The Arab businessmen are ready to invest about $2 billion in Crimea’s northeastern coast.
One of the leading construction companies from the United Arab Emirates is considering making the largest investment to date in Crimea – the country’s summertime tourist Mecca.
If their bold investment plans go forward, they could also mark the single largest Greenfield investment into Ukraine.
On April 17 the Ahmed Al-Naboodah Group and the autonomy’s parliament signed a Memorandum of Intent for developing a tourism and sports complex on the peninsula’s underdeveloped eastern coast. The Arab delegation was led by the president of Ahmed Al-Naboodah Group, Alshamsi Ahmed Sultan Ali Obaid Alnabouda. Crimea was represented by Anatoliy Hrytsenko, chairman of the autonomy’s parliament.
Crimean officials said that if the plans proceed, the Arab investment may be as high as $2 billion.
“We are interested in this project because it will improve Crimea’s image and attract other investors,” Ihor Primyshev, a Crimean cabinet official, told the Post.
Primyshev said that the UAE group’s plans for Crimea include the development and construction of hotels, sanatoriums, golf courses, entertainment establishments and clubs. It is envisioned that all infrastructure and facilities will function year-round and conform to European standards, Primyshev added.
The Arab businessmen are ready to invest about $2 billion in Crimea’s northeastern coast, according to Alla Goreva, a spokesperson for Hrytsenko.
Primyshev said that according to the memorandum, the potential investors have three months to secure approval for the project’s economic and technical plans from Ukrainian regulators. An investment agreement should be signed after all approvals are given, Primyshev added.
Robert Olsen, a project manager in Eastern Europe for Canadian developer Kanini International Inc., said his company is a partner of Ahmed Al-Naboodah Group in the Crimean project.
Olsen told the Post that the Arab company plans to build its tourism complex along the northeastern seaside of the Kerch peninsula. He said the project will be financed by both companies and will take three to five years to develop.
According to Olsen, Ahmed Al-Naboodah Group is the third largest construction company in Dubai. Its portfolio includes the Dubai International Airport, the biggest in the region.
Ukrainian officials said the Arab businessmen’s interest in Crimea is very strong.
“Crimea is very promising. [Its] non-developed infrastructure is, on the one hand, a big minus. On the other hand, it’s an opportunity to start from zero and make investments that will bring a tenfold return in a few years’ time,” Primyshev explained.
Investment experts and Crimean officials agree that Ahmed Al-Naboodah Group can easily attract new tourists and keep its investment comparatively low.
“Compared to Western resorts, Crimea is very attractive with the low costs of employment and construction… They [Arab investors] probably want to attract tourists with their famous brand name while keeping expenses as low as possible,” said Oleksiy Imas, a financial analyst at the Kyiv office of auditing and accounting giant Ernst & Young.
If plans proceed, then Ahmed Al-Naboodah Group’s development project will go on record as the largest single investment into Ukraine to date.
According to the State Statistics Committee, foreign direct investment into Crimea since independence stands at $577 million.
Ukraine has attracted nearly $17 billion since independence. Some investors have in recent years paid top dollar for Ukrainian assets through acquisitions.
Total investments from the UAE into the Ukrainian economy have amounted to only $16.2 million since 1995, according to the Economy Ministry.
International steel giant Mittal Steel, for example, paid a whopping $4.8 billion for Ukraine’s flagship steel mill, Kryvorizhstal, in a re-privatization tender held back in 2005. Several European banking groups have paid top dollar, about $1 billion, for leading Ukrainian banks in the past two years.
But Ukraine, a country whose economy is desperate for fresh investment needed to drive sustained economic growth, has yet to attract an investor willing to pump billions into the development of a single project on the scale of the proposed Crimean project being backed by Ahmed Al-Naboodah Group.
If the plans mulled by Ahmed Al-Naboodah Group to build the resort and sports complex move forward, the project could turn the UAE into one of the largest sources of FDI into Ukraine.
