Ukrainian Real Estate Market Opportunities

Main macroeconomic indicators Population: 48 mln Territory 603,7 sq. km or 5,7% of Europe and 0,44% of the World GDP real growth in January-June 2006 is 5,4% 3189,5 thousands sq. meters has been constructed during 6 months of 2006 Construction volume for January -August 2006 to January –August 2005 has grown for 7,1% Ukraines export for January -August 2006 is ,7 mln. USD, import ,4 mln. USD Index of consumers prices is 100% in August 2006, 103,8% from the beginning of the 2006 Registered unemployment rate is 2,5% Population real revenues incl. influence of price factor risen on 19,5% comparing to last year Year deposit interests in USD – 9-12%

Why Ukraine? No restriction on foreigners urban ownership including land for entities or private persons Appropriate taxes: Flat 15% personal income tax Flat 15% of money repatriation for legal entities No taxation of property Year to year growing real estate and land markets which are far from satiation (detail figures are in following slides) Year to year growing demand from local inhabitants and foreigners in all sectors of real estate because of the low availability of m2 per person as compared to average EU levels and low quality of old Soviet houses

Real Estate Market Research in 2004 – 2006 Residential Estate In 2005 in Kiev 1,107 mln sq. meters has been built (+5,4% comparing to 2004 with 1,054 mln sq. meters and +4,9% comparing to 2003 with 1,050 mln sq. meters. Construction companies plan to build up to 2,5 mln sq. meters during Due to Kievs General Development plan it is arranged to increase total capitals residential square in 1,5 times to Due to Ukraines Statistical Committee construction volumes has grown about 51,5% in Kiev during last 5 years Kiev is not the only growing region: for example nearest Chernigiv region together with Kiev region have grown intensively during last years (23,4% and 22,6% accordingly)

Real Estate Market Research in 2004 – 2006 Residential Estate Fuente: OECD

Real Estate Market Research in 2004 – 2006 Residential Estate Residential Flats: Cost of the project, building cost and, land – from 900 USD per sq.m Selling price – from 1200 USD per sq.m Second hand flats - from 1400 USD per sq.m Private houses around Kyiv city: Location - Up to 30 km from city Land price – from 200 USD per sq.m till 10 USD per sq.m Cost of building from 500 USD for sq.m. Average size of the houses – from 200 sq.m. Average sell price - from 1000 USD per sq. m Fuente: OECD

Real Estate Market Research in 2004 – 2006 Kievs Office Estate in Brief Total Office premises volume (A,B,C) sq. m Professional premises (A and B classes) sq. m Non-professional premises (non-classed) sq. m Rent rate range: A class$60-80/ sq. m per month B+ class$50-60/ sq. m per month B class$35-40/ sq. m per month C class and non-professional premises$25-30/ sq. m per month Operational expenses rates$2-6/ sq. m per month Sale price$ /sq. m. Free space share3% VAT20% Insurance deposit1-3 months

Real Estate Market Research in 2004 – 2006 The commercial real estate market is not developed yet Total professional office centers space in Kiev is about 539, 000 sq. m (9-10% of total market) Other 90% (4,6 mln. sq. m) have been adopted for offices using former scientific and research institutions or private apartments. It is the lowest rate in Central Europe. In Warsaw professional real estate volume is about 2,9 mln. Sq. m., in Prague - 1,9 mln sq. m and in Budapest – 1,6 mln. sq. m. Due to director of "Colliers International Ukraine" Sergiy Sergienko the capital needs about 4,5 mln. sq. m of office space. If average annual office space construction rate would be no less the 300, 000 – 400, 000 sq. m the misbalance will be reduced to 1,5 – 2 mln. sq. m in 2025.

Real Estate Market Research in 2004 – 2006 Retail Estate Market Only 2 trade centers has been constructed during 6 months in Kiev in 2006 with total 17,500 sq. m. Another 2 are going to be launched in early December with total 20,000 sq. m The main problem is a lack of investments and credits Due To Ukrainian Trading Guilds estimations about $3 bln required to satisfy current demand The main interests of developers now are in regional retail markets which are still undeveloped. In 2007 about 24 new retail stores are going to be launched in regions 2008 is expected to be a year of World Mart's and other retail world leaders entrance which would lead to preliminary satisfaction of the market

Real Estate Market Research in 2004 – 2006 Warehouse Estate Market During 6 months 2006 major foreign and national companies have shown their interest in qualitative warehouse services. There are almost no warehouse capacities of A and B class in Kiev and region. Currently HCM Group and BM Group is the only high-class warehouse operators in Kiev and region. The company plans to construct several warehouses with more then sq. m area. HCM Group plans to sell the whole logistic network to strategic investor

Conclusions Ukraine has a great opportunities for investment in in real estate market It is possible to have diversified portfolio in different sectors Average ROI rate could be achieve on the level of 25% and more Minimum investment such for operation is 5 millions USD Minimum Investment period - 1 year All the investments will be in low risk real estate and land markets with full guaranty of ownership rights All investments will be reinsure with reputable Insurance companies All projects will use services of experienced professionals Investors will be able to be all the time owners of all investments Investment will be structured with SPV companies in tax friendly locations

Ukrainian Real Estate Market Opportunities Now is the time to come to Ukraine and work with high profit and low risk!

Ignacio Razkin General Manager Mobile: Tel Fax Parque Empresarial La Muga Nº 11, Planta 3ª, Oficina ORCOYEN (NAVARRA)