CONSTRUCTION OF AMUSEMENT PARK, KRYVYI RIH CITY PROJECTS INITIATED BY REGIONAL AUTHORITIES

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Eugenia Russell
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1 CONSTRUCTION OF AMUSEMENT PARK, KRYVYI RIH CITY PROJECTS INITIATED BY AL AUTHORITIES

2 Summary There are 20 water parks in Ukraine, including 10 indoor and 10 seasonal aqua parks. Geographically water parks are located on the shores of the Black Sea and the Sea of Azov, and partly on the west, north and east sides of Ukraine. At the same time central region of the country is still not covered with water park services. The absence of water parks in the central region of the country shows the necessity of scaled amusement park construction that would become a center of youth and family recreation adapted for all income levels. Part of the park would be occupied by water activities. Dnipropetrovsk oblast is the most attractive region for doing business in Ukraine. Dnipropetrovsk region occupies 5,3% of the country with a population of 7,3% of the country s population. Region provides 10% of Ukraine's GDP and 11% of Ukrainian foreign trade turnover. In the Regional Competitiveness Rating it occupies the 2 nd place. Key attractiveness indicators of the amusement park construction in Kryvyi Rih city (Dnipropetrovsk region): large population of the city (657,7 thousand people, 2 nd place in the region, the 8 th in the country). According to the experts it is reasonable to construct an amusement park next to the city with minimum 600 thousand inhabitants; absence of this kind of entertainments in the city and the region as well; absence of equipped beaches, sites for family recreation in the coastal zone of the city rivers; large share of young people (target group of visitors): the share of kids and youth aged to 29 years old is 35% of the city s resident population; developed transport hub enables to cover the territory of more than 3,2 million people. 1,1 million people of them are potential and regular visitors and over 18% are preschoolers and schoolers who will attend the park on regular not only with parents but also on the year-round group visits organized by educational institutions; the amusement park attendance, not only on weekends and holidays, but also during the week due to the shift work at key city s enterprises. readiness to spent 45,5 thousand UAH per year on entertainment (7,1% of real income of one inhabitant of Dnipropetrovsk region); preference of citizens to spend money on entertainment in their home town is explained by the expensiveness of air tickets and visa problems when going abroad on weekends and dissatisfaction in entertainment services on the coast of the Sea of Azov and the Black Sea as well; high tourism potential in the field of industrial tourism (see Annexes). According to the size of the target group of visitors and the amount of money they spend on entertainment, the evaluative market size is 71,8 million Euro a year due to visits by Kryvyi Rih city s inhabitants. On condition that the appropriate advertising campaign in other region s major cities and regional centers of neighboring oblasts is provided, the income may increase to 281,6 million Euro due to visits by these cities inhabitants. The Dnipropetrovsk Investment Agency (DIA) is studding actively all the proposals from potential partners who are interested to create effective business through the construction of large-scaled, unique theme park in Kryvyi Rih city. We are open to cooperation and ready to discuss additional support in the project implementation and favorable conditions for the investor. Cooperation should be mutually beneficial. Regional authorities are committed to: provide the land on concessional terms. To assist in connecting the utilities; provide effective help during the permitting procedures; provide additional benefits under their authority. For more detailed information please refer to the relevant sections of the presentation. 1

The center of Ukraine is not covered with entertaining services (water and amusement parks) Lighthouse Dream Island Terminal Limpopo 0,3 ha 450 people 6 Euro 0,3 ha 250 people 8 Euro 7 Euro 2,4 ha 3

