The Belgian general manager of property developer TPF Ukraine, Filip Schelfhout, has set out to make the company a "change maker" in western Ukraine's residential real estate industry.
Based in Brussels, TPF entered Ukraine in 2013 and has about 30 office employees and 150 on-site workers. It operates in 57 countries.
TPF is now working on the Belgian Village project, a nine-block residential district occupying 2.8 hectares that offers 360 apartments in downtown Lviv. Apartment prices are selling in the range of $45,000-$90,000. The developer is also about to break ground on an additional 400-apartment project.
The majority of western Ukraine’s residential high-rise buildings are extremely out-of-date, still being built in a “post-Soviet style” known for inefficiency and inconvenience, Schelfhout told the Kyiv Post by Skype. Certain spaces are too big, whereas others are too small.
He ridicules Ukrainian builders who sell shells of apartments that he deems are only 70-80 percent completed.
“You just receive concrete walls, no flooring… That means that within the first year you will never have one weekend when there is no drilling around your ears,” Schelfhout said.
But Lviv is being closely watched by investors. Many new developments have sprouted up during the past year. In addition to Kyiv and Lviv-based developers, the expatriate expects to see an inflow of foreign investors in Ukraine’s west beginning next year.
It is still possible to buy a 1-2 room apartment for as little as $20,000-$40,000, but buyers should be aware of the risks and problems.
The idea of more competition does not frighten him. In fact, he supports new market players copying his idea. “If you can’t stand competition, then don’t come to a market like this one, because it’s volatile like hell,” he said.
Western Ukraine’s eight oblasts, with a combined population of 11 million, are more than enough to keep this manager busy, and he does not plan to branch out into other parts of Ukraine.
Because of the hryvnia currency’s fluctuation and inflation, many Ukrainians in the Lviv region have secured their money by purchasing apartments rather than putting it in a savings account.
Providing a guarantee for residential real estate investors is a must, Schelfhout says. Many developers ask for down payments ahead of time, while investors don’t know where their money is going. When an economic crisis hits, the developer can’t guarantee the down payments.
“That’s why you see so many unfinished buildings,” he said.
But the main problem is corruption. Schelfhout believes that things are actually worse now than in 2013. While many top-officials are truly fighting for change, it’s the people under them that are causing all the trouble. “The problem is the middle management of the officials,” he said.
There were 77,000 more apartments in Ukraine’s capital at the start of 2014 than in 2005. Two-room flats are the most common.
One thing the government can do is to help banks reduce extremely high loan interest rates. “Just give people normal interest rates,” he says.
Schelfhout has no plans to leave Ukraine despite the huge losses TPF suffered because of the hryvnia’s devaluation without providing a dollar figure. Spending five days a week in Lviv and weekends in Belgium to visit his family, Schelfhout sees potential in Ukraine. “I am here for the long ride,” he said.
Kyiv Post staff writer Ilya Timtchenko can be reached at [email protected].
