Prozorro.Sale

In this material, we spoke with Yana Furman – a specialist of Prozorro.Sale at SmartTender.biz – and learned what opportunities the state offers businesses today for scaling and development, and how the war affected the rental market of state property.

How Did the Start of a Full-Scale War Affect the Auctions for the Lease of State Property?

Despite the start of active hostilities, the rental market of state and communal property continued its work. Objects located in conditionally safe territories continued to be put up for auction, despite the unstable situation in the country. Thus, from 24.02.2022 to 31.12.2022, 13,950 auctions were published, of which 65.31% were completed.

On average, 1.28 offers were submitted for one auction, but even this ensured a good result because on average the initial price of the lot increased by 86.79%.

Prozorro.Sale

How Did the Lease Auction Procedure Change During Martial Law?

During martial law, changes were made to the legislative acts regulating this direction. I will mention the main ones established by the Resolution of the CMU of May 27, 2022 No. 634:

1. Benefits are provided for the payment of lease payments for the use of property in state-owned seaports and airports. Also, benefits have appeared for certain categories of tenants when paying an advance payment and a security deposit.
2. Lot exposure has been reduced to 5-35 calendar days (instead of 20-35).
3. The starting rent is determined as follows: during martial law, if the residual book value of the object of rental real estate is less than 10% of its initial book value, or there is no information about its residual book value, the balance keeper may not carry out revaluation of such a property object for calculation of the starting rent. In this case, the starting price of the lease, which is indicated in the conditions of the Prozorro.Sale auction is set at the rate of UAH 1 per 1 square meter of the object.
4. Lease contracts, the term of which expires during martial law, are automatically extended until the end of martial law and for another 4 months from the date of its termination or cancellation.
5. Information about participants and the winner of the auction is anonymous (hidden) and is not disclosed after the end of the auction. Only the operators of the electronic platforms from which the participants submitted their bids and the lessor have access to such information, which is noted by the system in the protocol on the results of the auction.
6. The protocol on the results of the auction, the lease agreement, and the act of acceptance and transfer, which the lessor uploads to the electronic system, are closed and are not displayed on Prozorro.Sale or on e-sites.

How Do Public Property Lease Auctions Help Businesses Continue to Operate, Start Their Own Business or Relocate?

Since the first weeks of the war, a program for the relocation of Ukrainian enterprises located in dangerous territories, created at the initiative of the Ministry of Economy, has been operating in Ukraine. The joint efforts of Prozorro.Sale, the Ministry of Digitization, and Diya.Business launched a digital interaction platform to help with relocation. It allows business representatives to exchange needs and offers for available rental properties free of charge. Moreover, landlords can provide such property both for free and on a commercial basis.

Prozorro.Sale

According to Clause 4 of Resolution of the CMU No. 634, in case of winning the rent auction, entrepreneurs and companies located in dangerous areas and who have decided to move their production or other assets to calmer regions, during the first six months pay rent (including advance payment) in the following calculation: UAH 1 per 1 sq.m of leased space.

In the Prozorro.Sale system, you can find state and communal property for various needs. These can be separate premises, buildings, or even complexes of buildings that can be used as warehouses, to accommodate production, open a coffee shop or gym, etc. When choosing a lot, it is important to pay attention to its intended purpose, since some objects are designed for conducting only a certain type of activity. Here are some examples of current lots that may be suitable for relocation:

1. Real estate with a total area of 560 square meters in Kyiv. The starting rental price is UAH 40,934.74 per month. Applications for participation are accepted until February 7. Read more here.
2. The room with an area of 98.8 square meters and part of the technical hall with an area of 424.4 square meters in the experimental and production building in Kyiv. The starting rental price is UAH 35,730.40 per month. Applications for participation are accepted until February 5. Read more here.

What Properties Can Be Rented Using Electronic Auctions?

Currently on Prozorro.Sale you can rent:

- real estate;
- single property complex;
- vehicles;
- other separate individually determined property.

