Ukrainian regions; i) growth of tourism infrastructure in Ukraine.There are 1218 officially registered hotels and 3200 recreation-rehabilitation centers in Ukraine, out of which only 148 have Category Compliance Certificate.It is expected that the number of foreign visitors coming to Kyiv in near five years will constitute 2.3-2.5 million people. Kyiv requires high-class hotels with large conference, banquet and negotiation areas. In the near future, 11 small hotels (up to 200 rooms) are to be launched. Still the market saturation will take place not earlier than in 7-8 years, provided that currently announced 11 hotels will finally open.Experts estimate the average cost of constructing a hotel in Kyiv to be between 30-100 million USD, which considering the payback period of 4-5 years, may bring on average 12% return for an institutional investor.It is also worth mentioning that Ukraine is to host 2012 European soccer tournament, which would require more hotels and accommodation facilities.Land Issues On October 25, 2001, the Parliament of Ukraine adopted a new Land Code which came into effect on January 1, 2002. In keeping with the new Land Code, land is finally deemed as an object of private ownership rights. Landowners have the right to sell, exchange, donate or pledge their plots.The most progressive innovation of the above Code is the concept of private ownership of land. Under the previous Code, private land ownership was limited to Ukrainian individuals and the land sale-purchase was permitted under very limited circumstances.The concepts related to land use classifications and zoning are taken from the previous Code. Lands are divided into a few major categories: residential, industrial and agro-industrial. Residential land includes land plots used for construction of residential buildings within populated areas, public constructions and other structures of public use. Industrial land includes lands provided for the allocation and exploitation of principal and auxiliary buildings and structures of industrial, mining, transportation and other enterprises, including their means of access, communication networks, administrative-infrastructure buildings and other structures.Another innovation introduced by the Code is the right to pledge (mortgage) privately owned land. However, only Ukrainian banks may act as pledgees (mortgagees), and then only if they comply with the requirements established by law.The Code also introduces some new concepts in land relations: landed servitudes and good-neighborliness. As for landed servitudes, they may be given to a landowner or user with regard to the limited free or paid use of another land plot. Under the concept of good-neighborliness, landowners and users are required to use land in accordance with its designated purpose to provide the least nuisance to neighboring land plots.Although the most progressive concept is full private ownership of land, the Land Code establishes a moratorium on the sale-purchase of agricultural lands until January 1, 2007. Also until January 1, 2015, the area of an agricultural land plot, that may be privately owned, may not exceed 100 hectares. Moreover, until January 1, 2007, land ownership and use rights cannot be contributed to the authorized fund (charter capital) of legal entities.After January 1, 2002, any legal entity or individual can acquire nonagricultural land, except for beaches, roads, and strategically important state-owned lands (e.g., lands of railways, airports, pipelines, and atomic energy). No significant limitations are imposed on a nonresident's ownership of nonagricultural land other than those imposed on Ukrainian residentsThe new Code strictly prohibits foreign citizens, legal entities and governments from acquiring agro-industrial lands. Lease arrangements are the only way foreign investors may get an access to agricultural land. Agricultural land inherited by foreigners must be sold within one year after the inheritance. So, agricultural land may be privately owned by legal entities and individuals, with the exception of foreigners.Only members of farmer organizations and former members of collective agricultural enterprises enjoy the right to privatize agricultural land. However, even after January 1, 2007, agricultural land may only be sold to Ukrainian citizens with a degree in agriculture or work experience in agriculture or who conduct agricultural production activity as well as to Ukrainian legal entities engaged in such activity.Ukrainian citizens may acquire ownership rights to land by way of:a sale- purchase, gift, barter or other civil agreement; gratuitous transfer from state or communal ownership; privatization of land plots previously allocated to them for use; inheritance; an in-kind share to which they are legally entitled. Foreigners may acquire non-agricultural land plots by way of: sale-purchase, gift, barter and other civil agreements; buyout of land plots on which real estate under their private ownership is located; inheritance. However, foreign citizens may only acquire ownership rights to a non- agricultural land plot outside the limits of populated areas if they have privately-owned real estate already located on such land plot. Foreign legal entities may acquire ownership rights to land plots of non-agricultural designation: (a) within populated areas, when the property acquisition of real estate will be improved by buildings or other objects related to the companies business activities in Ukraine; or (b) outside the limits of populated areas in the case of the acquisition of real estate.When the moratorium on the sale of land is lifted, foreign investors will have the right to purchase the land under their privately owned production and storage facilities, provided, however such land is not designated as agricultural or other land restricted for foreign citizens and businesses.Foreigners are also entitled to participate in the privatization of land. However, sales of state-owned land to foreigners must be carried out by the Cabinet of Ministers