The American Chamber of Commerce in Ukraine has taken a step toward implementing office classification standards in Kyiv.
AmCham announced that it is launching an initiative that it said could bring more clarity to the Ukrainian real estate market, improve the investment climate and attract additional development. AmCham is also in the process of establishing a code of professional conduct for real estate brokers and agents, which it expects will be widely adopted within the industry.
The Ukrainian real estate market has been developing rapidly and attracting the attention of foreign and domestic investors, AmCham said in a statement issued Sept. 19. “Presently, occupiers and investors are given a wide range of variable information from brokers and landlords, which portray a confused picture of the office market stock, classification structure and, accordingly, applicable rental levels,” the statement read.
Nick Cotton, AmCham Real Estate Committee member and regional director of DTZ, a property advising firm, said there is no clear definition by which to distinguish between offices of the A, B and C classes, which indicates that Ukraine has an unpredictable and insecure real estate market.
“Until potential investors from outside can see that the agencies got together and established criteria, they will look at Ukraine as an immature market,” he said.
“Investors like transparency, and Ukraine’s property market feels the lack of it,” said Yury Nartov, an investment consultant with Colliers International. “The AmCham initiative is highly positive; if classification is adopted, it’ll obviously be a step forward to a more mature property market.”
Cotton said that investors, tenants and consultant agencies are the ones who’ll benefit from classification.
As the basis for classification, AmCham is proposing a point system that was worked out by the AmCham in Russia, and is currently used by the main Russian industry participants. The system would classify office spaces according to 20 criteria. Cotton said that two real estate brokers – DTZ and Colliers International – currently use a similar system.
According to the classification, a class A office building should meet or exceed 16 out of the 20 specifications, and class B office spaces should meet between 10-15 of the specifications. Buildings that meet less than 19 specifications would be designated class C offices.
Cotton said the only market participants who could oppose the new standards are developers, who tend to overestimate the value of buildings.
AmCham hopes to receive feedback from the industry, he added.
“They may decide classification is not necessary, and occupiers should look at each building on its own merits,” Cotton said. “I personally would disagree with that, but it should be a voluntary decision to join the code. We’re trying to achieve general consensus.”
Cotton said that DTZ and Colliers International would be the first signatories to the code.
Nartov said Colliers International would support AmCham’s initiative, but that standards should be reviewed on a regular basis to reflect the development of the market.
