What is the MOST PROFITABLE kind of BUSINESS? - News about real estate, Kiev, Kyiv region. Real Estate In Ukraine
Steep turns commercial real estate...Construction, especially in the field of commercial real estate, is considered today one of the most lucrative businesses. However, the high rate of inflation, the rise in price of building materials and non-transparent scheme of allocation of land forcing developers to mobilise. About real estate prices, profitability of developers and consequences of the subprime crisis on the Ukrainian market correspondent told Igor Chernenko, General Director of managing company "Tiko construction" .The dynamics of housing prices are regularly covered in the media, unlike commercial. How recently gained office, retail facilities?Due to higher interest in the residential real estate market, the information on it is more open. The pricing situation on the commercial real estate market is more buried for a number of reasons. In particular, fewer buyers and sellers of data objects; the unique characteristics of objects, which has a significant impact on the sale price; high demand from institutional investors.Therefore, the prices of commercial properties are growing steadily, outpacing the growth rate of housing prices. To talk about specific numbers is difficult because price depends on many factors: the class project, its success, the interest of the buyer, etc. the highest prices for commercial properties are observed in the Central part of Kiev. So, the price of 1 sq m of high-end office space in downtown starts at $7500-7700, commercial premises вЂ“ $9000, and on Khreshchatyk, the cost of 1 sqm could be $20 000 or more. The average cost of 1 sq m of retail and office space in the whole Kiev is about $3500.According to some experts, a "down" real estate prices by 30% or more - will help the arrival of large foreign investors. How, in Your opinion, how likely is such a scenario? Will finally come to Ukraine large foreign capital?Large foreign capital is interested in entering the domestic commercial real estate market because of its higher profitability. However, the main limiting factor of his coming is the lack of a transparent land allocation and ignorance of the specifics of doing business in our, unfortunately, are still far from market conditions. Therefore, foreign companies still prefer to buy ready-functioning projects, or work in cooperation with local developer that takes the handling of all administrative issues.The fall of the same price with the arrival of foreign developers are also unlikely, because as the experience of our banking system, Western companies attracted to our market high yield. Lower prices should be expected only under the condition of market saturation, which may occur without the direct participation of large foreign capital.According to forecasts, the mortgage crisis in the USA will continue until 2012, and by that time, housing prices could fall by 70-80%. Will affect whether Ukraine this fall or we can only win?Because the Ukrainian economy is still very poorly integrated into the global economic system, the effects of the mortgage crisis in the US had almost no impact on the Ukrainian real estate market. Moreover, the Ukrainian market is showing a stable trend of growth both in the residential and commercial real estate, due to a significant excess of demand over supply.The scenario of the us real estate market in Ukraine is unlikely, since the main reasons for the development of the crisis on the US real estate market is to grant unsecured income loans that, in light of the current policy of the NBU in Ukraine is impossible. Stabilization of the Ukrainian real estate market is possible only in the medium term (2011-2012) provided a significant increase in supply across all segments.Until recently, You were mainly engaged in commercial real estate, and now intend to build three residential complexes in Kiev. Amid a difficult situation with a mortgage, do not fear that housing will not endure?Despite the fact that currently the real estate market there is a decline, caused by the reduction in mortgage lending due to the crisis of liquidity of Ukrainian banks, we believe that this trend is short-lived and decreasing inflation, the crisis will be overcome. An additional factor indicating the attractiveness of the residential property market is a huge potential demand, which, despite the increase in volumes of housing construction, is largely unmet. Moreover, in recent years, the interests of many construction companies are shifting towards the suburbs, which in future may lead to a reduction in the number of new buildings in Kiev. That is why we believe that, despite challenges, the residential real estate market is still very promising and attractive.Also note that our residential complexes cannot be regarded as purely residential, because in addition to residential, two of the three projects also perform a commercial function, which somewhat reduces the risks of failure complexes. So, in the project at St Architects on the first two floors provides commercial space that is positive for the District, where it will be located because there is insufficient supply of retail space. The project at St Kudryashova on the first several levels provides offices, making it more relevant than just housing.And yet, what projects provide today the developer maximum profitability?On the commercial real estate market is the most attractive segments is office, retail and warehouse real estate, capitalization rates which account for 9-11% on office and retail real estate, 10-12% for storage.The highest possible rate of return on the residential property market is observed in the segment of real estate, as the construction cost of the construction of a residential building are not significantly different, while the sale price is higher.In General, we note that, due to significant excess of demand over supply are attractive all segments of commercial real estate. The difference in the level of profitability is explained by the different level of risk associated with the implementation of projects in various segments of commercial real estate.How promising the plan can be considered the Left coast, given the fact that Kiev is "gasping" for the caps?Currently, the attractiveness of the Left Bank is on the rise due to the lack of available land suitable for commercial properties. The building density in the Central areas is now extremely high, which makes the search for possibilities of implementation of projects in areas close to Central as well as in residential areas of the Left Bank.From our point of view, Kiev need to form a new business district вЂ“ the "city" that largely would off-load the Central part of the city and redistribute traffic flows. The most attractive area for this is the Hem, and the territory of Rybalsky island, however, for the construction of high-rise office and commercial buildings need to decide the question of removal of nearby industrial plants.At what stage is the project for the construction of the shopping center "Petrovka"? There are persistent rumors that the construction of this facility will have to carry the book market...The project of construction of the shopping center "Petrovka" is at the stage of final approval documentation, and its implementation will begin in the near future. The issue of moving the book market in new shopping and entertainment center is also being considered. The existing book market does not meet the criteria in respect of quality customer service and efficient use of the territory. However, in any case, we will take into account the wishes of tenants and visitors of the book market "Petrovka", because we know that this place is some kind of "calling card" of the city. In General, trade books and audiovisual products must not be of a spontaneous nature, and the process of buying books should be fun. No comfort for buyers and sellers cannot be and speeches, if the trade will be carried out on the street. Therefore, we believe that the transfer of the book market in modern shopping and entertainment center is a logical step for further development of the street, especially with the prospect of holding in Kiev Euro 2012.Today, many city developers come up with their projects in the regions. How, in Your opinion, promising regional markets?Certainly, the commercial real estate market of Kiev is not unlimited and in the future is the key to success will be the effective development of the regions of Ukraine, where the market is not so saturated. However, development of regions requires additional costs associated with the study of the local market and the creation of an appropriate organizational structure of the company. According to our estimates, in the medium term, the commercial real estate market of Kyiv will remain the most attractive, therefore it is more appropriate to concentrate all the main efforts on this market.Currently all our projects are concentrated in Kiev and Kiev region.