KAN Development implements its development projects through separate investment funds structured as collective investment institutions. Each property has its own dedicated financing, which is not mixed with the budgets of other projects. The company generally receives land plots from partners, while construction is carried out by its in-house general contractor, Kan Bud.
According to KAN Development founder Igor Nikonov, Ukraine effectively lacks conventional project financing and a large-scale mortgage market. Banks rarely finance developers against land, corporate rights, project documentation or construction permits. As a result, projects are initially financed by investment funds, after which apartment buyers become an additional source of funding.
Partnerships with Investors
Nikonov considers the growing number of transactions in which major entrepreneurs become co-investors in established development companies to be a logical trend. Building a fully integrated development company from scratch is difficult, so investors acquire stakes in existing businesses and rely on the expertise of their management teams.
At the same time, this model works only when the operating partner has full authority and independently makes decisions regarding project costs, quality and implementation timelines.
“I do not need additional partners or additional capital. I build only as much as I can deliver myself. If I understand that I cannot handle a project on my own, I bring in a partner.”
KAN’s strategy therefore provides for attracting co-investors only to projects that the company cannot finance and implement using its own resources.
Asset Sales to Finance New Projects
KAN Development is prepared to sell part of its asset portfolio in order to redirect capital into new priority projects without bringing in additional partners.
In particular, the company has exited several properties, including the Graal project on Khreshchatyk Street. The proceeds are being used to finance new construction and the development of educational infrastructure.
Investment in the construction of a school within the Respublika residential complex is estimated at $45 million, while the school in the Biorhythm residential complex is expected to require $46 million.
“I will sell any project in order to build something new.”
KAN therefore uses asset rotation as an internal financing instrument and a means of reallocating capital between different business areas.
Key Development Investments
KAN’s current investment portfolio is primarily focused on large-scale residential projects:
- approximately 650,000–700,000 sq m remain to be developed in the Respublika residential complex;
- around 237,000 sq m remain in the Faina Town project;
- the total area of the Biorhythm residential complex exceeds 150,000 sq m;
- the company is developing UNIT.Home in partnership with UDP;
- a low-rise residential complex of approximately 100,000 sq m is being prepared on a site of around 50 hectares along the Dnipro riverfront.
The company’s current residential developments are expected to require between five and ten years to complete. Due to the market slowdown, the implementation timelines of individual projects may be extended. At the current pace, Respublika may take another ten years to complete, Faina Town another three to four years, and Biorhythm another five to six years.
No Plans for New Office or Shopping Centre Developments
KAN Development currently has no plans to return to the large-scale construction of business centres or shopping and entertainment complexes.
Commercial real estate requires substantial upfront investment, while demand for office and retail space remains weak. The continued growth of online sales represents an additional risk for retail property.
The company is therefore directing its capital primarily into residential developments, educational facilities and new real estate formats. One of the promising areas is a health and recreation complex featuring swimming pools, saunas and sports infrastructure as part of the Dnipro riverfront project.
Investments in Autonomous Infrastructure
Another area of KAN’s investment strategy is reducing the dependence of residential complexes on municipal utility networks.
When centralised systems are overloaded or the city cannot provide the required technical connection conditions, the company develops its own infrastructure. New projects may include:
- heat pumps;
- individual heating systems;
- autonomous water supply;
- proprietary energy and engineering networks.
These solutions increase the initial construction budget but improve the resilience of the property, reduce future utility costs for residents and create an additional competitive advantage for the residential complex.
Investment Demand for Apartments
Most apartments in KAN projects are purchased for owner occupation. The share of conventional investment transactions remains relatively limited.
At the same time, some buyers view apartments as assets for:
- preserving capital;
- generating long-term rental income;
- benefiting from future property price appreciation.
Sales remain volatile. Depending on market conditions, the company sells between 20–30 and 70–80 apartments per month. Demand is heavily influenced by the security situation and the condition of the energy system.
KAN has also considered REIT structures and collective investment models for rental property. However, the company does not currently plan to use them. Its focus is on creating residential complexes with a high proportion of permanent residents rather than developing short-term rental properties.
