Some seven kilometers northwest of Kyiv, at the foot of the quiet village of Kotsyubinskoe and atop land that used to be closed military territory, construction is about to commence on what is to be Ukraine’s largest industrial park.It is called Bionic Hill Innovation Park, and it is here where Vasily Khmelnytsky’s ambitious plan for a Silicon Valley-type information technology development community is set to become a reality.Khmelnytsky, 46, is a multimillionaire member of parliament representing the ruling Party of Regions and the majority shareholder of Kyiv Investment Group, a company known for its opaqueness. The main asset of his investment group is development company UDP, which constructed Ocean Plaza in Kyiv, Mezanom in Crimea and is currently set to develop Bionic Hill. Forbes Ukraine in August listed Khmelnytsky as the 29th richest Ukrainian, with a net worth totaling some $333 million.
The easiest way to describe the Bionic Hill project is grand. By 2020, the high-tech park, spanning an area of 147 hectares, will house some 900,000 square meters of mixed-use property with business, residential, educational, retail and recreational facilities for 35,000 employees, 10,000 of which will call the park home. Victor Galasyuk, first vice president of Bionic Hill Innovation Park, likes to call it a “live, work, learn and play community.”
Galasyuk told the Kyiv Post that the project will provide an environment for development and growth of high-tech and knowledge-based businesses in Ukraine, focusing on information technologies, biotech and pharmaceuticals, energy efficiency and clean energy solutions. It will target a range of tenants and partner companies, from promising tech startups to major local companies and global corporations, and in turn increase the country’s gross domestic product by hundreds of millions of dollars, he said.
Already, CISCO, BOSCH, Infopulse and Kyivstar, among others, have signed memos of understanding and cooperation with Bionic Hill, according to Galasyuk. More than a dozen others have made verbal agreements. Leases are yet to be signed, though, since the site is still being prepared for construction.
The total project investment is expected to reach $1 billion, all of which will come from the pockets of UDP. As the project corresponds with the Kyiv Development Strategy 2025, the Kyiv City State Administration agreed to construct roads to and engineering networks for the site, the cost of which is unclear. City administrators did not respond to Kyiv Post requests for comments.
This spring, 14 ammunition warehouses that were erected in the 1950s, when the site was used by the Soviet military, were cleared. With those out of the way, UDP plans to officially break ground on Bionic Hill in the coming weeks.
But the project, which is planned to be completed by 2020 (its first phase should be finished by end of the first quarter of 2015), is not about construction, “it’s about education, entrepreneurship and developing an innovation ecosystem,” Galasyuk explained.
A big step toward the education aspect was taken on Sept. 27, when Ukraine’s first inter-corporate IT educational center, known as Bionic University, was opened at a renovated historic building on the campus of the Kyiv Mohyla Academy. It will move to the Bionic Hill campus upon its completion.
The new institution will train IT-specialists in three areas: technical skills such as programming, soft skills, which include social interaction, and entrepreneurship. Graduates will have a crack at employment with companies on the Bionic Hill campus.
A goal of Bionic University is to “prepare future professionals for the Ukrainian IT industry and decrease the ‘brain drain’ of talented specialists abroad, Galasyuk said. Tuition will be free for the approximately 1,000 IT students accepted.
Ukraine is among the world leaders in human potential, with more than 163,000 graduates per year in the fields of science and technology, some 16,000 of which specialize in IT. The problem is that many of them go abroad for work, as opportunities here in Ukraine are few and pay is low, industry experts say.
Galasyuk hopes Bionic Hill will provide incentives for those talented young professionals in the form of employment opportunities with some of Ukraine’s and the world’s leaders in IT development.
But Dmytro Popianko, managing partner at Innoware and a Bionic Hill skeptic, said the park is a real estate project, not an IT project, and that steep office leases could deter companies from moving into the high-tech campus.
What is attractive for startup IT companies and growing IT companies are “not places, but tax incentives,” he explained. “IT parks in other countries allow savings on costs and allow companies to be competitive.” What would most benefit Ukraine’s IT sector right now is tax reform, he said, adding that lease prices and current taxes may be too high to attract most companies to Bionic Hill.
Forbes Ukraine, citing an anonymous manager of one of the five largest outsourcing companies in Ukraine, wrote that the cost of rent at Bionic Hill would range from $20-25 per square meter. “It can’t be serious,” the source told the news magazine. “Now we are paying $16 (per square meter) for space in the areas adjacent to the center of Kyiv. There are serious doubts that (Bionic Hill) will be able to fill its buildings.”
But Ruslan Kramarenko, deputy head of Kyiv City State Administration, is optimistic. In an interview with Forbes Ukraine, he said the innovative park would be almost fully occupied by its scheduled completion in 2020.
But his word isn’t enough to convince everyone.
“For IT companies… they start in garages. I don’t think IT companies require luxury office space to be competitive,” Popianko said.
Kyiv Post editor Christopher J. Miller can be reached at [email protected], and on Twitter at @ChristopherJM.