and agreed to by the Parliament. As for municipal land, sales to foreigners must be carried out by the appropriate local Council and agreed to by the Cabinet.Further, the sale of state-owned and municipal land is allowed on condition that the foreigner registers a permanent representative office in Ukraine. Foreign countries desiring to acquire state owned or municipal land (e.g. for embassies and consulates) must apply to the Cabinet of Ministers.The Land Code permits two basic rights to land use: (i) the right to permanent use; and (ii) lease rights. The right to permanent use gives the right holder the right to possess and use a land plot under state or communal ownership without an expiration term. Unfortunately, this right may only be acquired by enterprises, institutions and organizations, which are related to state or communal ownership.Fortunately, the right to lease plots of land is a viable alternative for foreign investors, international organizations and foreign governments. Under the Land Code, leases may be either short-term (no more than five years) or long-term (no more than 50 years). The Land Code also allows the lessee to sublet the land plot upon consent from the lesser. All other issues in connection with the lease of land are regulated by law of Ukraine.Article 210 of the Civil Code effective as of 1 January 2004 stipulates a general rule that an agreement on real estate shall be registered. An agreement subject to state registration is considered valid as of the moment of state registration that is performed usually by a notary. Registration of title to real estate is carried by the State Registry of rights to Real estate and their limitations.Construction Materials MarketThe Ukrainian market for building materials offers sound opportunities to Americanexporters. The developing Ukrainian construction industry is looking for new supplysources and contacts. The annual import market for building materials is estimated atUSD 570-580 million.Not all imported building products have good market potential in Ukraine. Low market demand is evident for: imported cement, bricks (domestic production is abundant), clay roofing shingles (customers desire metal shingles or asbestos roofingmaterials), asphalt shingles, bituminous sarking and tar paper.There is moderate market demand for metal roofing components. Seven domestic metalproducers are able to fulfill demand, although fixtures, sheeting and anti-corrosioncomponents for production are imported. Imported metal shingles are available fromFinland, Sweden, Germany, and Poland.In cement, there are numerous local producers of dry mixes but the quality is not alwaysacceptable. Nearly all local manufacturers import chemical binding, conditioning, and coupling agents. Prices, however, for these imports are beginning to rise, opening thedoor for new lower-cost suppliers.Best Sales Prospects include:a. Linoleum (Imported linoleum has better coloring and is more than 2 meters wide.).b. Carpet and tufted floor covering (There is only one domestic producer.).c. Interior ceramic tiles (Imported tiles have better coloring and size variety.).d. Insulation (Imported mineral wool has improved packaging, size variety and pricing.).e. Paints (Local production is abundant for alkyd penta- phthalic oil paints, but there is ashortage in production of acrylic paint.)The Ukrainian market for building materials is highly competitive. German, Italian, Scandinavian, French, and Spanish exporters are aggressively promoting their products. Many well-known European brands are represented at construction shows held in Kyiv. U.S. building products have increased their market share, but remain a small percentage of the overall building materials market.Major distributors have set-up building material chains and supermarkets as one stop shops for consumers and wholesalers. Price and quality are the decisive factors in consumer choice. To reduce prices and increase competitive advantage, several European companies have established joint ventures to manufacture building materials in Ukraine.Kyiv is well supplied with imported building materials. Pricing for building materials in more remote areas is higher than in central and western Ukraine, although the gap is diminishing. Kharkiv, Dnipropetrovsk, Donetsk, Lviv, Odessa, and Zaporizhzhya offer potential for foreign exporters and investors interested in expanding operations to Ukraine. U.S. exporters may find it advantageous to cooperate with importers located in or oriented toward the major industrial regions of Ukraine. In most cases, local production of building materials satisfies the need of the construction industry for low cost items, when compared to imported products. But this price differential is decreasing, making room for the importation of foreign buildingmaterials.USG Resources U.S. Commercial Service in UkraineThe Commercial service, U.S. Embassy Kyiv, 4, Hlybochitska Str. Kyiv 04050 Ukraine. HYPERLINK http://www.export.gov www.export.gov U.S. Embassy in Ukraine HYPERLINK http://www.usemb.kiev.ua www.usemb.kiev.uaUSAID HYPERLINK http://ukraine.usaid.gov http://ukraine.usaid.govBISNIS (Business Information Service in Newly Independent States)The Commercial service, U.S. Embassy Kyiv, 4, Hlybochitska Str. Kyiv 04050 Ukraine.BISNIS RepresentativeSergiy Polovenko HYPERLINK mailto:Sergiy.Polovenko@mail.doc.gov Sergiy.Polovenko@mail.doc.govFor more information on Ukraine, visit BISNIS online at  HYPERLINK http://www.bisnis.doc.gov/bisnis/country/ukraine.cfm www.bisnis.doc.gov/bisnis/country/ukraine.cfm BISNIS ( HYPERLINK "http://www.bisnis.doc.gov" www.bisnis.doc.gov) is part of the U.S. Commercial Service ( HYPERLINK "http://www.export.gov" www.export.gov). PAGE \# "'Page: '#' '" Is there a place you normally put the date of publication of this article? Or is that part of the BISNIS reporting procedure? EMBED MSGraph.Chart.8 \s  EMBED MSGraph.Chart.8 \s  - funke iridium motorola touch screen revol dr 478 478 kyiv apartments service : kyiv apartaments service kyiv apartaments rent