Company expected to invest 50-60 million euros
A new real estate investor has declared its intention to put money into Ukraine’s hot property market, where prices have been rising annually in double digit figures over the past several years.
Vicus Limited, a company that says it’s backed by Finnish high net-worth families and investors, announced Dec. 20 that it had increased the capital for its real estate fund, adding that it would now extend activity to the Ukrainian market. The company says it has previously focused on the Baltic and Russian real estate markets.
Juha Mikkonen, managing director of Vicus, told the Post Jan. 9 that Vicus plans to invest in Ukraine around 50-60 million euros, or approximately 25-30 percent of a fund that is expected to total 200-250 million euros. Much depends on whether the Ukrainian real estate market continues developing and if the political situation remains stable, he added.
“Vicus’s investment plans for Ukraine are focused on retail, logistics, industrial and probably office property, with one or a few anchor Western tenants,” Mikkonen said.
“Our company is looking for long-term projects which won’t include shopping centers, which usually have many different tenants.”
In December 2005 Vicus tiptoed into its first Ukraine investment, taking a share in a logistics center to be built in the Boryspil region of Kyiv oblast. The investment project is being carried out in cooperation with Eurocon Ukraine, a branch of AS Eesti Ehitus, an Estonian construction company that has been on the Ukrainian market for eight years.
The Boryspil project, which is still in the early stages of planning, is estimated to cost about 20 million euros ($24 million). Land-related organizational issues are currently underway. Vicus and its partners are currently looking for a potential tenant – preferably a Western logistics company.
Founded in May 2005, Vicus reportedly made its first investments in Estonia and Latvia. In Parnu, southwestern Estonia, Vicus funded construction of production facilities for a Finnish electronics company. In Riga, Latvia, Vicus is reportedly behind a logistics center being built for an international logistics company. Russia is another area of the company’s business activities expansion, particularly St. Petersburg, a hot spot for much neighboring Finnish capital.
In Ukraine, Vicus will mostly work with local partners who have ample local experience.
“If there are positive results in market development, as we have observed in Russia over the last three to five years, we want to be among the first investors in the field,” Mikkonen said.
Vicus is one of the Ukrainian market’s newest players, but not the last, Mikkonen stressed.
Late last year, a handful of new Western-financed real-estate funds focusing on Ukraine emerged. One of them, Concorde Capital, told the Post on Aug. 3, 2005 that they, in tandem with real estate consultancy Colliers International, planned on raising $200 million for Colliers-Concorde Ukraine Real Estate Fund.
Concorde’s partner, Steven Cheshire, told the Post Jan. 10 that the fund drive is scheduled to be completed by Jan. 31, adding that the group already has its eye on a $60-90 million investment project in Kyiv. The investment project involves development of an office park in Kyiv’s central business district.
There are other investments lined up to proceed with after the fund closes, he added.
Talking about newcomers on the market, Cheshire said that in addition to Vicus there were many large investors and developers looking for direct investment projects in Ukraine.“We speak with many of these groups regularly and find many are frustrated with their inability to easily enter this market. The market here is not transparent, and the bulk of projects and project sites are off market. The projects that everyone knows about are either expensive or have some kind of problem. It is crucial to have a local team with the contacts, which ensures an ideal flow of sites and the knowledge necessary to determine which are economically, legally and physically feasible,” Cheshire added.
