OREANDA-NEWS. September 16, 2011. The financial crisis has ceased the existence of a number of development companies operating in Ukraine. On the contrary, AVEC Group of companies decided to focus on commercial real estate development during this period. Alexey Chernyshov, the Head of supervisory board of GC AVEC tells about the vision of new projects, development of investment potential of the country and possibilities of development of specific cities

How was one of the famous group's assets – Barabashovo shopping center – developing in the recent years?

Barabashovo shopping center is the largest wholesale and retail park in Eastern Europe. This object is in a sense the reflection of evolution that Ukraine has gone through since the ‘90s. But today Barabashovo became more civilized and demonstrates the phenomenal performance as to its size, number of visitors, and many other statistical parameters.

Besides the fact that wholesale and retail park provides businesses with civilized working conditions, it also provides employment opportunities for thousands of people, creates ground for development of economic and business activity in the region and in surrounding areas. Barabashovo shopping center has become an integral part of the infrastructure of Kharkov region and in addition to business functions performs a significant social role. Therefore we are proud in a good way that we constantly develop it.

The group of companies combines multiple activities. This is what many companies did in early '90s. What are your priorities at the moment?

We decided to concentrate the efforts in the retail sector several years ago. We are both interested in the projects of traditional format that has evolved to creation of wholesale and retail complexes, and to modern formats – shopping and office and shopping and entertainment centers.

At present we are focused on development of new projects of modern projects on major cities of Ukraine. Besides we hold several joint real estate development projects with foreign companies. In our portfolio, there are about ten interesting projects for the next three to four years in Kharkov, Kiev, Sumy Crimea. We consider opportunities of work in Russian Federation in terms of wholesale and retail complexes since our countries were developing in a similar way.

During the crisis, many development companies have lost funding and were unable to complete started projects. Is there funding for large projects now?

Our company is putting maximal effort to build long term relationships with potential investors who are willing to invest in Ukraine. And our strong belief is that attracting investments is the key to economic development of Ukraine in future.

Many industries need huge infusions, which simply can not be provided by domestic market. The leap in development is only possible with the help of such an impulse. We already have successful precedents of commercial real estate projects with partners from USA, Austria and Germany.

The development is a complex area for foreign investors. And it often hinders access to our market for many foreign companies. How will it work?

Because some stages of development are more risky to foreign investors, local companies often agree on the allocation of responsibilities in joint projects. Foreign investors often prefer to enter the project during the stages when the risky steps are already passed. For the most cases, the good project for foreign partners is the one where the land is already acquired and there is a full list of approvals. But over time foreign partners are becoming bolder, as the profitability of investments in Ukraine is higher than in Europe.

Do you plan to use your experience of managing "Barabashovo" shopping center in the new projects?

We are presently working on China-Mall project. This is a very civilized shopping complex that focuses on the representation of Chinese consumer goods. Such systems exist in different countries, including European ones. In Bucharest the second mall of this type was opened in August. Typically, these projects are supported by governments that make adequate conditions for creation of new jobs for the residents and help to provide a good range of quality products. The cities with over million residents are potentially interesting for us, but Kiev and Kharkov are still the priority.

Today there are many intermediary companies between Ukraine and China that are focused on maximization of their profits. "AVEC" initiates a selective approach in the selection of Chinese manufacturers and entrepreneurs, who would provide affordable quality with the adequate price at the conditions of direct supply. We would like to make absolutely official, legitimate, transparent shopping center, which would give the opportunity to present a wide range of products at the lowest price.

Does the Chinese side take part in investing? And if so, how big is it?

It’s too early to speak about the proportions. But the share of Chinese capital will be significant. And most of such projects are carried out with the participation of Chinese capital directly or indirectly.

What kinds of projects in Ukraine are interesting for Chinese investors?

Mostly the projects in commercial real estate, related with logistics and wholesale trade. We hope that it can potentially be even development of production facilities in order to move the production to the borders of the EU. But these projects mostly considered the SKD and unit production of the products with substantial expenditures on transportation.

What projects do you consider promising for realization with Ukrainian partners?

We would like to reach the level of larger projects and scaled infrastructural projects in cooperation with municipalities, as well as individual administrative regions and districts. Since the local government bodies and executive authorities have the task of developing the investment attractiveness of the administrative-territorial units.

What kind of infrastructural projects?

What is needed to attract investments? The presence of business and social centers that must exist in any city. One of the flagship projects in this sense - "Manufaktura" in Lodz. Because of it there was a reconstruction of the industrial urban area into a shopping complex. Its construction allowed to move the center of attention and social activity, it was a kind of revitalization of the city.

Naturally, we do not claim to implement a similar project on our own, but we are ready to be the engine of the reconstruction process. Because today individual local authorities and developers are strongly limited in their possibilities. It’s necessary to create a bundle, combining the interests of municipalities in maintenance and development with commercial interests.

In addition to Kiev, which cities have the potential for such projects?

We would like to participate in such projects not only in Kiev but also in other major cities of Ukraine.