Prozorro.Sale

Here are some examples of lots for rent in Kyiv:

1. Non-residential premises with a total area of 162.70 square meters with a starting rental price of UAH 162.70 per month. Can be used, for example, for a car repair shop (service station). Applications for participation are accepted until February 5. Read more here.
2. Part of the non-residential premises with an area of 30 square meters with a starting rental price of UAH 113.98 per month is intended for the provision of public catering services (dining room, buffet, cafeteria, bakery). Applications for participation are accepted until February 6. Read more here.

How Does Renting State Property Help Support the State's Economy During Wartime?

In 2022, almost half of all successful auctions in the system related to the lease of communal and state property – from 24.02.22 to 31.12.22, more than 8,500 such auctions were concluded with the signing of the contract. At the same time, the initial monthly rent increased by 40%.

Analyzing the previous year, we can see that communities will earn a total of 16.6 million hryvnias monthly from renting out their facilities, and the state will earn 9.6 million hryvnias. Kyiv, Chernivtsi, Dnipro, Lviv, and Kharkiv became the leading cities in terms of income from successful trades.

Relocation plays an important role in this. And if for obvious reasons, at the beginning of the full-scale war, auctions for the lease of communal property took place more actively in cities in the west of Ukraine, then more and more objects were leased in Kyiv, Dnipro, and Kharkiv, where those who left in the first weeks and months of active hostilities returned.

According to data from Prozorro.Sale, in 2021, Kyiv held 821 successful auctions, which brought it 9.4 million hryvnias per month from rent. And already at the end of the first half of 2022, the capital received more than half of this amount – 5.4 million hryvnias per month – as a result of 225 rental auctions.

For comparison, in 2021, Chernivtsi held 175 successful auctions, as a result of which they received 1.3 million hryvnias in monthly income. And in the first half of 2022, the city organized 98 successful rental auctions, as a result of which its budget was replenished by more than 1.1 million hryvnias every month.

User Comments on Cooperation with the SmartTender Platform

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Pharmacy Network “Pharmacia" PJSC:

We participate in property lease auctions through the SmartTender platform to expand our pharmacy network and extend lease agreements. We are satisfied with the work of the site. We have high-quality support from specialists, with the help of which all auctions are successful.

Prozorro.Sale

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Our Family Medical Center LLC

The company won the auction for renting premises in the Kyiv region. Lawyer's comment:

Everything was great. I contacted technical support many times. Each time, employees consulted in detail on any issues, very clearly, at a very high level. We rented premises for the outpatient clinic and the provision of medical services.

Prozorro.Sale

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Komenergo-Zhytomyr Management Company LLC:

We are satisfied with the work at the SmartTender site. We appreciate the excellent technical support and speed of execution. Satisfied with the work between SmartTender departments. We rented premises for business activities.

Prozorro.Sale

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Is It Difficult for a Beginner to Participate in an Auction and What Is Required for This?

At first, it may seem that the procedure for participating in auctions is complicated, but in fact, it is enough to perform just a few simple steps:

1. Authorization: register on the SmartTender.biz site and fill out a profile.
2. Search for auctions: by number, USREOU code, or keywords.
3. Submission of an offer to the auction: payment of fees, preparation of the necessary documentation (samples are provided), and submission of the offer itself on the auction page.
4. Participation in a three-round auction, during which you need to offer the most favorable price among the participants (if there is only one participant – automatic win with the price offer submitted at the stage of accepting offers).
5. Signing of the protocol and contract.

Prozorro.Sale

To correctly apply for participation, I advise you to use our instructions or, if you have any questions, contact our managers by phone: 0 800 75 10 10.

If necessary, at each stage, the manager of our site helps the potential tenant and provides all the necessary information, sample documents, and a strategy for participating in the auction. We do everything so that even beginners can quickly and successfully submit offers without errors and have as many chances as possible to win the auction.

If you have any questions about working in the Prozorro.Sale system, call us at the following numbers:

- (099) 002 79 96 (working number)
- (044) 337-86-64 (line 3)
- 0 800 75-10-10 (line 3)

Or write to the e-mail: info@smarttender.biz