Корпоративна нерухомість 2008-2009

04 11 2008

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The corporate real estate market

1. What have been the main trends in the real estate market in your jurisdiction over the last 12 months? What have been the most significant deals?
During the last 12 months, the market for residential and office real estate has remained strong. There have been new trends emerging in housing, warehouse and hotel developments. Additionally, there has been significant growth in foreign investor activity.

Despite the effective moratorium on the sale of certain types of agricultural land, acquisitions in the agricultural sector did increase compared with previous years. Construction in the regions of Ukraine outside the city of Kyiv (Kiev) and its suburbs has expanded considerably over the last 12 months.

Some of the most significant deals include the following:
Basky plus-2004 LLC bought the largest land plot (113 hectares) ever sold at an auction in Ukraine for about UAH1 billion (about US$223 million). The land is located in the Obolonsky District of Kyiv.

The acquisition by the Eurasia group of the Iceberg business centre in Kyiv (comprising 39,095 square meters), from the development company Nedvizhimost Stolitsy for about EUR104 million (about US$164 million).

The sale of a group of Ukrainian and foreign holding companies that own the Globus Shopping Mall (located at Independence Square, Kyiv) closed in autumn 2007. The buyer is a UK-based private property investor.

The sale of the Alladin shopping and entertainment centre, which is currently being finalised.
Real estate investment

2. Please briefly outline the opportunities for investing in real estate in your jurisdiction. In particular, consider:
The structures commonly used (for example, property companies and partnerships).
Are real estate investment trusts (REITs) available? If so, are they commonly used?
The role of institutional investors.
The role of private investors.
The most common structure used for investing in real estate is a partnership. REITs are mostly used for investing in residential real estate and are not involved in the construction or development of commercial real estate. REITs are represented by construction financing funds and real estate operation funds, which are not generally intended to provide any tax advantages. The effective legislation is not uniform on investment in real estate through real estate derivatives. Therefore, these are not commonly used.

Institutional investors (in the form of venture funds) are active in the Ukrainian real estate market, though private investors are currently the most active investment group. Large development groups invest using their own funds, as well as funding from banks and other financial institutions.

Real estate legislation

3. Please briefly set out the main real estate legislation that applies in your jurisdiction.
The main sources of real estate law are:
Civil Code (No. 435-IV, dated 16 January 2003).
Land Code (No. 2768-III, dated 25 October 2001).
Law on Land Lease (No. 161-XIV, dated 06 October 1998).
Law on Lease of State and Municipal Property (No. 2269-XII, dated 10 April 1992).
Law on Planning and Building-Up of the Territories (No. 1699-III, dated 20 April 2000).
Rules of construction, governmental and other regulations, including local acts.


4. Please briefly state what constitutes real estate in your jurisdiction. Is land and any buildings on it (owned by the same entity) registered together in the same title, or do they have separate titles set out in different registers?

Real estate consists of land and objects attached to the land that cannot be removed without devaluing the objects or changing their use, that is, immovable objects, particularly buildings and so on. Land and the immovable objects attached to it are deemed to be separate and interdependent for the purpose of ownership and other property rights. As such, a right of ownership to the land and a right of ownership to a building located on it are acquired independently from each other. They have different procedures of registration (see Question 5), and are transferred separately as well.

In practice, it is common for owners of the building to have the right to demand respective rights to the land occupied by their building. However, this is a matter of common practice rather than legislative requirement.

5. How is title to real estate evidenced, for example by registration in a public register of title? Which authorities manage the public title register?
Land rights (see Question 9) are registered in the public land register, called the State Land Cadastre:
The freehold title is evidenced by the State Act for the Right of Ownership to the Land Plot.
The permanent use title is evidenced by the State Act for the Right to Permanent Use of the Land Plot.
Leasehold title to land is evidenced by the land lease agreement.

Freehold title to immovable objects, including buildings, is registered in the Register of Ownership Rights to Immovable Property (Immovable Property Register). For the initial acquisition, the ownership certificate is the evidence of the title. If the title is later transferred, the transfer agreement is evidence of the transfer of title.
The leasehold title to immovable property is evidenced by the lease agreement.

