February saw a number of protests in the Black Sea port city as residents demonstrated over what they claim are violations of their rights as home owners. Plans for a number of new building projects have placed some of Odesa’s residential areas under threat and exposed the often questionable legality of many properties erected in the chaos of the early independence years.
Many home owners own the land on which their properties stand but lack the necessary documents required by Ukrainian law for the construction of their homes, while plans to meet the city’s shortfall in new office and residential buildings have raised concerns that residents may be forced out of their properties without being offered suitable compensation.
Residential areas targeted by the existing city development plans include Chubayivka, Chornomorka, Blyzhni Mlyny and Velykiy Fontan. Odesa Mayor Eduard Hurvits responded to the protests by ordering that discussion of the general urban growth plan should continue until March 30 in order to provide citizens with the opportunity to acquaint themselves with the details of the proposals and lodge objections with the authorities.
Fears and misunderstandings
Hurvits blamed official intransigence for much of the confusion, commenting, “During the discussion of the general plan simple bureaucratic stupidity was a factor. Odesa citizens didn’t receive answers to their questions.” He reassured residents that their concerns would be taken into consideration, adding: “I will be the last person in the city who will allow anyone to infringe on individual private property rights.”
First deputy city administration head Anatoliy Vorokhayiv also moved to allay fears of land seizures and evictions, commenting: “All the effected areas are designated for use as private residential zones and there is no law which would allow us to remove the owners of privatised plots against their will. It can be done only with their agreement. It would only be possible to sell these areas on to developers if every single owner of an entire street or row of houses gives their consent for the sale of this territory to investors.”
A market rich in promise
Odesa is likely to witness many similar confrontations to this in the coming months as developers move in and search for the necessary plots to meet the ever-growing demand for office space and high quality residential buildings. Despite the well-publicised cooling of the Kyiv real estate market, there are still thought to be rich pickings to be had throughout the countryside, with Odesa topping many peoples’ lists.
Real Estate professional Maryna Rymarenko of DEOL Partners in Kyiv says that one of the biggest pulls of the Odesa market is the huge scope for growth that it offers investors. “The real estate market in Odesa is viewed by potential investors as one of the most attractive largely because it is in the earlier stages of development today. Demand for commercial real estate far exceeds supply, leading to average price increases of about 20% in the past year.”
Busy port, no warehouses
Real estate developer focuses include warehousing, with the antiquated facilities currently servicing the city’s thriving port increasingly unable to meet the demands of the modern trade. A number of international warehousing groups have recently moved onto the Ukrainian market but the sector in Odesa remains sadly underdeveloped despite the huge potential offered by Ukraine’s unrivalled trade transit corridors.
The market for leisure options is also thought to be underexploited, with the Odesa region’s growing middle classes looking for a wider variety of options when spending their rising incomes.
International developers who specialise in state-of-the-art entertainment centres and shopping malls are said to have been put off by the lack of available land in and around the city’s historic centre, but concerns remain that as the market grows more and more profitable unscrupulous local politicians may be tempted to seek legislative loopholes in order to sell off lucrative plots and okay projects that could compromise the historical aesthetic of the city centre.
At present the historical part of downtown Odesa is protected by the urban development plan adopted in late 2007, which allows for the construction of new buildings in the city centre but sets a height limit on any new structures in order to preserve the skyline.
The largest single growth sector remains quality office space. Rymarenko explains that at present most of the office space available in Odesa remains located within dated Soviet structures that used to house scientific and research institutes or in converted residential buildings.
Building on a tourism boom
Growth is expected to be most visible in the tourism sector as Odesa has experienced larger numbers of tourists annually for over a decade and the region is looking to promote itself actively as a tourist destination. The appearance of Odesa Opera House in the recent Forbes magazine list of top regional destinations is a reflection of the increased attention Odesa is attracting, while with the EU’s Schengen visa-free travel zone now extending up to the Ukrainian border and EU citizens enjoying visa-free entry into Ukraine 2008 is expected to be the busiest year yet for the Ukrainian tourist trade. Odesa developers are looking to add to the city’s hotel infrastructure in order to capitalise on the rising tide of foreign guests looking to Ukraine for a relatively unspoiled tourist experience.
“Most of the current hotel construction projects are part of wider leisure complex developments,” offers Rymarenko at DEOL Partners. “For example, the large-scale Delfin [Dolphin] complex is set to feature a total of six hotels,” she adds.
This and other similar large-scale developer projects are expected to provide a lift for the coastal area around Odesa city and boost the fledgling tourist trade in the area. While Odesa is fast earning a reputation as a sophisticated city break destination, the nearby beaches and coastline have yet to attract the attention of European holidaymakers.
