stepINVEST and Kharkiv real estate. Interview with Abdurakhman Shaykhalov
IT ClusterAbdurakhman Shaykhalov is a Kharkiv-based entrepreneur, investor with 25 years of experience, founder and owner of Step by Step group of companies with more than 30 implemented business projects in various fields, general partner of the public platform «My City» Kharkiv, co-owner of Evolution Business Park, partner of Kharkiv IT Cluster, together with whom the community team relaunched Invest Club.
Mr. Abdurakhman is an expert in investing and managing commercial real estate both in Ukraine and abroad. We talked to him about his work, team, projects, and stepINVEST expertise. Read the main points of this conversation in the Kharkiv IT Cluster article.
How stepINVEST works
«stepINVEST, like each of our companies, stepREALTY, stepMONTE and others, started their journey with a small but very important first step. That is why the names of our companies begin with the valuable step,» says Abdurakhman Shaykhalov, Founder & owner of Step by Step.
stepINVEST is an integral part of the Step by Step family. Thanks to the integration model of the group of companies, it is possible to provide investors with a full range of services: search for premises, its analysis, purchase, development of the concept of the premises, search for a tenant and repair to meet his needs, sale and further management of the object.
The company works with different types of investors based on their investment goals.
🔹 Selling at the initial stage to investors who want to earn more and are ready to take more risks.
🔹 Investors who want to get a ready-made product to receive a monthly, stable income. For such people, the company offers RRBs – a ready-made rental business.
«After the property is occupied by tenants, we sell it as a GAB. This product is now popular, including thanks to stepINVEST, and 6-7 years ago such a term did not exist at all,» Abdurakhman Shaykhalov said.
🔹 Buying an object for your own use. For example, an IT company that buys premises at any stage of its implementation, for its own needs.
As mentioned above, the group of companies provides a full range of services and manages completed projects. As for the tenants, stepREALTY management takes care of these processes, while stepREALTY service deals with all operational issues: cleaning, utilities, etc.
«We breathe new life into the facilities, creating space for work and development. We buy old, possibly undervalued buildings and give them a second life by renovating them: we update the concept, make major repairs and completely change the utilities,» Abdurakhman Shaykhalov says.
stepINVEST ecosystem
The company has a club ecosystem within which stepINVEST regularly organizes events for investors, both public — open meetings and private — closed events.
«We send information about each project we implement in a separate chat, where we share not only general information about the development of the facility but also distribute educational materials. One of the reasons why investors are with us is our openness and the knowledge they gain in parallel by working with us,» says Abdurakhman Shaykhalov, founder of Step by Step Group.
Investors who cooperate with stepINVEST, even with small checks for the real estate market ($50-$100 thousand), can get a share in objects with a total value of $5 million or more.
How it all started. The history of stepINVEST
Abdurakhman Shaykhalov has been in business for over 30 years and started investing in real estate in 2000, when he purchased his first property for his own business needs.
«When we had 10 properties, it was difficult to effectively manage all the requests, so we set up a management company, stepREALTY,» says Abdurakhman.
In 2006-2007, the company began small-scale market activities related to the purchase of real estate. Until 2015-2016, the company did not attract external investments but worked exclusively with trusted partners. At that time, stepREALTY worked in the format: we bought an object, completed it, and sold it.
When the team saw that this format was in demand and there was an opportunity to increase the turnover by 5-10 times with external investments, they decided to create stepINVEST.
«We don’t attract investments at the stage of buying out properties, as it is difficult and there are more risks. At this stage, we work exclusively with old partners who have extensive experience and competence,» Abdurakhman Shaykhalov says.
Real estate and investment during the war
The real estate market is a sensitive organism that changes, adapts, and suffers under the influence of the slightest fluctuations, not to mention crises and war. For almost a whole year, starting from February 24, 2022, there were almost no sales and purchases of commercial real estate in Kharkiv.
The market is still somewhat difficult today. However, in almost 2 months, from March-April 2023, the activity of inquiries increased significantly and sales began to recover.
The situation is different in different segments of commercial real estate. The warehouse market was the most active, and they were in high demand in March-April 2022. Volunteers needed somewhere to bring humanitarian supplies, and people needed a place to store their belongings before they left. In general, the warehouses received 70-80% of the pre-war price. Abdurahman provided his own warehouse space for humanitarian purposes free of charge.
The space for cafes and small shops is doing relatively well and is in demand compared to other segments. In May 2022, the rental rate was 30%, and today this figure sometimes reaches 70% in UAH of the pre-war price.
The A and B class office segments suffered the most, as their main users were IT companies, most of which have left the city, as well as banks, medical, and insurance companies.
«Now there are only 25% of IT workers in Kharkiv compared to January 2022, but most of them still work remotely without going to offices,» Abdurakhman notes.
The general estimate of rental property in Kharkiv is currently 50% of the pre-war price, as for sales, the situation is somewhat different:
🔹 small apartments — 70-80% of the pre-war value;
🔹 shops — 70%;
🔹 warehouses — 50-60%;
🔹 A, B-class offices — 40-50% of the pre-war value in $.
Abdurakhman Shaykhalov is skeptical of all possible forecasters who are «able to predict» future crises, their depth, and duration. However, he believes that it is possible to accurately determine when the market is growing, relying solely on analytics and actual data.
«Since April 2022, we have been keeping our finger on the pulse of events: we observe the dynamics, analyze, and communicate with various communities. I can’t say when the commercial real estate market will start working at least at half capacity. But today I can state that the market is reviving — there are more and more requests for rent, and rental rates are growing and will continue to grow, even if military operations continue, but we must always remember about new possible force majeure and risks,» Abdurakhman Shaykhalov quoted.