6. Please briefly set out the information and documents registered in the public register of title, for example a description of the real estate, the owner, matters affecting the title and any relevant documents.
To register freehold title to real estate, documents evidencing the acquisition of the title must be produced. The following information is included in the State Land Cadastre for registration of freehold title and permanent use to land rights:
Cadastral number.
Name of the tenant/owner.
Location of the land.
Type of title.
Encumbrances and limitations to the land.
When registering a lease, the date of termination of the lease is also included.
The following information is included in the Register of Rights to Immovable Property:
Registration number.
Name of owner(s) and co-owners.
Functional use.
Inventory data of the real estate.
Value of the property.

7. Can confidential information or documents be protected from disclosure in the public register of title?
Information and documents included in the public registers of title are protected from disclosure. They can only be disclosed to a limited number of interested persons, entities and state authorities, usually the owners of such property and relevant state bodies. However, in practice, the registers of title are not aimed at protecting confidential information and are increasingly open to the public.

8. Is there a state guarantee of title? Is title insurance available? If so, is it commonly used?
Generally, the state guarantee of title is assured by the Constitution of Ukraine and other legislation, including the Civil Code and the Land Code. There is no special state guarantee of title available for particular purposes.

Title insurance is mostly used in loan transactions to finance the purchase of real estate or where real estate is used as collateral. Therefore, title insurance is more widespread in the banking sphere.

9. How can real estate be held (that is, what types of tenure exist)?
Real estate in Ukraine can be held on the basis of freehold title, leasehold title and title of permanent use (of land).
The Civil Code also provides for interests in real estate that are subject to someone else’s freehold title, such as:
Superficies (right of a non-landholder to use land for construction purposes).
Servitudes (right of a non-owner to use real estate for its needs, for example, a right to pass through).
Emphyteusis (right of a non-landholder to use land for agricultural purposes).
Sale and purchase of real estate

10. What are the main stages and documents in the sale and purchase of real estate? In particular:
How is real estate marketed, when does commercial negotiation occur and what pre-contractual arrangements are used?
When is the sale contract negotiated and executed?
When are the parties legally bound?
When is the change of title registered?
When does title transfer and what are the formal legal requirements to transfer real estate (for example, in writing and signed by the parties)? Is notarisation required?

It is common for corporate real estate to be marketed by its own¬er, however, on rare occasions marketing is outsourced to real estate agents. A public announcement of the transaction is usually made at the closing stage of the sale.

Commercial negotiation
Commercial negotiation of the sale and purchase of real estate is done directly by representatives of the parties, which can include professional real estate and legal advisers.

Pre-contractual arrangements
In most cases, pre-contractual negotiations result in a preliminary sale and purchase agreement between the parties. International investors sometimes sign letters of intent and memoranda of understanding, but they are difficult to enforce under Ukrainian law.

Sale contract
The sale and purchase agreement must be in writing, and duly notarised and registered at the relevant state register.

When legally binding
A preliminary agreement is deemed to be legally binding. The sale and purchase agreement enters into force on the date of its registration and the parties are legally bound by it at that time.

Registration of the sale and purchase agreement at the State Register of Deeds is performed by the notary. Once registered, proof of registration is issued in the form of an extract from the register.

When title transfers
The seller loses its title on notarisation and registration of the sale and purchase agreement. However, the buyer only acquires the title after receiving proof of registration, which is one of the following:
The registration record on the sale and purchase agreement.
A registration certificate attached to this agreement (in case of premises).
A new state act for the right to ownership to the land plot and its registration and other perfection requirements.

The main legal document is the sale and purchase agreement (for both land and other immovable property). This must be in writing, notarised and registered in the State Register of Deeds. Further registration of title in the State Land Cadastre or the State Register of Ownership Rights to Real Estate Objects is required.

For tax purposes, the transfer of the real estate must be evidenced by a corresponding transfer and acceptance act (TAA).

11. Does a seller have any statutory or other liability to the buyer in a disposal of real estate, for example to disclose real estate information, or in relation to title?
Liability of a seller to a buyer is covered mostly by real estate buy-sell or other contracts. It has become common practice to provide for a range of warranties and indemnities in such agreements, as well as to set out specific payment, retention and compensation mechanisms.

Legislation imposes general requirements on the seller, the target property and the contract itself. Breach of contract usually involves compensation of damages. Breach of mandatory provisions of law can instead involve invalidity of an instrument rather than liability of the seller.

The law protects the buyer in that it establishes the concept of a good faith buyer, which cannot be deprived of purchased property, unless proven that the buyer knew or should reasonably have known about the defects in the seller’s standing, title and so on. There are also certain exceptions when this doctrine is not applied, which are minor.

