Saturday, 3 July 2010

Swissotel deal boosts plans to build Kyiv’s tallest skyscraper

The bid by Ukrainian property developer KDD Group to construct the tallest building in Kyiv received a boost in late June when international hotel operator Swissotel signed an agreement to manage the five-star hotel planned for the yet-to-be-built center.

The deal should help KDD to secure financing – which has been in short supply for developers since the financial storm first hit Ukraine in 2008 – to complete the Sky Towers project by 2012.

The twin glass towers, rising to 165 meters and 210 meters, will be located on Prospekt Peremohy near the railway station and will dominate other Kyiv skyscrapers, including the giant Parus business center at 136 meters. The smaller tower will house the hotel, with class A offices occupying the taller one.

Financing of the project is secured independently of the signed agreement, but the partnership with a famous international hotel operator makes an improvement of financing conditions more likely,” said Nataliya Oleksiyenko, KDD’s director of marketing communication and public relations. “Such cooperation opens possibilities to attract international investments with the help of foreign export agencies, which we are currently in negotiations with.”

KDD is in negotiations on extending its credit facility with the State Export-Import Bank of Ukraine (Ukreximbank), and other investors. As of July 1, the developer had already spent $87.4 million of the initial $160 million credit on the project. To complete the 34-story hotel, the developer needs to spend $122 million and another $171 million for the 47-storey office tower. The total cost of the project will reach $380.3 million.

Swissotel Hotels & Resorts is owned by Fairmont Raffles Hotels International, a leading global hotel company with 94 hotels and resorts worldwide, including Singapore and Shanghai, Chicago and London, under the Raffles, Fairmont and Swissotel brands.

Plans envision that the Swissotel Kyiv will feature 513 guest rooms and suites, 14 serviced residences, 4,000 square meters of conference space, as well as a 3,000-square meter spa. It will also include a number of restaurants and bars, and will offer an eight-storey underground parking area. The whole complex will cover approximately 225,000 square meters.

Meinhard Huck, president of Swissotel Hotels & Resorts, said the hotel was a major step in the company’s expansion in Eastern Europe, following on from the hotel it runs in Moscow.

“The Ukrainian metropolis is also one of the most important transport points and centers of communication in Eastern Europe – an environment in which superior quality international hotel chains are still in short supply,” he said.

That situation looks set to change.

With construction slated to be completed in 2012, Swissotel is just one of several hotel chains hoping to capitalize on the Euro 2012 soccer championship, which will see thousands of tourists flock to Kyiv. Five other international companies are working on projects in Kyiv, according to the international real estate consultancy Knight Frank. They include the five-star Fairmont Grand Hotel, four-star Holiday Inn, three-star Ibis, five-star Hilton and Sheraton Riverside Plaza

However, none of them will be as tall as Swissotel Kyiv, which aims to dominate Kyiv’s skyline.

One challenger for the mantle of tallest building in Kyiv – the Mirax Plaza complex on Hlybochytska Street, which was slated to hit 170 meters – was halted by its Russian developer in 2008 due to financial troubles, and its future remains unclear.

Meanwhile, work is plowing ahead on the Sky Towers. The technologically tricky underground works are almost completed. Almost three years have been spent building iron and concrete basement walls, which drop down to 53 meters underground. The rest of the building should shoot up quickly, experts say, with the help of advanced construction technology.

KDD’s next step is to secure financing for the rest of the project. If the hotel is to be ready for the soccer tournament’s kickoff in 2012, KDD has around three months to attract more funds, according to Yevhen Hrebeniuk, senior equity analyst with Troika Dialog Ukraine.

“If they enter the active stage of construction works, if there is financing, then it is realistic to finish the project in two years,” he said.

If financing is delayed, and “they don’t put the project into full production till the fourth quarter of this year, then it will be hardly realistic,” he added.

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