International investors are interested in Ukrainian real estate – major lessons and insights from MIPIM

For more than 10 years, Ukraine has been presented at the major real estate investment exhibition MIPIM taking place annually at the mid of March in Cannes, France.

This year the event hosted 26.000 real estate, city and political leaders, including more than 5 000 investors from over 100 countries. Ukrainian delegation was represented by Kyiv headed by the city’s mayor Vitalii Klitschko, as well as by 63 local entrepreneurs.

Among the key global real estate trends are focus of investors on alternative assets such as student housing and retirement living, as well as logistics, growing impact of prop tech and potential of advanced technologies in real estate.

However, first and foremost, all participants note that today the importance of the cities as economic drivers and gateways is much higher rather than specific companies/projects and even countries in general. According to UN, cities house 54% of the worlds’ population. Investors consider cities in terms of economic growth, risk management and long-term perspective. Hence, it is very important for Kyiv and other major Ukrainian cities such as Lviv, Odesa, Kharkiv or Dnipro to be presented at the exhibition and to show their full potential.

Aleksandr Popov, CEO of Archimatika and participant of Kyiv Stand believes that MIPIM is a competition between cities for the investors, which allows them to evolve and improve the quality of urban living: «City is a complex ecosystem. And investor should be convinced that this specific environment offers better conditions.»

In addition, we saw that investors were interested in cooperation. Cushman & Wakefield noted that a strong global economy across all markets would encourage investors to release more funds into real estate this year compared to the record $1.6 trillion in 2017.

Among the key investors represented at MIPIM are either private/venture entrepreneurs considering any country for investing depending on the project or large investment funds, which more likely do not look at Ukraine right now because of its risks such as external aggression, poor justice system, complicated tax and licensing system, as well as political risks.

However, according to Georgiy Yasinksiy, deputy Director of Kyiv Investment Agency, Kyiv remains interesting for investors even without being among the high-priority cities for capital placement: «To convert this interest into real foreign investment inflow, the city should do its homework in terms of legislation and reforms at the country level.

Hence, the country should improve and ease mechanisms of private public partnership, make changes in tax system with focus on simplification of administering, make changes in justice system to make investor feel that their long-term investments are safe.»

Talking on behalf of business community, Yuriy Kryvosheya, Managing Partner at Toronto-Kyiv believes that in case of proactive position, companies have a good chance to appeal significant capital: «It is important to help investors to structure the deal & to make the initial teaser, which then can be approved by the board at a high level. At MIPIM, we felt that people were ready «to roll up their sleeves» to do such homework and to look at the projects in Ukraine. Probably, as of now, many of them are not ready to bear the risks of development or to invest in Greenfield project, though given excess of liquidity and low rate of return in their home markets, they are ready to consider projects in Ukraine that generate income today.»

Among the good signs were the interest of international companies, which left Ukraine a long time ago, in re-entering the market to establish the office here. It is a reason to believe that Ukraine is gradually restoring the trust of the foreign players.

Author – Anna Nestulia


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