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Dynamo homes in on Ukranian property

Dynamo property investment aims for growth by investing in properties and property developments in the Ukraine. It is available to Sipp and SSAS investors as an exempt unit trust and also as a limited partnership for high-net-worth and certified sophisticated clients.

The directors of the fund say the Ukrainian property market began to grow when the restrictions on private property ownership were lifted in the 1990s after the collapse of the Soviet Union. Further liberalisation in 2004 has led to economic growth and the directors believe this will drive property prices higher. Demand for properties is exceeding supply as more Ukrainians are coming into the city from rural areas.

Founding shareholder Brian Evans-Jones has spent the last two years building up contacts in the Kyiv, the Ukrainian capital. During this time, he used his own money to buy and refurbish two city centre apartments, which have produced returns of over 40 per cent.

The strategy of the fund may involve buying and refurbishing city centre apartments to western standards for young professionals and business people, designing and constructing a housing development for sale to the Ukranian middle class or buying land on the outskirts of the city and obtaining planning permission. Legal advice will be taken when looking at land to ensure it is suitable for investment and possible development.
Buying simple country cottages, known as dachas, located up to two hours travel away from the city is another strategy the directors will consider.

The fund has a planned life of five years and will be geared up to 80 per cent to increase the number of properties that can be ought with the intention of increasing returns for investors. The costs on these borrowing, along with property management and fund management costs, will be paid from rental income on the properties.

Any capital in the fund after the repayment of borrowing and costs will initially repay investors capital, then provide a return equal to this, so that investors could double their money. Any capital after that will be split equally between the investors and the managers as a performance incentive.
Although the outlook for the Ukrainian property market appears attractive, a geared portfolio of illiquid assets in emerging Europe could seem too risky to some investors.


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