12. Please briefly outline the real estate due diligence that is typically carried out before an acquisition (including title investigation and searches of public authorities).
Before concluding the sale and purchase agreement, the potential buyer usually involves lawyers, auditors, valuers and technical specialists, who conduct due diligence to disclose all risks and transaction issues related to the acquisition.

13. What real estate warranties are typically given by a seller to a buyer in the sale of corporate real estate and what areas do they cover?
For the sale of an individual commercial property, the seller is usually required to give the buyer the following warranties (among others):
Proper title to the property.
Absence of any encumbrances, limitations or rights of third parties to the property.
Absence of any legal proceedings with respect to the property.
Full disclosure of relevant information.
In the acquisition of shares of a company holding real estate, a seller is usually required to give a buyer the following additional warranties (among others):
Proper incorporation and other good standing of the target company.
Absence of outstanding debts and other obligations to third parties.
Absence of any encumbrances, limitations or rights of third parties to the company’s shares and property.
Other warranties, depending on the results of due diligence.

14. Can an owner or occupier inherit liability for matters relating to the real estate even if they occurred before it bought or occupied it? For example, environmental liability, or liability under a lease.

Generally, an owner or occupier is not liable for matters relating to the real estate if they occurred before it bought or occupied the property. However, in the purchase of a company that owns or occupies real estate, it remains liable for any matters relating to the real estate, regardless of when they occurred or when the company’s ownership changed.

In the acquisition of leased real estate, the leasehold title usually remains in force, unless special arrangements with the tenants have been made.

15. Does a seller or occupier retain any liabilities relating to the real estate after it has disposed of it? For example, environmental liability, defects in the real estate, and contractual liability to the buyer.

Generally, the seller or occupier of the real estate is liable for all breaches of law relating to the real estate occurring before the date of transfer.

In particular, a seller or occupier is liable for violations of environmental law even after disposal of the real estate, if the violation occurred before the date of disposal. The seller or occupier is also liable for any defects in the real estate that occurred before the date of disposal.

The contractual liability of the seller to the buyer is determined by the terms of the sale and purchase agreement. The seller is obliged to notify the buyer about any existing rights of third parties to the real estate, otherwise the buyer can claim a reduction in the purchase price or dissolve the agreement (Civil Code).

16. What costs are usually paid by the buyer? What costs are usually paid by the seller?
Buyers of real estate (except for any land plots) in Ukraine usually pay a special levy to the State Pension Fund. The levy is calculated at a rate of 1% of the purchase price, as recorded in the sale and purchase agreement.

The parties agree on payment of state duty (see Question 18) in relation to the purchase. Each party bears its own costs in relation to the transaction, for example, legal fees, payments to the real estate broker and its other consultants, if any are involved.
Real estate tax

17. Is value added tax (VAT) (or equivalent) payable on the sale or purchase of real estate? Who pays? What are the rates? Are there any exemptions?
VAT is payable on the sale of non-residential real estate at a rate of 20% of the purchase price, if the seller is registered as a VAT payer. The purchase price must be inclusive of VAT (that is, VAT is generally chargeable on the price of the real estate being sold). VAT is not paid on the purchase and sale of land plots and residential real estate, except for the first sale after its construction. If corporate real estate is acquired through shares in a holding company, VAT does not apply.

18. Is stamp duty/transfer tax (or equivalent) payable on the sale or purchase? Who pays? What are the rates? Are there any exemptions?
The sale of real estate is subject to a state duty, charged at a rate of 1% of the purchase price (but no less than its market value). The buyer usually pays the state duty. Exemptions from state duty do not usually apply to the sale of corporate real estate, except for the sale of corporate rights of a holding company.

19. Are any methods commonly used to mitigate real estate tax liability on acquisitions of large real estate portfolios?
Most real estate acquisitions are made through a transfer of shares of the real estate holding company. The transfer or sale of shares is not subject to VAT, state duty or pension dues. There is no real estate transfer tax or any other transaction taxes payable on a share transaction.

Transfer of Ukrainian corporate real estate control is sometimes done by foreign investors through the purchase of shares in holding companies.
Holding business premises

20. Is it common for companies to manage their real estate portfolios and their accommodation needs by using third parties, for example through outsourcing transactions?
In Ukraine, most companies manage their real estate portfolios and accommodation needs themselves. In some cases, this is done by related managing companies, mainly for risk management purposes. However, hotels and offices sometimes outsource these tasks.