3 The center of Ukraine is not covered with entertaining services (water and amusement parks) Lighthouse Dream Island Terminal Limpopo 0,3 ha 450 people 6 Euro 0,3 ha 250 people 8 Euro 7 Euro 2,4 ha people 13 Euro 9 Euro 2,1 ha people 12 Euro 10 Euro Jungle 1,1 ha people 11 грн. 8 грн. 4 Euro Aqua Sferra (semi indoor) Beach KYIV Brovary 1,1 ha 500 people 1,4 ha people 11 Euro Lviv Ternopil Kharkiv 13 Euro 9 Euro 9 Euro Vinnytsia Cape of Good Hope Tsunami Ivano-Frankivsk Kirovohrad Dnipropetrovsk 5,5 ha people Odessa 1,0 ha 500 people 12 Euro 8 Euro Aquarius 0,8 ha 800 people 7 Euro 4 Euro Kryvyi Rih Mykolaiv Koblevo Ochakiv Odessa Donetsk Zaporizhzhia Berdiansk Kyrylivka 7 Euro 6 Euro Treasure Island 6,0 ha people 8 Euro 5,0 ha 7 Euro people 7 Euro Koblevo Attika Koktebel 6 Euro 4,0 ha people 5 Euro 4 Euro 1,7 ha 700 people 9 Euro 6 Euro Saky Sudak Alushta Sevostopol Simeiz Koktebel 4,4 ha people 8 Euro 5 Euro Banana Republic Sea World area, that is not covered by water parks services (more than 200 km to the nearest one (2,5 hours by car)) 4,0 ha people 10 Euro 7 Euro 2,0 ha people 95 грн. 65 грн. indoor water parks seasonal water parks Zurbagan 2,1 ha Blue Bay 2,5 ha Almond Grove 2,0 ha people people people 8 Euro 9 Euro 11 Euro 6 Euro 5 Euro 20 Euro Note: Minimum prices are stated Source: Agency s analysis based on the data of water parks official websites 2

Dnipropetrovsk region a region of economic opportunities Advantageous economic and geographical

region is 31,9 thousand km 2 (5,3% of the territory of Ukraine) Developed infrastructure advanced

(Dnieper river) 2 international airports Developed industry in the region, there are more than 700

the world market of space services belongs to the region Skilled labor and scientific personnel

able-bodied population (1,85 million people) there are over 80 higher educational institutions of

institutions prepare specialists of more than 250 professional directions Favorable conditions for

countries, such as Austria, the Netherlands and others (2,5 million hectares) moderate-continental

4 Dnipropetrovsk region a region of economic opportunities Advantageous economic and geographical position the region is located in the center of Ukraine and borders upon 7 regions the area of the region is 31,9 thousand km 2 (5,3% of the territory of Ukraine) Developed infrastructure advanced motor road network vigorous railroad system gas-main pipeline presence of key country s waterway (Dnieper river) 2 international airports Developed industry in the region, there are more than 700 large industrial enterprises producing about 20% of all industrial sales in Ukraine about 10% of the world market of space services belongs to the region Skilled labor and scientific personnel region s population is 3,3 million people (7,3% of Ukrainian population), 56% of whom is able-bodied population (1,85 million people) there are over 80 higher educational institutions of all directions and 63 institutions of vocational and technical training in the region; the institutions prepare specialists of more than 250 professional directions Favorable conditions for agriculture region's agricultural lands exceed the number of land resources of range of EU countries, such as Austria, the Netherlands and others (2,5 million hectares) moderate-continental climate flat ground Reach source of raw materials the region has 50% of the total mineral resources of Ukraine 40 types of minerals 3

5 Attractiveness of Dnipropetrovsk region for doing business Position of Dnipropetrovsk region in the competitiveness ranking of Ukrainian regions 1 Kharkiv 4,19 Dnipropetrovsk 4,16 Donetsk 4,14 Kyiv 4,12 Odessa 4,10 Zaporizhzhia 4,07 Poltava 4,02 Lviv 4,00 Volynska 3,99 Rivne 3,98 Sumy 3,98 Vinnytsia 3,97 Mykolaiv 3,97 Zakarpatska 3,95 Chernivtsi 3,95 AR Crimea 3,94 Cherkasy 3,94 Ivano-Frankivsk 3,93 Luhansk 3,93 Khmelnytsk 3,92 Ternopil 3,88 Zhytomyr 3,87 Chernihiv 3,87 Kirovohrad 3,84 Kherson 3,82 Comments: Dnipropetrovsk region takes the 2 nd place in the competitiveness ranking of Ukrainian regions (only Kharkiv region is ahead). The region is a leader according to the market size indicator. In 2011, GRP per capita in Dnipropetrovsk region was 48% higher than the national figure ( UAH). Results of Dnipropetrovsk region according to 12 components of the competitiveness index 1 Index of global competitivness 4,16 4,37 Institutions 3,70 4,04 Infrastructure 3,99 5,03 Macroeconomic context Health and 5,63 primary education 6,00 Higher education and training 4,73 5,10 Goods market efficiency 4,03 4,12 4,52 Labour market efficiency 4,85 4,93 4,52 Level of financial market 4,08 development 4,17 Equipment of new technologies 3,34 4,29 Market size 3,06 3,69 Level of business development 4,14 4,18 Innovation 3,30 3,44 The region The best result among Ukrainian regions Average Source: Agency s analysis based on the data: 1 The Report on Competitiveness of Ukrainian regions by The Foundation for Effective Governance 2 The State Statistics Committee of Ukraine 4

