The war in Ukraine has dominated the headlines for many months. Since February 2022, nearly 9 million Ukrainians have fled their country, and tens of thousands of civilians and soldiers have died. My guest today, Denis Buyanov, has lived through the sirens, explosions, and tragedies that come with war. During this episode, he openly shares his experience of leaving Kyiv, returning to Kyiv, and being separated from his family. He thinks of himself as one of the lucky ones in comparison to so many of his fellow citizens; however, his story is an incredible display of the strength and resilience of human beings. Although we delve quite deep into his personal story, since this is a real estate podcast, we of course also get into his take on real estate in times of war, including the approach he took as a landlord.

Key Points From This Episode:

[01:28] - Episode Overview

Kyle returns to the podcast world with an episode about what is globally one of the most noteworthy topics right now: the war in Ukraine. Kyle and his returning guest, Denis Buyanov discuss this topic from both a personal and a real estate perspective.

SURVIVING THE WAR: THE PERSONAL SEGMENT

[08:55] - Misunderstanding Russia

Denis shares why he, along with many others, didn’t believe a war between Russia and Ukraine would ever happen.

[14:30] - The Day Everything Changed

On the 24th of February 2022, Denis knew he had been wrong about the war. Suddenly, the sounds of sirens and explosions were inescapable and his world was turned upside down.

[18:56] - Leaving Home

Denis and his wife, along with their child, their dog, and her three puppies, attempted to leave Ukraine the day after the invasion began. They packed their cars with their most important possessions and found one of the few routes that were not blocked.

[22:45] - Returning to Kyiv

After 5 hours of driving, Denis realized they weren’t going to be able to make it safely to another city, so they decided to return to Kyiv and move in with their friends.

[25:11] - Difficult Decisions

After 2 days of acquiring information about the war, Denis and his wife decided they needed to leave Kyiv. They went to stay with other friends in Ukraine. They were lucky in comparison to many others but it was a challenging time and after a week they moved back to Kyiv.

[30:52] - Underestimating Ukraine

The Russians thought that overthrowing the Ukrainian government would be an easy task, but they underestimated the power of the Ukrainian people. The conflict in Kyiv escalated and people were being killed on the streets.

[37:18] - Separation

New laws prevented Denis from leaving Ukraine, but with the help of his fellow citizens, he was able to get his family out. He has spent the past few months separated from his family, but their return to Kyiv is imminent.

SURVIVING THE WAR: THE REAL ESTATE SEGMENT

[43:18] - Real Estate In Times of War

From February to June, most commercial and residential landlords did not expect their tenants to pay rent. Now, most rental prices are reduced by up to 50%. As a landlord himself, Denis explains the approaches that he has used with his tenants.

[51:15] - Can the Government Be Trusted?

Denis shares why he is not convinced that people who have lost their houses or their businesses due to the war will receive compensation from the government.

[53:21] - How Different Parts of Ukraine Have Been Affected By the War

Not every city or town in Ukraine has been impacted by the war in the same way. Denis tells us which areas have become overpopulated, why, and how this is affected rental and sales prices.

[01:00:50] - Issues Facing the Construction Industry

Although there is lots of work to be done, finding workers is a major ch

This Kyle’s Take features commentary on the recent performance of Mexican real estate across the residential and commercial spectrum, insights from the interview with Jaime Fasja, poll results, and a preview of the next guest.

00:15 – Introduction
Kyle sets the stage for the episode by describing the context of his surroundings at the Ritz Carlton in Mexico City.

1:28 – BREAKING NEWS

1:32 – Residential Metrics and Drivers
Kyle highlights recent price increases in major Mexican cities that were not only attributed to the pandemic, but also the growth in the middle class and, in some instances, foreign buyers.

3:47 – Economic Decline and Subsequent Rebound
After the Mexican economy plummeted in 2020 to levels not seen since the 1930s, the ratings agencies downgraded the country’s credit. 2021 has offered a brighter picture, however, with GDP up 20% through Q2.

04:27 – Foreign Buyers and Legislation
Citizens of the US, Brazil, and Spain constitute the majority of foreign buyers in Mexico City. In coastal areas, foreign nationals have been able to own real estate via bank trust since a 1993 amendment of investment law.

05:35 – Mexican Lending & Market Statistics
While mortgage rates remain elevated in Mexico, the Mexican Central Bank has made two consecutive hikes in its benchmark rate to address inflation concerns. Industrial activity and the services sector have both flourished this year despite moves by the government that upset investor confidence.

07:23 – Office Performance
High vacancy, a robust new supply pipeline, and tepid leasing activity are projected to weigh on the office market in the coming years, resulting in a tenant-favorable market.

08:48 – Industrial Performance
An improved vaccination campaign, the reactivation of the US economy, stable international trade, and strong e-commerce demand have acted as tailwinds to the Mexican industrial market.

