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Messenger Legal audit of the Star City residential complex
| Client | Укрбудинвест |
| Location | Kyiv, Dniprovskyi District |
| Class | Comfort |
| Price UAH/m² | 22 300 — 25 700 |
The Star City residential complex is being built in the Dniprovskyi district of Kyiv. This is an industrial zone; the complex is located not far from a cemetery and an operating factory — these are the associations that immediately come to mind when the complex is mentioned. But that’s not the main point. What’s important is that you know the state of the documents, permits and the developer. So let’s figure it out.
- Document verification
- Investment scheme analysis
- Process analysis
- Transaction support
Infrastructure
On the page of this residential complex, I saw the following text: “The residential complex “Star City” at 27 Kaunas Street is being built in the Dniprovskyi district of Kyiv, on the territory known as Sotsgorodok. The Dniprovskyi district is one of the most ecologically clean in the capital.”
“…It is located on the left bank of the Dnipro. There are many green areas and squares, lakes and reservoirs. Just think of the Dnipro Embankment”…
Well, it clearly makes sense to map a route to Verbny Gai on the Dnipro Embankment. I’ll have to walk almost an hour and 4.5 kilometers).
The Rusanivka embankment and canal (49 minutes and 4 kilometers), the “Telbin” lakes (similarly, 4 kilometers), “Nyzhniy Telbin”, “Prorva”, “Korolek” and others. Park of Partisan Glory and Venetian Island (Hydropark) are not that far either.”
The second point to pay attention to is how to get here.
I studied all possible routes on Google Maps from the center to this residential complex, but all transport goes to the Mega City complex. Then you walk 800 meters to Star City. It may seem not far, but try walking once through this colorful area in the evening or during a blizzard or rain and then we’ll judge whether it’s a lot or not.
And separately about the infrastructure of Comfort Town, which many clearly look to. First, it is a gated complex with its own security. Yes, if you name the cafe you are going to or the school, they will let you through, but I can imagine what will happen when all the residents from the eight 25-story buildings start to visit this complex regularly.
Land and the Prosecutor’s Office
We find the land on the cadastral map (8000000000:63:131:0001) and see that its designated use is for residential development.
The land is municipally owned by the Kyiv City Council and in 2020 was leased to the company Ukrbud Invest – the client of the construction.
And now a bit of history about this land.
Previously this plot was granted for use to the enterprise UKRVTORCHORMET – a ferrous metals production facility. Accordingly, the land had a non-residential designation. But in 2016 the Kyiv City Council changed the designated use to build a residential complex. And already in 2017 a criminal case was opened on this matter. The prosecutor noted that the land plot borders directly on the Fanplit factory (which still operates there), which is a plant for the production and processing of wood, using synthetic resins in its operations. According to sanitary norms, there should be a sanitary protection zone of 300 meters around the plant where housing cannot be built. But between the Fanplit plant and the land plot for the residential complex there are slightly more than 100 meters. That’s a problem! But somehow a sanitary-epidemiological examination was passed, which concluded that everything is fine and the sanitary zone is observed. The prosecutor decided to find out how this could happen. Several times the prosecutor’s office obtained court orders to access the documents. All this happened in 2017. Then everything calmed down and the result is unknown. The most interesting thing is that in April 2020 the prosecutor’s office again appealed to the court on this criminal proceeding and asked for permission for an inspection. BUT! Under mysterious circumstances, even BEFORE the court began considering the matter, the prosecutor withdrew his application.
The main conclusions we can draw from this: the issue that the Star City residential complex is being built on land unsuitable for housing is unresolved. Whether new criminal cases will emerge on this matter is unclear.
Building permit
There is a building permit; it has been amended repeatedly, but I did not find anything critical. The reference to the current permit does not indicate the height, but this is most likely related to the registry’s operation, because in previous versions the height was indicated – 25 floors. In the urban planning conditions and restrictions the building height also corresponds to 25 floors, so there is no problem here.
I did not find the project expertise publicly available, and it should exist. If I were investing in this complex, I would definitely demand this document.
Client and developer
The client of the construction is the company Укрбудинвест. And is this company connected with the notorious Ukrbud?
So far I have not found any connection other than a similar name. But you should understand that there are as many as 226 companies with similar names. This client has a lot of court cases. I checked the last 2 years and found nothing related to the residential complex. They sue contractors, the tax authorities, but this does not affect the complex.
The developer of the project is stated as Kyivgorstroy. But this is no guarantee that construction of the complex will definitely go well. First, participants there can change many times.
Second, there are many participants in the construction and you need to figure out what Kyivgorstroy’s actual involvement in this project is, who is responsible for what. For this you need to look at the contracts between the construction participants, especially the contract between the client Ukrbudinvest and the company “Budkepital” (according to information from a sales department manager, this company implements and finances the project) and the contract between Kyivgorstroy and Budkepital.
Investment scheme
The investment scheme is a preliminary agreement, but this scheme is not the most reliable.
Its essence is as follows:
You sign a preliminary agreement with the company Budkepital (you agree in advance that you will buy an apartment here when it is ready).
- The building is built, you wait. After commissioning, Budkepital first registers the apartment in its name and then sells it to you.
- In the sales department they told me that the preliminary agreement is notarized, which is good.
And after thorough study of the draft preliminary agreement, I recommend you pay attention to the following:
And on one forum I read a complaint from an investor. He decided not to wait for commissioning and resell the apartment to another person, but the developer is in no hurry to give consent to assignment. Therefore it is advisable to stipulate in the contract the possibility of assignment regardless of the developer’s wishes.
- Document verification
- Investment scheme analysis
- Process analysis
- Transaction support
The location of the complex is specific, and it’s not only that it’s an industrial zone. Comfort Town was also built in an industrial zone, and now it looks nice. Someone will say that here it will also be beautiful in 5 years, but I’m not sure about that. In Star City you won’t get away from the railway even in 5 or 10 years, and the Fanplit plant is unlikely to move anywhere in the coming years. Yes, this is highly subjective.
The second issue that really worries me is the land on which construction is underway. From time to time criminal proceedings arise regarding the change of its designated purpose and its development with residential buildings.
- the contract states a planned commissioning date, which is not a concrete formulation. Insist that the contract indicate a final deadline for commissioning.
- the contract provides for assignment, but only with the developer’s consent.
Star City residential complex — problems that can be avoided.
- Unfinished construction. There are 70 unfinished constructions in Kyiv alone. 18,000 apartments whose buyers never receive the keys.
- Long-term projects. In Kyiv there are 8 well-known long-term construction projects that have been under construction for over 12 years.
- Completed project does not match what was advertised. That’s when the developer promised one thing, but another happened. Expected to see a luxurious children’s playground, but in reality three swings. In visualizations there was a green yard with mature trees and bushes; in reality it’s all asphalt, with dug-up patches of soil around the perimeter and some shoots instead of lush crowns. They promised a car-free yard, but there is parking by the entrance. In the pictures they showed a beautiful lobby and finished corridors; instead there are plain Soviet-style entrances. There are many examples.
“Remember! Neither the realtor, nor the bank, nor especially the sales department will fully find out all the problems with the Star City residential complex, because they care about only one thing – closing the deal and getting their profit. Checking a new building and investing are your personal responsibility. Study all the documents, check all aspects yourself. If you need to reduce risks to zero, order a full check and we will do everything for you.”