21. Are there restrictions on foreign ownership or occupation of real estate, or on foreign guarantees or security for ownership or occupation?
The Constitution, Civil Code and various other legislation generally allow non-residents to own real estate in Ukraine. However, Ukrainian non-residents can only own non-agricultural land plots, and mostly where these are purchased as ancillary to real estate or for construction purposes. However, in practice, the restrictions can easily be overcome by foreign investment companies establishing Ukrainian subsidiaries, which are able to hold all land rights and own buildings.

There are no restrictions on non-residents obtaining leasehold title.

22. Does change of control of a company affect its holdings of real estate?
The change of control of a company does not usually affect its holding of real estate because the title to real estate belongs to the company as a legal entity.

However, because joint ventures established by non-residents cannot own agricultural land plots, if a foreign entity acquires shares in a Ukrainian company holding agricultural land plots, it may need to dispose of such property within a year.

23. In what circumstances can local or state authorities purchase business premises compulsorily? Is the purchase price market value?
Local or state authorities can compulsorily purchase business premises if the land plot on which it is located is required for a public need (Civil Code). Such an acquisition requires court authorisation. The purchase price is the market value plus reimbursement of damages to the owner caused by the compulsory acquisition.

The law is unclear about what constitutes a public need, so some misuse of the right is possible. However, a special draft law clarifying and regulating compulsory acquisition is currently being discussed in Parliament. In practice, compulsory acquisition is rare.

24. Are municipal taxes paid on the occupation of business premises, for example business rates? Are there any exemptions?
There are no municipal taxes applicable to the occupation of business premises.
Real estate finance

25. How are acquisitions of large real estate portfolios or companies holding real estate generally financed?
Acquisitions of large real estate portfolios or companies holding real estate are generally financed through bank loan facilities or through the independent financial resources of the buyer or a group of investors. To attract investment in large real estate portfolios, companies holding real estate may undertake initial public offerings (IPOs), private placements and other stock exchange mechanisms.

26. How is real estate commonly used to raise finance? In particular through:
Secured lending.
Sale and leasebacks.
Other financing such as real estate securitisation.
A company can use its corporate real estate as security to obtain bank credit and finance its business. This is usually done via a mortgage agreement with the respective bank. The security can be corporate real estate itself or the property rights to it. Project finance has recently arrived in Ukraine and is available mostly through foreign-owned banks.

Sale and leasebacks are provided for by law, and special leasing companies are developing in the market. However, in the wider real estate market this practice is still uncommon.

Real estate securitisation is not yet common. Special purpose bonds are usually used in construction projects for pre-sales and financing. Corporate bonds can be placed on foreign stock markets through foreign special purpose vehicles, but Ukrainian stock and currency legislation in this area is not sufficiently developed.
Real estate leases

27. Are contractual lease terms regulated or freely negotiable?
There are no legal limitations on the length of lease terms for business premises. Both the rent and the term of lease are freely negotiable, according to the principle of freedom of contract, which is set out in the Civil Code.
However, the lease term for land plots cannot exceed 50 years (Article 93, Land Code).

The level of rent for state and municipal properties is defined by legislation and local regulations. Local authorities generally use their own means to determine the rent, which is usually a certain percentage (usually no more than 10%) of the real estate value.

The level of rent for private real estate is freely negotiable.
28. How are rent levels usually reviewed and are there any restrictions on this? Is VAT (or equivalent) payable on rent?
As a general rule, a rent review can be conducted because of:
A change in the currency exchange rate.
An increase in market prices or land tax.
A change in the value of the assets.
Rent reviews are usually limited in time, for example, annually, and must be substantiated by the landlord.
VAT at a rate of 20% is usually payable on rent.

29. What is the usual length of lease term and are there any restrictions on it? Do tenants of business premises have security of occupation or rights to renew the lease at the end of the contractual lease term? If yes, please give details.

The most common length of lease term is between five and ten years depending on the type of premises leased. Because legislation requires lease agreements for a term exceeding three years to be notarised, landlords sometimes prefer to set the term at less than three years to avoid notarisation, and include a pre-emptive right to extend the lease.