The existing and possible new security risks in Kharkiv do not allow stepINVEST specialists to call for active investment. However, it is worth knowing that at this time there is an opportunity to purchase real estate with a fairly large investment potential, while prices in different segments remain at the attractive level mentioned above.
Security is the main factor that will influence the further recovery of both the commercial real estate market and the city of Kharkiv itself. And for some investors, this factor remains a deterrent to investing.
For such clients, including for the purpose of diversification, stepINVEST offers investment in resort real estate in Montenegro through stepMONTE, a member of the Step by Step group of companies. Over the past year, this area has been very active, with several projects with active and passive investment models.
«We have 8 years of experience in the Montenegrin market. The range of services provided to investors is identical to the one in Kharkiv, from searching for offers to managing the property. 70% of clients investing in this area are the same partners who are cooperating or have cooperated with us before. This degree of trust is extremely important for us,» Mr. Shaykhalov summarizes stepMONTE.
stepINVEST specialists believe that the effectiveness of investments, regardless of the project or the country where they are located, largely depends on the competent classification of investors and the provision of an appropriate investment proposal.
Then each investor receives a product that meets:
🔹 the risk they are willing to take;
🔹 his check;
🔹 his philosophy and business thinking.
«Before deciding to work with an investor, we classify it to understand what risks and force majeure it can bear. If we don’t understand the client’s reputation, we refuse to cooperate with them. We choose our partners based on their values: experience, reputation, and openness of the investor,» Abdurahman quoted.
The task Abdurakhman Shaykhalov sets for himself as part of his work is to give investors and his clients honest guidelines so that they have correct and up-to-date information about investing in the projects they need.
Evolution Business Park
The stepINVEST team treats each of its projects warmly, despite its different scales and formats, because the company’s mission is to restore and create new things.
«We are pleased to see the project before and after, such contrasting pictures inspire us to the next achievements,» Abdurakhman Shaykhalov shares his thoughts.
Evolution Business Park is the company’s largest project. The total area of the buildings is 26 thousand m2, and the potential for realization is estimated at 50 thousand m2. This project is also special for the founder of stepINVEST, which plans to invest in it long-term, for the next 10 years at least.
«Despite the fact that we have good capitalization in this project, it is not just about money. The key is values and its big idea – to give new life to the outdated. We are giving new life to the complex itself, the city district, and the format of interactions and business communications. And in today’s realities, I see its mission as more global. Evolution Business Park is the place where a new round of Kharkiv’s evolution begins,» Abdurahman said.
The company strives to preserve the uniqueness of the old buildings of the business park, their history, and aura, but with the obligatory integration of modern technologies. There is already a case of renovation of the IDEA building (5 thousand m2) with a century-old history, which has been operating since 2020. In Evolution Business Park, the team plans to create modern schools, a museum, coworking spaces, a large food court, summer event venues, conference rooms, spaces for development and creativity, a business assistance center, and medical facilities.
«Part of the business park’s territory will be publicly accessible to Kharkiv residents and guests of the city as a platform for street festivals and other events, a summer cinema and café, art objects and photo zones are planned,» Abdurahman shares his plans.
Socially-oriented projects
Socially oriented projects are an integral part of Evolution Business Park, so 3-4 thousand m2 will be allocated for their needs.
«At the first stages, we plan to invest in social initiatives on our own, but if there are those willing to support projects in the future, we will be only for it,» Abdurakhman Shaykhalov on social projects.
It is planned to allocate 1 thousand m2 for the museum mentioned earlier, and another 2-3 thousand m2 of space will be allocated for various social projects in the future. Some of them are being implemented right now, such as the Honey Academy space for children.
Evolution Business Park is home to My City Kharkiv, a platform that helps raise money for the social projects of Kharkiv residents. Three months ago, a special fund was created to implement social projects aimed at improving the city’s life.
«If the project raises only a part of the required amount on the My City Kharkiv platform, the rest will be provided by the fund. This is a new format of the project that we have implemented,» Abdurahman said.
The founders of Evolution Business Park personally support the fund and cover administrative expenses on a monthly basis to ensure that donations from caring people are used to implement projects in full.
«From the first day of the full-scale invasion, up to 10 projects started their work on the basis of Evolution Business Park, 3-4 of them were from the Kharkiv IT Cluster. I remember that the cluster’s residents were making Molotov cocktails in one of the premises,» Abdurahman shares his memories.
Throughout the year, part of the business park’s premises was provided to several humanitarian foundations for storing goods. The premises were not equipped for warehousing, but no one was denied assistance.
VMESTE has prepared, packaged, and delivered more than 130,000 meals for the military and residents of the affected areas of the city and region, and today Evolution Business Park hosts various business events. Currently, about 25 conferences are held per month, but this number is expected to double in the near future.
«We also organize social events of various kinds, such as first aid workshops, events for children, etc.», Abdurahman said.
The Step by Step team
The company has retained all the people who plan to return to Ukraine and continue working. The team is now located in 10 different countries around the world, and they are involved in different segments — some have even changed their line of work dramatically. Several employees are currently serving in the Ukrainian Armed Forces, some continue to volunteer, and some have returned to work on a full-time basis.
«I am proud that we have managed to keep everyone, despite the situation around us,» Abdurakhman Shaykhalov admits.
The Kharkiv IT Cluster team thanks Mr. Shaykhalov for a meaningful and interesting conversation, as well as for cool, useful projects and initiatives that make our native Kharkiv even better.
We look forward to years of fruitful, close, and productive cooperation and are confident that together with stepINVEST we will have many new achievements and incredible achievements ahead of us!🤝
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