On the occasion of Kyiv Day, we share capital’s achievements in managing its property. Since the start of privatization and lease of municipal property under the new rules, Kyiv has firmly established itself as one of the leaders among cities that prefer transparency and competition, as well as active use of electronic auctions.

Thus, even at the start of electronic small-scale privatization in 2019, the capital held 510 auctions — the largest number of all cities of Ukraine and earned UAH 113.5 mln to the city budget.

During the period of 2020-2021 (as of 20.05.2021), the Department of Municipal Property of Kyiv successfully completed 44 auctions of small-scale privatization totaling more than UAH 144 mln.

In general, the city budget has planned to receive UAH 185 mln from the sale of municipal property in 2020 and 2021.

Top 3 successfully sold objects:

  1. Thesale ofa non-residential building with a total area of 719.3 sq.m. in the Holosiivskyi District of Kyiv for UAH 30.18 mln at a starting price of UAH 9.1 mln.

This was the second auction for the sale of this object, with a 50% reduction in the starting price, that is, 100% of the cost of the object amounted to UAH 18.2 mln, so the final bid increased by 166%! This is yet another proof that reducing the starting cost of rent can sometimes be an advantage rather than disadvantage.

By the way, this is a stunning building of old architecture, and we hope that the new owner will breathe new life into it.

  1. The sale of a non-residential building with a total area of 654.7 sq.m.in the Pechersk District of Kyiv.

The building was sold for UAH 22.5 mln at a starting price of UAH 4.92 mlnThe price increased by 457% from the starting one!

  1. Thesale of non-residential premises with a total area of 187.7 sq.m. in the Holosiivskyi District of Kyiv for UAH 13.75 mln at a starting price of UAH 3.54 mln

When buying this property, buyers did not seem to care that these premises had been damaged by fire and had not been not used for a long time, and their technical condition required major repairs, in addition, they were not serviced. However, the price increased by 388% from the starting one!

Given that the building in which the premises are located is included in the list of cultural heritage sites of Kyiv, this sale leaves hope for the restoration and preservation of yet another part of our capital’s history.

Lease of municipal property

Back in 2019, Kyiv began actively getting ready for a transparent lease and launched an online map of municipal ownership objects which contains information about the condition, terms of use, and transfer of potential premises for lease.

Visibility is always a great advantage and ease of use. It is not surprising that in the second half of 2020, when electronic rental auctions started, our capital headed the ranking of cities that actively lease property under the new rules, providing on average additional revenues to the city budget in the amount of UAH 726,300 per month.

Based on the results of the first quarter of 2021, Kyiv ranks second in Ukraine among the cities that actively and efficiently have been leasing property through ProZorro.Sale. In total, the city will receive UAH 1.74 mln per month from successful auctions.

In general, for the period of 2020-2021 (as of 20.05.2021), the Department of Municipal Property of Kyiv and Kyiv District State Administrations successfully completed 298 lease auctions under the new rules with a total amount of UAH 4.38 mln.

Top 3 most profitable lease auctions:

  1. The lease  of a part of non-residential premises with an area of 1919.47 sq.m. for UAH 550,000 per month with a starting price of UAH 12,350 per month. That is, the price increased by an incredible 4.453% from the starting one! By the way, 8 potential lessees at this auction did not seem to care that the premises required repairs, including the power supply, heat supply, sewerage, and water supply networks.
  2. The lease of non-residential premises with an area of 548.9 sq.m. for UAH 210,000 per month with a starting price of UAH 121,400 per month. Cost increased up to 173% from the starting price.
  3. The lease of non-residential premises with an area of 394.8 sq.m. of Kyiv City Clinical Endocrinology Center for UAH 70,500 per month with a starting price of UAH 68,800 per month.  The price increased up to 102% from the starting one.

One of the leaders among the most profitable lots is a successful example of an auction for the extension of the lease agreement of non-residential premises with an area of 70.4 sq.m. on Kybalchycha street. With a starting amount of UAH 14,540 per month, participants managed to raise the price up to UAH 90,000 per month.  And this is a significant 619% of the starting price!

The example of the capital demonstrates that the market can pay much more than expected, and Kyiv actively uses this chance to fill its budget.

A very happy birthday to our capital. We wish it to employ municipal property for the benefit of society!

Authors: Khrystyna Zelinska, Mariia Poloz

This material was prepared by Transparency International Ukraine with the support of the USAID project Economic Development, Management and Growth of Entrepreneurship (EDGE) and State-Owned Enterprises Rapid Response Activity (SOERR). The authors’ views expressed in this article do not necessarily reflect those of the United States Agency for international development or the United States government.

Source: blog.liga.net