Left Bank Could Boast Tallest Skyscraper In Ukraine's Capital Kyiv

KIEV, Ukraine -- Ukrainian company has announced the construction of a $340 million skyscraping hotel and office complex on Kyiv’s Left Bank, but questions remain as to when the project, which will give the city its tallest building to date, will get off the ground.

Gradostroy's other projects

The 60-floor building is slated to include a shopping mall, sports center and underwater restaurant on a 14-hectare plot of land in the capital’s Darnytsya district, but the developer, Gradostroy, still has to obtain a building permit.

“There is only one way to build such a high building. First, you have to get a permit from Kyiv’s town planning council to see if the local council needs this building. Afterward, we take up the project to check for safety issues,” said Anatoly Necheporchuk, deputy chief of the structural engineering department at the Ministry of Construction and Architecture.

“Ukraine’s construction business is far ahead of Ukrainian building legislation,” said Ihor Khlopyachy, marketing director for Gradostroy.

Gradostroy, which has been on the market since 2001 and was one of the contractors for Kyiv’s up-market Mandarin Plaza, has launched two residential buildings in Kyiv and has another one currently under construction.

The Darnytsa project will be Gradostroy’s and Kyiv’s tallest building.

Buildings higher than 25 floors have additional technical requirements, especially with regard to fire safety, said Necheporchuk.

“In the near future, there will be 30 building projects in Kyiv that exceed this limit, but only five of them will be put into use any time soon,” he added.

“It is not a question of a building’s technical feasibilities. The main thing is that firefighters have ladders that only go up 73 meters. This is our safety limit. So above all, builders need to provide some sort of external evacuation for people,” said Necheporchuk.

And this all costs money, with building costs going up by 30 percent per square meter if a building goes higher than 25 floors, according to Necheporchuk.

“It makes sense to build up, to multiply the prime price of buildings and to lengthen the terms of returns on a building, but only if the high cost of land or high demand for it in a certain area justifies this,” said Vitaliy Boyko, deputy director of Ukrainian Trade Guild, a consulting company that took part in the initial marketing research of Gradostroy’s project.

The Trade Guild has suggested a different solution for the hotel and office complex.

If they get the permit, it will take Gradostroy 50-60 months to finish construction, putting the completion dates somewhere near the end of 2011.

Real estate consulting companies working in Ukraine note that the market for commercial real estate is expected to continue growing for the next several years, and Gradostroy is confident that it will make a return on its initial investment, the amount of which Khlopyachy declined to specify.

“Our company has already started renting the area,” said Khlopyachy, adding purchasing the land would be much more expensive.

In the meantime, the company is looking for more investment, including foreign investment, to cover further costs.

“A single investor can’t afford a building that costs around $340 million. We will need four or five different sources. I think they will be primarily foreign,” said Khlopyachy.

The complex will include a 27,000-square-meter shopping mall surrounding the 60-story building, in which the hotel starts on the 35th floor, and office space occupies 39,000 square meters from the ground to the 34th floor. A parking lot with 1,500 parking spaces and a 450-seat underwater restaurant are also planned.

“Location, location and location is the main thing when talking about this class of hotels and office space, said Khlopyachy, “which is why it’s still too early to decide this. Nevertheless, we are going to create the highest standards ever seen in Ukraine.”

“The Left Bank is very attractive for investments in residential real estate because the population keeps growing there,” said Ukrainian Trade Guild’s Boyko.

But the main disadvantage of the city’s Left Bank is its limited natural and infrastructural resources, as well as distance from the center, he added.

“There will never be an A-class office on Kyiv’s Left Bank, but it has very good prospects for large-format commercial real estate, especially in the areas of the Livoberezhna and Kharkivska subway stations,” said Boyko.

“It’s improbable that a 60-floor trade-office-hotel complex on the Left Bank will be profitable,” said Valentyn Sovyetov, fund director of XXI Century Investments, a Kyiv-based real estate developer and manager.

“The cost of land is lower and the total cost price may also be lower than on the Right Bank, but the demand for high-class hotels and offices is definitely there [on Right Bank],” he said.

Still, Gradostroy is convinced that they’ve got the location right.

“This complex will be a 20-minute drive from Boryspil International Airport, the only one in Kyiv, which will be very convenient for businesspeople, athletes and VIP clients, who are the target market for the future hotel,” said Khlopyachy.

“There is increasingly less space in the center of the Right Bank every year, so we are assuming that office and hotel buildings will be moved to the Left Bank within five years,” he added.

But much still remains to be done.

Gradostroy has yet to decide who will manage the hotel and has itself taken on the role of general contractor and developer.

“This is the first time that we are standing as the initial investor, developer and general contractor. Subcontracting services will be outsourced,” said Khlopyachy.

“Taking into account international practice, it is more effective to divide the process of development and the contracting processes between the different companies of the investment,” Sovyetov said.

“Very often on the Ukrainian market the investor, developer and general contractor are all the same person. The lion’s share of real estate is built on one’s own funds,” said Boyko.

Source: Kyiv Post


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