Luxury Kyiv Apartment Block Increasing Both Floors And Prices

KYIV, Ukraine -- The prices for real estate in the Ukrainian capital have been climbing steeply for the last couple of years, but in the case of one residential project in the center of town, they are going up faster than floors can be added to the building.

Capitol Center

The Capitol building, which is being constructed on the city’s main Khreshchatyk Street, was touted as Kyiv’s most expensive block of flats in the October issue of the Ukrainian real estate magazine Building.

And although only seven of Capitol’s planned 11 floors have been completed, developers say that all the luxury apartments have been sold and that a total of 15 floors are likely to be eventually built to meet continuing demand.

The project is being developed by 21st Century Investments, a Kyiv-based real estate investment company, which is best known for launching the Kvadrat brand of shopping centers.

21st Century’s board of directors is headed by Lev Partskhaladze, a former member of the Kyiv City Council, whose European Capital party lost its bid for the mayor’s seat in the last elections.

According to Vyacheslav Ushakov, who is managing the Capitol building project for 21st Century, apartments began selling at around $4,000 per square meter (sq. m.) in late 2003, when the Kyiv City Council allocated the 2,800 sq. m. prestigious land plot.

Now, he said, flat prices have more than doubled, exceeding the $10,000 mark. Ushakov predicts that by late March of 2007, when Capitol is scheduled for completion, the price per sq. m. will reach nearly $13,000.

The developer said that an average apartment in Capitol is around 200 sq. m., which puts the current price of a flat well into the seven-digit domain. Ushakov noted, however, that none of the 40 tenants who bought apartments in the posh residential complex have paid the whole sum upfront.

Instead, these “affluent individuals representing various groups of society, both businessmen and officials,” opted for a financing scheme that allows them to pay up within a year.

“This is definitely not the case of years-long housing loans. The clients are expected to be adequately secure financially.”

According to Ushakov, the 11-floor project’s initial projected expenditures was Hr 38 million (around $7.4 million), but this figure has increased due to rising construction and material costs.

He said he now expects a 70 percent profit margin.

Ushakov said city regulations for downtown residential construction require developers to give up 12 percent of their apartments to the city for distribution among the “socially vulnerable.” However, this will not be the case for Capitol’s $2 million apartments.

According to Ushakov, 21st Century has an arrangement by which the city will be given apartments in less expensive buildings built by the real estate investment company.

Ushakov denied that any members of the Kyiv City Council who were involved in allocating the land for Capitol’s construction back in 2003 will be tenants in the new building.

He said the luxury block of flats will be like a clubhouse, a closed community with hotel-like reception service to prevent trespassing.

In addition, the complex also will boast its own swimming pool, fitness center and spa – open to the public, but accessible through a separate entrance.

But the addition of more floors in the building might work against the Capitol’s clubhouse image, according to Serhiy Ovchinikov, deputy board chairman of Kyiv-based NEST, a real estate development company, which is currently developing three residential projects in the capital.

“Judging by European standards, a club-type building should have no more than seven floors.”

Ovchinikov said that a developer working on a club-type project must additionally ensure that the proper resident atmosphere is created, by carefully screening buyers and tenants to make sure they will be comfortable living next to each other.

Ushakov said that some of his tenants “might know each other” but, he acknowledged, his company never went so far as screening future residents. “The entire building is already sold out,” he said.

Source: Kyiv Post