The Russian company of Lev Leviev will develop 420 hectares near Kiev

The Africa Israel conglomerate of Israeli billionaire Lev Leviev is transferring its Ukrainian development division to the Russian AFI Development. AFI's first project in Ukraine will be a multifunctional complex with an area of more than 500 thousand square meters. m in the Boryspil district, the company said yesterday. The construction of such large complexes is a common practice for developers - Africa Israel is also investing about $200 million in the largest development in the center of Zaporozhye.

The first project of the Russian AFI Development in Ukraine will be the construction of at least 500 thousand square meters. m of office, retail and residential real estate near Boryspil, the company’s general director Alexander Khaldei said yesterday. The project implementation period is five to seven years. According to the executive director of the Budinkom company (the Ukrainian division of Africa Israel) Zhanna Khotovely, the plot of 121 hectares is located between Boryspil and Kiev, in the village of Bolshaya Aleksandrovka (15 km from the center of Kyiv). “We own 70% of the land in this project, the rest belongs to our Ukrainian partners, the DS company headed by Evgeniy Dolgov,” Ms. Khotovely told Kommersant.

The project in the Boryspil area belongs to the company AFI Ukraine, which the parent company Africa Israel decided to transfer to the Russian AFI Development, said Alexander Khaldei. The deal will be completed within six months. Zhanna Khotovely reported that, despite the reorganization, the final decision on who will oversee the Ukrainian division - the Israeli office or the Russian one - has not yet been made.

Africa Israel entered Ukraine last year, purchasing a plot of land in the center of Zaporozhye for $22 million - where the company plans to build a multifunctional complex of 150 thousand square meters. m, investing about $200 million (see Kommersant dated December 13, 2007). It has not yet been decided whether the Zaporozhye project will be transferred to AFI Development, the company reported.

The Africa Israel conglomerate was founded in 1934 by a group of Jews from South Africa. Since 1997, the owner has been billionaire Lev Leviev. Net profit for the nine months of 2007 was more than 4 billion shekels ($1.034 billion), the total value of assets was 38.6 billion shekels ($9.98 billion). AFI Development manages Lev Leviev's Russian real estate assets. The company's portfolio includes 29 projects with a total area of 3.7 million square meters. m. 71% of the shares are held by Africa Israel, 10% by Alexander Khaldei’s Nirro Group, another 19% are in free float on the LSE. Capitalization at the close of trading on March 27 was $4.368 billion.

The concept of the project has not yet been developed (this could take about three months), so it is not yet possible to say what exactly will be built on the site, Ms. Khotovely noted: “Most likely, an industrial park and housing.” According to the commercial director of the Eurocon Ukraine company, Yuriy Pivovarov, building a technology park in this place is the right decision: “I myself wanted to buy land there for such a project. It has a good location - close to the Kiev-Kharkov and Kyiv-Moscow highways. In addition In addition, there is a gas pipeline in the north of the village, which will provide the technopark with gas.”

AFI plans to increase the area of land in this area by another 300 hectares, investing $120-150 million. “We are now in the process of acquiring and consolidating the remaining plots - there is a memorandum of understanding for them with a local partner. Already aggregated plots are estimated at $119 million, of which AFI Ukraine paid $30.26 million,” Mr. Khaldei told Kommersant. The declared investments for the purchase of land are more than enough, Yuri Pivovarov believes: “$120 million, or $4 thousand per hundred square meters, that’s even expensive. In this area, land can be bought for $2 thousand per hundred square meters.”

The construction of large complexes is a common practice for developers. Among AFI's projects in Russia are a shopping center in Moscow City (114 thousand sq. m), a multifunctional project in Kuntsevo (1.28 million sq. m) and a residential area in Odintsovo (450 thousand sq. m).

The Ukrainian real estate market is one of the three most interesting markets in the CIS countries, says Dmitry Shmelev, commercial director of the Russian company Snegiri. According to his estimates, the IRR (internal developer return) of projects in Kyiv and its surroundings is 35-40%. In Moscow and the region, this figure can reach 40-50%, adds Aleksey Belousov, commercial director of Capital Group.

Elena Kommersant-Sinitsyna; Olga Kommersant-Sichkar, Moscow

AFI Development landed in Boryspil