15.05.2007 /Home mortgage
 Real estate segment of project finance market is of high demand
Valeriy Povreznyuk, Director of the Project Finance Center, JSCIB “UkrSibbank” The real estate segment of project finance market is of high demand. Prices have skyrocketed for the last five years. As per estimates of the experts, as of today the demand is one and a half time higher than the offer. There are few new building constructions as it is difficult to hedge projects risks. UkrSibbank keeps under review the financing of several large building projects – I believe that in the short run there will be more – notably, we are talking about dozens of millions of dollars. It is very important that the borrowers receive funds the moment they need them. However, it makes it difficult to find the corresponding scheme of financing, according to which the risks of the bank would be insured. Nobody has to ignore the purchasers – the individuals must be assured that they do not “buy a pig in a pock”, and the real asset is guaranteed with reliable financial instruments, elaborated by the bank and high expertise of the developer. The schemes proposed by the bank do take it into account. As for perspectives of the real estate building sector, the foreign countries practices show that with the increase of people’s well-being, evidently, they do want to have more comfortable living conditions, modern high quality buildings, etc. That is why, taking into consideration that the housing fund in Ukraine is mainly formed by the buildings of the 60s and 70s, we consider that the demand for modern buildings will not subside in future (perspective of 8-12 years). The demand for the old-fashioned buildings will gradually decrease. At the local markets with high liquidity the demographic setting is unlikely to have an essential influence. Thus, both developers and banks have a lot of work to do.
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