Real Estate: Desperate Efforts against crisis

14.10.2008 00:00
The impact of global crisis on the construction market in Ukraine can be prevented or at least to depreciate. Although the quality of new buildings, the number and qualifications of the builders leave much to be desired, Ukraine has all chances to make a real leap forward thanks to foreign investment. About this in an interview LigaBusinessInform told the deputy head of the Board of Directors of the Ukrainian Construction Association (UCA), the head of the Board of directors of the "Slav-Invest" Milan Paevich.Vy repeatedly stated that Ukraine is a promising country for foreign investment, and they needed it . Why?

I'm really saying that the Ukrainian real estate market is very capacious and promising for all foreign investors. Let's look back: from 1994 to 2004 in the Ukrainian economy has invested $ 9.3 billion in Poland - $ 71.5 billion in the past 4 years invested nearly $ 25-30 billion, but this is not enough. It is worth noting that the Polish market is much more attractive Ukrainian. After all, Ukraine has a convenient geographical location, access to the Black Sea, a good transit route and so on.

Until April 19, 2007 - the date when, identified the European Championship in football - all the stated commercial construction projects lacked about $ 3 billion to complete projects. April 19, 2008 (one year) for Euro 2012 was not enough already $ 30 billion If we compare this information, we understand that plans are ambitious, but the reality of their implementation - is rather weak.

In the past year, even before the crisis and its symptoms, I asked one of the ministers at the fact that we are not Euro-2012 there is a lack of investment, labor, the lower and middle level executives and high-quality materials. He replied that we will do without foreign investment. Spoken like that in Kiev alone built 150 high-rise buildings, and at the same time all over Poland with 23 high-rise building. For me it was a sign that the big politicians do not see the situation very deeply. Because I insisted and said: we have no foreign investments can not do. And it is normal for a developing country's economy.

How much influenced by the global crisis on the domestic market for commercial real estate?

Ukraine as a member of the global society can not be aloof from the global crisis. It can absorb the global crisis, prepare for it. But we have a latent political crisis and the crisis in the industry. Add to this global crisis of commercial real estate.

According to analyst firms, investment in commercial real estate over the past year decreased by 41%. The only market that could rose is a Canadian. But getting the Euro 2012 in Ukraine - a chance to go up to 2012 the path of regional development, planned before the 2025-2030 year. This is a great chance of development for the area. Particularly relevant issue was now on the eve of the crisis.

After all, back with the devaluation of the hryvnia, because the population keeps the savings in local currency. Some invest in real estate, but almost 50% of economy-class housing is frozen. And note that this situation is particularly struck by the ordinary citizen: I do not think that people with a large fortune to keep their savings in the sector of economy housing.

Milan, you're talking about the crisis in Ukraine, but as far as we at the same time ready for the arrival of foreign investment?

We are not ready for the arrival of investment. And were not ready to win in the competition to host the Euro 2012, not now. The reasons for this mass: the problems with land acquisition, with conciliation or licensing system, the instability of law and too many government regulations, uncertainty of the legal system, the instability of the economic sphere, corruption, high taxation, low level of net income, difficulties in negotiating with the authorities, lack of physical infrastructure.

Then we can talk about the quality and quantity of manufactured building materials, and skills of workers. Yes, not all building materials, we are bad and need not to generalize. Brick, which produces, for example, the Kharkov Plant Slobozhanska ceramics "- a very high quality product that can give 100% for export. And it may happen that they will not be affected by the crisis. We have high-quality materials, but they are very few and they are going to import.

For me the problem lies elsewhere. The Government fears that builders will take to the street, but I'm afraid not this. According to some reports, in Portugal to date is 375 thousand construction workers and 1.5 million Ukrainian construction workers in Russia. According to unofficial estimates, the amounts are doubled. If this situation continues, and the remaining will go there for jobs. Perhaps, in their place come the Chinese, they will build us, but I do not think they will go home after 2012.

You see, I'm an optimist. I hope that politicians will focus on the problems of the economy. After all, look, we have a good harvest this year. His need to collect and solve storage problems, these need to be addressed! And I do not know, maybe, politicians hope that the builders were left without work, go to the field ... But I doubt it.

After all, what is happening in the States? When there was no law to support the financial industry, and one of the second presidential candidate came to the lower house, having thrown the race, and did not leave until it was explained to everyone why this law needs. And the law is adopted. And we do not have another crisis, but as a policy.

If the level of politicians do not create a committee or other authority to support the economy, then the yield will be very difficult to find. Western Europe and the States to allocate funds for the completion of specific projects. I am deeply convinced that the Ukrainian government should first of all to support projects that are in the 50% stage of readiness and more. Those projects that are now almost ready for commissioning, is a sin not to finish and did not pass the people.

You say that the Ukrainians are building in Portugal and Russia. And who works with us?