The tenant is guaranteed the same protection of its right to the leased premises as the owner.
Legislation provides a pre-emptive right to renew or extend the lease on the expiration of the lease term, if the landlord decides to continue letting the premises. If a tenant wants to exercise its pre-emptive right to renew or prolong the lease, it should notify the landlord within the timeframe indicated in the lease, usually several months before completion of lease term. If no timeframe is given, the landlord must be notified in reasonable time before completion of the lease term.

If the tenant continues to occupy the premises after the conclusion of the lease term, provided there are no written objections from the landlord within one month of the conclusion, the landlord is deemed to consent to renewal of the lease for the same period and on the same terms as the original lease.

30. What provisions or restrictions typically apply to the disposal of the lease by the tenant (for example, can the tenant assign or sublet the lease with the landlord’s consent)?

The tenant usually has the right to sublet the premises with the preliminary written consent of the landlord. The lease cannot usually be transferred to another party without the landlord’s consent. The landlord usually allows disposal of the lease or any part of it to parties affiliated with the tenant.

31. Who is usually responsible for keeping the leased premises in good repair?
The tenant is responsible for repairs to the premises, except for structural repairs which are the lessor’s responsibility, unless otherwise stipulated in the lease agreement.

32. Who is responsible for insuring the leased premises?
Insurance is not required by law. Individual lease agreements determine whether the tenant or landlord must insure the leased business premises.

33. Can tenants usually share their business premises with companies in the same corporate group? If yes, on what terms?
Usually, the landlord does not object to tenants’ sharing their business premises with companies in the same corporate group.
Sharing of business premises with group companies requires either a:
Sublease agreement, after the written consent of the landlord has been obtained.

Separate lease agreement between the company willing to share the premises and the landlord. (In this case, respective changes to the total area of the leased premises should be made to the initial lease agreement.)

34. On what grounds can the landlord usually terminate the lease? Please briefly outline any restrictions or procedure that applies. Can the tenant terminate the lease in certain circumstances?
Typically, the main event that gives the landlord the right to cancel the lease is a material breach of the lease agreement. The landlord usually has the right to terminate a lease if the tenant:
Uses the premises contrary to the lease agreement or in a way that may damage the premises.
Enters into a sublease agreement without the landlord’s consent.

Does not carry out structural repair to the premises as required under the agreement.
The tenant usually has a right to terminate a lease agreement:
If the premises is not provided in a condition required for the purpose of its use.
If the landlord failed to perform its duties regarding the structural repair of the premises.
If the landlord materially breaches the agreement in another way.

In other cases stipulated by the lease agreement.
The Civil Code also provides for the right of a landlord to terminate a lease in case of delay in rent payment for three consecutive months.

35. What is the effect of the tenant’s insolvency (under general contract terms and insolvency legislation)?
Generally, the tenant’s insolvency results in the termination of all agreements concluded by it. Satisfaction of the tenant’s creditors’ claims, including the landlord’s claim, is done in order of priority established by law. The landlord’s claim under a lease agreement is the fourth priority after the secured claims and procedural costs, liabilities to the employees, and taxes and duties.
Planning law/zoning

36. What authorities regulate planning control and which legislation applies?
Construction in Ukraine is regulated by the laws, state standards, regulations and local construction rules of the territories.

At the local level, planning control includes a master plan for the built-up area, as well as planning schemes of the territories, and other city-planning documents by local authorities. The local authorities also manage a regime for the development of relevant territories and other land uses for town planning purposes.

All development projects must comply with the local planning re¬strictions, and extracts from the general plan of the respective city or other territory are supplied to developers for this purpose. In some cases, investors can propose changes in local planning infrastructure to be adopted by local state and municipal agencies.

37. What planning consents (for example, planning permission or building permits) are required and for which types of development?
A permit is required to construct a project subject to town planning, as defined by the Law on Planning and Building-Up of the Territories. The permit must be obtained before the construction begins, though it is not unlikely that all planning issues will be settled at that time. These issues are managed on a case-by-case basis.

A further permit is required at a later stage, once all the details of the project have been finalised, to begin construction (see Question 38).

If a village or city council issues a decision allocating a plot of municipal land for the project, this decision also serves as the construction permit for the project.

In other cases, separate permits for the design and the construction of the development must be obtained under a procedure established by each local municipal council.

38. In relation to planning consents:
Which body grants initial planning consents?
Do third parties have the right to object?
In what circumstances is there a public inquiry?
Ministry of Regional Development and Construction
The Ministry is the main government authority that implements the state policy on construction, architecture, town planning and improvement of the territorial administrative system.

