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Investment potential of the Ukraine real estate market: 4 promising areas

05 February 2018 | Monday
URE Club

During the III Eastern Europe Real Estate Forum international investors and developers discussed investment prospects of the real estate market of the whole region and in Ukraine specifically.

What impedes foreign investment

Among the main reason why foreing investors do not look at the Ukrainian marekt is geopolitical risk. According to theexperts. the main risks lie in corruption, underdevelopment of the institutions of power and drawbacks of the judicial system. Natalia Kochergina, head of real estate practice at DLA Piper Ukraine, said that as long as our judges are not judged by law, we will not overcome corruption.

Burak Pehlivan, president of TUID think that, the Ukrainian government does not communicate with business - there is no dialogue, which also has a negative impact on the country's investment climate.

In Ukraine, there are still no institutional investors, in the real estate sector, financial and industrial groups, the population and commercial banks act as the main source of financing.

Under favorable conditions, this list could be supplemented by REIT (Real Estate Investment Trust), industrial and financial foreign investors, says financial consultant and teacher of the Edinburgh Business School Ivan Kompan.

While the situation in Ukraine not so good, there are certain positive trends. Experts noted that over the past 3-4 years, business has been substantially simplified, due to openregisters, the creation of a public land cadastre, and in the future - the opening of access to town planning documentation.

Agricultural land market

One of the most valuable resources of Ukraine, which attracts interest of potential investors. So far, at the legislative level, there are no necessary mechanisms that would allow us to attract exteraneous capital into this sphere. Ivan Kompan said that competent land reform can become a catalyst for the inflow of financing to Ukraine.

Burak Pehlivan confirmed the interest of foreign investors in the agricultural land market and foreign investors are ready to rent and purchase land.

The need for land reform is brewing for a long time, but this issue needs to be approached delicately.

Natalia Kochergina said that before removing the moratorium on the sale of agricultural land, it is necessary to work out a clear mechanism for its preservation - for example, to develop tools that will not allow uncontrolled changes in the intended purpose.

Infrastructure and industrial facilities

The development of the land market will open another attractive area for investment - infrastructure and industrial facilities. Innovative agriculture will require new granaries, roads, ports. Ukraine is already experiencing a deficit in similar facilities. And, according to Natalia Kochergina, today among the clients of DLA Piper Ukraine there is a large port operator.

However, most investors only look at Ukraine and study the situation, says Olga Syvak, Chief investment officer at the Lviv City Council. At the same time, Olga also noted investors' interest in infrastructure facilities.

Green and energy efficient construction

International banks and venture funds are ready to consider similar projects for investment of capital. Julia Stepanova, senior banker of the EBRD, said that the bank is ready to invest in Eastern Europe, and one of the main factors that is taken into account when considering the project and making a decision is energy efficiency.

The EBRD has already participated in financing the construction of the new Hilton Garden Inn hotel in Tbilisi, where considerable attention is paid to energy efficiency.

Renewable energy

Alternative energy is another promising area for investment. Annually in Ukraine the number of projects associated with alternative and renewable energy is increasing. Experts believe tha the pace of development of the segment does not correspond to the potential that exists in Ukraine.

Burak Pehlivan said that Turkish investors want and ready to invest in renewable energy projects, but the process is hampered by the absence of a free trade agreement.

source: propertytimes.com.ua

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