Working Ukrainians, Turks, Chinese, but not enough skilled construction workers. Although, if the Ukrainian builders working in Portugal and Russia, they are very much in demand. They need to return to Ukraine. Local businesses, unfortunately, is also to blame for the situation. After all, often to builders in Ukraine are as people second and third categories. Not thinking that if the construction in our country will stop, then GDP will fall by half.

Why do we employ foreign builders? I will answer you. There is a post-Soviet mentality. In the West, people have lost their jobs, he was left without insurance, without means to pay for the education of children, to pay the loans - he lost everything! With us, if a man has lost his job, he lost nothing. Let's talk frankly: we have no responsibility for their work.

In addition to everything in Ukraine is based a lot of houses to the stage of "rough" finish. This is the psychology: I do not want such as a neighbor. As a result, large firms were left without masters, because they all ran away for the "Cash" - to finish the work of the builders.

Retain professionals is virtually impossible. People run up nalom. Here the fault of the market, and mentality. Because we like: you have not done anything, if something is stolen. That is why in Ukraine on the scene taking foreign builders because they have nowhere to wear and no one to sell over the fence. And then there's the local investors slogan: pay only a coward. When changes of 3-5 sub-contractors who will work fine and be accountable for quality? I do not want to say that this whole section of this, but we have many such cases.

We gradually moved from the question of commercial property to residential new building. Milan, why do we have a situation where people who have bought an apartment, even as many have to spend to bring it to mind?

Bravo, that's for sure! In some of our new buildings, I would have never bought an apartment. It is unlikely that their quality can be compared to "Khrushev, not to mention the pre-revolutionary buildings in terms of construction.

We have a strange situation going on: on the one hand, on paper, we have very tight control, but on the other hand, really, a complete lack of control.

How to deal with it?

For two years we tried to involve in the process of investment of insurers, but they do not want to enter this market. Firstly, it is not profitable by the insurers, and secondly, many of our builders say it is not necessary. In addition, there is no practice, but there is a bad experience, when companies insure construction and installation risks, but the coming event could not realize their insurance rights.

There is a fact: the real estate market 30% of companies engaged in insurance. If the object is safe from non-scheduled dates of commissioning (this service is for all European markets), then the insurance officer is a terrible trial, and strict control on the site. I propose a draft law on compulsory insurance for all who participate in the construction of facilities, including banks. To developers could not get credit if building is not insured. (Although you credit now, and so no one will!)

This problem can be fought or not fought, or will wait until the market itself will regulate these things.

Perhaps the company's project management would be able to monitor the quality, as it happens abroad? Why do we have such a service is not in demand?

There are three holy commandments companies on project management: time, money and quality. We are the company until that simply can not get along.

After all, what is happening: all the more expensive, building materials, too, as the developer a fixed price. Hence, what he does? Save! On quality, quantity, on salaries builders. This is very dangerous.

What to do? Do not buy new building until the construction in Ukraine do not come to the European level?

I do not know what to advise. You can buy, but you need to know clearly: from whom and for what money. Come to the construction site before you buy an apartment in a newly built house and ask the usual builder: how he lived, when it receives a salary, whether it is regularly paid? Find out who oversees the construction project, whether the insured? Buy an apartment in companies with foreign financial component.

We have so many problems ... Why do foreign investors are interested in our country?

Yes, we scare them the political situation. We scare them unstable economy and bureaucracy. They know that even when you have all the building permits, you may be left without land or investment - we have not one such example.

Serious investors with billions of dollars of investments in Ukraine yet. Neither the commercial real estate or housing. Those who appear in the shelter, I would say it's investors-speculators. But because we live in a country market, it is a normal period through which to pass.

You know what I fear? That these potential investors who are interested in our very capacious and profitable market, can not wait 20-30 years. They turn around and go further: in China, or Brazil.

Let us now 4 years of political stability, and this is the way to heaven. Now the stability of the market need as air. Yes, in Kazakhstan, Russia, the Baltic crisis, too. And we live by the adage: if I have a burning house - and a neighbor's house is on fire. It's not so bad, because bad neighbor. But this is not correct. Because if the environment is weak, then it can not be very strong.

So, maybe I repeat myself, but my mesidzh that we should host Euro 2012, and should make the leap.

At a conference, you said that major investments are expected by late spring 2009. Why is this so?

There is a certain logic in the development of things. If the elections are at the end of the year, to May - on a wave of positive energy after the update the loan portfolios of banks and the economy will work - something to be resolved.

Kiev - Moscow and not far from Odessa. Given all the peculiarities of our market by the summer of next year will be the minimum time for completion of Euro 2012. But if we miss this chance, it will be a big sin ... lost a great chance to jump up.

If the month of June all of this does not rise and begins to boil, then more time will not. And I want to believe that everything will be fine. For the success of the project need a lot of positive energy, but on a real basis. I believe that we can do it, this is real data.
Jan Dougan
Content tags:
Did you like the material?Subscribe to our newsletter
Your comments:
Your opinion will be the first. Thank you for reading this article. I wish you happiness! Please share your opinion in the comment below.