In an exclusive interview with "Interfax-Ukraine" Anatoliy Shkriblyak, founder and shareholder of Budhouse Group, one of Ukraine's largest developers, spoke about the company's plans.
- At the opening of the Nikolsky shopping center (Kharkiv), it was announced that Budhouse Group would intensify its development of the following three retail real estate projects: in Odesa, Zaporizhzhia and Kyiv. How much investment are we talking about?
- In total, we estimate the volume of investments in these three projects in the next two to three years to be around EUR 314 million. In particular, Odesa is a small shopping center, about EUR 12 million, Khortitsa Mall in Zaporizhzhia - about EUR 82 million, Kyiv - about EUR 220 million.
This summer, we are resuming the Yessa shopping center project in Odesa and plan to complete it in about a year and two months, in the fall of 2022. This shopping center is small, about 30 thousand square meters of total area, so the investment in its completion is relatively small - about EUR 12 million.
- Yessa implementation was suspended in 2014. Will you carry out a reconceptualization?
- Yes, we are reconceiving the concept. A lot of time has passed, market conditions have changed, and tenants' requirements have changed.
- As you know, the Fabrika shopping center in Kherson is a reconstructed industrial property. Does the project of Khortitsa Mall (formerly the working name of Fabrika-2) also provide a new life for industrial areas?
- This facility will be built on the basis of a destroyed industrial zone located on the main highway of Zaporizhzhia. We will start construction work this summer, and investments in the construction of the new shopping center with a total area of 85 thousand square meters and a leasable area of 65 thousand square meters will amount to about EUR 82 million. In 2.5 years, this center will become the largest and most popular in Zaporizhzhia.
- The site in the center of Kyiv on Peremohy Avenue was cleared for the Hartz mixed-use complex back in 2011. When do you plan to start active work on this site?
- The project in Kyiv should be the "icing on the cake". We will start its implementation after the completion of the projects in Odesa and Zaporizhzhia.
- What is the estimated payback period of the projects?
- From the eight years.
- You have a residential project in the capital, Linden Luxury Residences. Do you plan to expand your portfolio in this segment in the near future?
- No, although we constantly monitor sites for residential complexes. Linden is already at the final stage of construction.
We focus on retail projects, creating high-quality world-class real estate in the regions. Our strategy from the start was as follows: we were looking for niches in cities where retail real estate was in demand, and our shopping centers occupied leading positions in these regions. Now, of course, competition is increasing.
- What other regions are you considering?
- Anywhere where the markets more or less allow us to ensure a return on investment. We are ready not only to create new shopping centers, but also to consider existing ones in order to reconceptualize and renovate them after the purchase.
- Are you already considering such potential projects?
- No, this is a two- to three-year perspective. After we launch projects in Odesa and Zaporizhzhia and start building a project in Kyiv, we will consider new markets more specifically.
- You have successful cases of implementing projects with bank loans. Will the new projects be implemented at your own expense or with the help of loans?
- Lending is the only way to go. Financing must be long-term, provided by powerful financial institutions - foreign or Ukrainian banks. So far, we have not had strong good loans within Ukraine. All loan portfolios were from international institutions: EUR52.1 million syndicated loan from the European Bank for Reconstruction and Development (EBRD) and Austrian Unicreditbank to Forum Lviv, EUR53 million loan from Polish state-owned BGK to Nikolsky.
The creation and operation of retail real estate requires a lot of money, which is quite cheap and comfortable in crisis situations. Ukrainian banks are more aggressive in crisis situations. Therefore, realizing that our projects have a significant payback period, European etiquette with banking institutions is extremely important for us.
Trust and reputation are very important factors. We are constantly working on our reputation at every stage: from choosing partners to building relationships with employees, etc. And today, when foreign companies come and do an analysis, they see a clean 12-year history of our company.
- What's more important in projects: a wow effect, like Nikolsky, or an emphasis on restrained economy and ecology, like Fabrika?
- The project must be cost-effective. It is important to adapt to society so that the project meets the expectations of the customers for whom it is created.
We are trying to squeeze out the maximum to make sure that society is satisfied and that the investment pays off quickly. Ten years ago, we jokingly named our strategy: SECs should become a central place for spending free time. In this concept, we are looking for approaches and creating projects where there is something to be proud of in the broadest sense of the word: from the wow effect to providing cultural pastime, with new standards, a new philosophy that unites society. And this is the key to business sustainability.
- Are you ready to sell your shopping malls?
- Everything is for sale - it's a matter of price. If they offer EUR 50 million for Nikolsky, we will not sell it, if they offer EUR 1 billion, we will buy it. But seriously, we use existing projects as a source of long-term financing to create new ones.
- Are you considering projects abroad?
- When we finish implementing the strategy in Ukraine, we will theoretically consider expansion to other countries.