10:17 – Retail Performance
The retail market has shown signs of improvement in 2021, though this progress is occurring at a slower pace compared to other countries.

10:54 – GUEST INSIGHTS

11:03 – Jaime Fasja Commentary|
In Episode 24, Jaime made the following points among others:

1) Thor Urbana capitalized at a very early stage on the reduction in Mexican tariffs on Chinese goods;

2) a new real estate venture can propel itself from obscurity to a $500mm pension fund commitment within a matter of months;

3) Mexican coastal markets feature lodging that is 2x the price compared to inland cities;

4) Thor Urban’s creative structure led to the consummation of the Ritz Carlton deal; 5) the outdoor nature of Thor Urbana’s lifestyle centers helped retain foot traffic during the pandemic.

13: 18 – POLL RESULTS
Kyle reveals the results from his last poll, which was:

When will the major tech companies (Facebook, Amazon, Apple, Netflix, Google) return to office?

1. January 2022 or earlier – 14%
2. February 2022 – 26%
3. March 2022 – 30%
4. April 2022 or later – 30%

The next poll to be featured at kylenaye.com will be:

How long will it take Western European tourist visits to the United States to reach pre-COVID levels?

1. Less than 6 months
2. 6-12 months
3. 1-2 years
4. 2-3 years
5. More than 3 years

14:50 – NEXT GUEST
Kyle provides some closing comments relating to the next guest for Episode 26.

Additional Information
Fideicomiso: https://www.expatsinmexico.com/what-is-the-fideicomiso/

While this episode’s guest, Jaime Fasja, has a family background in real estate dating back 50 years, he crafted his own way to the highest echelons of retail, hospitality, and industrial real estate investment & development across Mexico and the Caribbean. The 180-person firm that he started from scratch in 2012 and now leads as co-CEO, Thor Urbana, owns assets in 20+ locations, primarily consisting of lifestyle retail centers and luxury hotels. Last week, Jaime and his team opened their latest project, the Ritz-Carlton Mexico City, adding to their roster of hotels featuring such flags as Thompson, Montage, and Four Seasons. As you will hear, Jaime has experienced both pleasant surprises and acute challenges since the start of COVID as he navigated temporary mall closures, pandemic safety protocols, leisure travelers from the USA, and new acquisitions. These aspects notwithstanding, Thor Urbana has emerged stronger than ever from the past 20 months and is ready to continue a steep growth path in the years ahead.

0:42 – Episode Overview

05:50 – CAREER FOUNDATIONS: The Ascent of a Dealmaker

06:04 – Family Real Estate Background and Education

07: 48 – Reasons for Business School

08:57 – Mexico’s Historical Lack of Institutional Capital

10:35 – Relationship with Co-Founder Jimmy Arakanji

12:36 – Steps of Creating Thor Urbana

15:22 – Focus on Retail vs. Hospitality

17:52 – Selection of Partners

19:53 – Leveraging Thor Equities Resources

23:12 – Culture at Thor Urbana vs. Thor Equities

25:46 – Co-CEO Responsibilities

27:44 – Expansion into Other Countries

30:23 – Greatest Challenge at the Moment

32:00 – MAKING THE MARKET: A Research Perspective

32:09 – Real Estate Comparison of Inland Cities vs. Coastal Markets

39:25 – Riviera Nayarit News

41:32 – Mexico City Luxury Hotels

46:39 – Mexico City Rate Increase

47:48 – Domestic and International Guests

49:33 – COVID’s Effect on Mexican Lifestyle

52:44 – Lender Discussions During COVID

57:15 – Pandemic’s Effect on Lease Structure

58:43 – Recent Acquisitions Activity

1:02:54 – Deal Competition

1:04:28 – POLITICIANS AND ATTORNEYS: Bureaucracy and Red Tape

1:04:40 – Pending Legislation Affecting Real Estate

1:06:34 – Entitlement and Permitting

1:08:57 – Legal Action for Title Claims

1:10:53 – Property Taxes

1:12:21 – Frequency of Litigation

1:14:50 – FINANCE AND FORMULAS: The Economics Behind the Deal

1:15:28 – Discovery of Opportunity

1:18:34 – Construction Timeline

1:20:21 – Equity vs. Debt

1:21:31 – Choice of Ritz Carlton as Flag

1:23:39 – Fee Structure Negotiation

1:25:40 – Ritz-Carlton Compared to Comp Set

1:27:54 – Unique Amenities & Technology

1:30:47 – Planned Hold Period

1:32:30 – TOURIST IN YOUR OWN TOWN: How to Spend Three Perfect Days

1:32:36 – To-Do List

1:35:26 – First Time Visitor Tip

Go to KyleNaye.com for full show notes and more info.