State Agency of Land Resources of Ukraine
This Agency implements:
State policy related to land regulations.
Monitoring of lands.
Filling in the land cadastre.
Feasibility studies on the organisation of the land use.
Investors usually deal with regional and local offices of the Agency.

Bureau of Technical Inventory and Registration of Ownership Rights to Real Estate in Kyiv
There are similar institutions for other administrative areas of Ukraine. Main activities include technical inventory and valuation of real estate, and registration of title documents.

Chief Department of Town Planning, Architecture and Design of City Environment of the Kyiv Municipal State Administration
There are similar institutions for other administrative areas of Ukraine. This department, among other things:
Implements the state policy related to town planning and architecture.
Examines the architectural part of a project.
Drafts regulations on developing the city of Kyiv.
Plays a principal role in co-ordinating construction projects.

State Architectural and Construction Control Department of the City of Kyiv
There are similar institutions for other administrative areas of Ukraine. This department grants permits for construction works of town planning objects and supervises construction work.

Real estate organizations

How long does an initial decision take after receipt of the application?
Is there a right of appeal against a planning decision?

Applications for construction permits are made to the executive body of the relevant local council, or to the Kyiv or Sevastopol City Administration.

Third party rights
Third parties, who may be affected by the development, have the right to object to it. These objections seek to stop, alter, or receive compensation for discomfort resulting from, the development. In most cases, such objections do not influence the decision on issuing the construction permit, but sometimes it may influence the design or construction of the project.

Public inquiries
Recently, a practice of public inquiries was introduced in the Ukrainian construction industry, and it is becoming increasingly popular in the larger cities. Public inquiries are conducted to discuss town planning documents and projects under construction.

However, the procedure for conducting such inquiries and the consideration given to suggestions made in them are not set out in current national legislation. In most cases, the procedure is governed by local rules concerning development of the territories. Usually there is no statutory requirement for the developer to conduct the public inquiry as a condition of obtaining a construction permit. However, to avoid later issues, many developers, especially in Kyiv, try to organise public discussions and obtain a positive outcome.
The territory community has a right to:
Hold a general meeting on construction issues.

Draft the minutes of public discussion.
Make collective requests to the developer and respective municipal authorities regarding the economic, ecological and other consequences of the construction and private and public interests (which should be made according to legislation).

This right can be exercised at anytime during the construction. The developer must reply to the collective requests and consider the legal concerns raised in the minutes of the public discussion.

Initial decision
An initial permit for the development is usually issued within two months of the application. However, filling in the details of the project may take several months or more, depending on its complexity. After that, the project is co-ordinated, approved and undergoes expert evaluation. The final permit required to begin construction is usually issued within two weeks of obtaining a positive conclusion from the state expert.

A decision relating to a construction permit can be appealed with the same agency that issued the decision, a higher level body in the same branch, or in court. However, appeals are very rare. After receiving comments on the application, most applicants amend the application and reapply, usually receiving the required permit or approval the second time. Negotiations on some architectural and technical issues are possible as well.

39. Please summarise any proposals for reform and state whether they are likely to come into force and, if so, when.
The “single window approach” in construction permit issuing procedures has been started throughout Ukraine, meaning that applicants would need only to deal with one agency for all permit-related matters. However, the reform has not yet brought any considerable improvements to the permit-issuing procedures. While the law declaring the single window approach has been enacted, it needs to be implemented through regulations, and applied in practice. Draft regulations are being drawn up for this purpose. However because most of these regulations will change Ukrainian law, their further adoption will depend on Parliament. Currently, the single window approach is starting to be implemented at local authority level.

Land reform is still being implemented in Ukraine. Land plots are limited in market circulation and land titles are not available for some categories of entities and some types of landholdings. Completion of the land reform is connected with the abolition of the moratorium on selling agricultural land, which should occur if the appropriate legislation has been adopted. Until then, economic activity in respect of agricultural land will remain quite passive.

A special draft law clarifying and regulating compulsory acquisition is currently being discussed in Parliament (see Question 23).

The real estate market also depends very much on development and reform of financial institutions, stock and currency law, tax and governmental assistance in international trade and investment.

2009 should bring significant change to clarify and simplify construction regulation, including abolition of the preliminary permit procedure, issuance of town planning data before design, abolition of second approvals for technical aspects of the project, and simplifying the procedure for putting the property into operation.
Author: Oleg Alyoshin