Risk is Not Always a Noble Thing

The Ukrainian customer is used to high prices for dwelling on the primary market

He even has accepted the situation that an apartment in Kiev can have the same or even a higher price in comparison with an apartment of the same kind in Berlin or, say, in Madrid. At the same time the daily reminder for a client is the following: Ukraine is still not the Western Europe, where the fraudulent manipulations on the real estate market are impossible.

Specialists assert the following: the incident which happened with the famous "Elite Center" Company, the fraud of its invertors, the transportation of millions to the foreign countries - is not a shameful coincidence, but a regular occurrence. The flaw of the proper legislation, non-transparent scheme of the allotments' selling, corruption and bribery - are the vivid signs of the Ukrainian dwelling market. So, it was the time's business to show those who would "bunko" it.

We must admit that long ago our neighbors gave the first signs of a possibility of building pyramids, which replaced the financial ones. At the end of 2005 in Moscow approximately 15 000 of investors, and in the suburbs of Moscow - 20 000, found themselves without their apartments. The reason of that was found in the system of building. At first, the company was buying or renting an allotment and then it was selling apartments. The third and the most important stage - building itself - were ignored. The same scheme was followed by the small companies, which didn't have a sufficient amount of financial resources for it. The money deficiency was compensated by the investors' contributions and the banks' credits. At last, the Federal Law "About Participation at Share Building" banned the investors' means to be set into motion till a company takes all the necessary permits for a dwelling building. But the samples and experience didn't serve us as a "landmark". We decided to trigger a back flash in our own way. And we did it.

The task of the law enforcement workers - is to elucidate at what stage and why the "Elite Center" Company's fraudulence turned out to be possible. The state's duty - is to preserve its citizens from such troubles. How to do this?

In the experts' view, the most optimal variant to deal with the situation on the real estate market is to stick to the transparent system of the allotments' division and the setting up of the safe, for investors, schemes of the building financing. For instance, if the allotment selling conducted due to the auctions, the companies, concerned with the allotment's acquisition, would be compelled to pass through the pre-auction checkup. Such procedure would make the allotment's distribution process more transparent and would make any impossible way for swindles to appear. Unfortunately, the auctions still exist on the paper and are not performed in fact.

Specialists assert that besides the state's control over the allotment's market, the real estate market legalization even...the banks will promote them. The argument is: the Western banks, while buying up the Ukrainian ones, introduce the European principles of work also at the financial institutions and companies that collaborate with the banks. Among of them one can find building companies, which, in order to be given a credit, are to co-operate following the transparent and understandable schemes.

The underhand action on the real estate market can be stopped, but, unfortunately, it's impossible to stop the price increase. Though after the incident with the "Elite Center" Company the realtors have noticed some halt of the impetuous price increase concerning dwelling on the primary market and ...the increase on the secondary market. A bird in the hand is worth...

As a matter of fact, some realtors advice not to comfort oneself with illusions. At the post-election period the prices are surely to increase.

According to the financiers' calculations, the elections "helped" to appear on the market... one billion dollars made during the election company. It's a well known fact, that the real estate (real, but not virtual) remains for Ukraine as the best money investment.

TEXT: Anatoly Skochelyas

The Ukrainian

March 2006