6 Market size, Kryvyi Rih city Age structure of Kryvyi Rih city population 1,2, thousand people 98,7 135,3 90,4 65,8 657,7 thousand people 103,1 58,8 105,6 Structure of spending of Dnipropetrovsk region s inhabitants 2, % to over 60 Comments: According to global practice the target audience of amusement parks are children and youth under the 29 years old (46% of all visitors) 3. Minimum gross income from visits by Kryvyi Rih city inhabitants is possible of 744,6 million UAH (71,8 million Euro), as: 35% of the city s population are potential visitors of aqua parks children and youth under 29 years old (230,3 thousand people) 2. On average, one Kryvyi Rih city s inhabitant receives Euro of real income from wages per year and spends about 7% of this sum on entertainment (312 Euro) 2. Most of the city s working population derives their income by working on city-forming enterprises of mining and processing industry (including РJSC ArcelorMittal Kryvyi Rih, Southern GOK, Inhulets GOK, Northern GOK, Central GOK, EVRAZ Sukha Balka, KZhRK). Shift work schedule of these enterprises will provide high attendance to the park, not only on weekends and holidays, but on weekdays as well. 11,2% 4,1% 4,8% 7,1% 19,0% 100% 53,8% Food and beverages Communal services, maintenance of dwelling, transport and communications Entertainment Clothes and shoes Other consumer spending Non-consumer spending Source: Agency s analysis based on the data: 1 The State Statistics Committee of Ukraine 2 The Main Statistics Department in Dnipropetrovsk Region 3 The Economic Impact of Theme Parks on Regions, by Michael Braun 5

The potential of market increase Age structure of the population of the area, that will be covered by the amusement park's services 1,2, thousand people 3,2 million people 317,8 653,0 283,9 3,2

7 The potential of market increase Age structure of the population of the area, that will be covered by the amusement park's services 1,2, thousand people 3,2 million people 317,8 653,0 283,9 3,2 million 476,4 509,8 people 436,2 497,5 The area which population will be covered by the amusement park s services (major region s cities and regional centers of neighboring oblasts) Petrykivka to over 60 Mahdalynivka Novomoskovsk Comments: Kryvyi Rih city is a developed transport hub of the region. The distance from Kryvyi Rih to major cities of Dnipropetrovsk region and regional centers of neighboring regions does not exceed three hours by car. So on condition that appropriate advertising campaign is provided, the amusement park may potentially cover the territory with 3,2 million people population. This will allow to increase the gross income up to 2 920,3 million UAH (281,6 million Euro), that is almost 2 times, due to increase of quantity of potential park s visitors up to 1,1 million people (children and youth under 29 year old) 2. Note that over 18% of them are preschoolers and schoolers who will attend the park on regular not only with parents but also on the year-round group visits organized by educational institutions. Kirovohrad 242,4 Zhovti Vody 48,2 Dniprodzerzhynsk 248,4 Dnipropetrovsk Pavlohrad 998,1 Synelnykove Ternivka Vasylkivka Mezhova Pokrovske 657,7 population, thousand people Kryvyi Rih 657,7 Ordzhonikidze 43,0 Marhanets Nikopol 49,4 Zaporizhzhia 768,9 138 km (1.58h) distance from major cities of Dnipropetrovsk region to Kryvyi Rih (web-resource sit-trans.com) area, that will be covered by the water park's services 118,4 Source: Agency s analysis based on the data: 1 The State Statistics Committee of Ukraine 2 The Main Statistics Department in Dnipropetrovsk Region 6

8 Absence of competition TOTAL Number of seats in culture and entertainment esteblishmenment Comments: There are no enough places of recreation for the city with population over 600 thousand people. Palaces of Culture Cinemas Infrastructure of the city in culture, sport and recreation is represented by: 3 theaters, 3 museums, 3 cinemas, Kryvyi Rih State Circus, 15 Palaces of Culture, 17 stadia, 2 ice skating rinks, 13 indoor and 2 outdoor pools; 3 major night clubs. None of the coastal zones of the city s rivers has equipped beaches or reservations for family recreation. Theatres In spite of presence of multifunctional entertainment complexes such as Union and Sun Gallery, not a single part of them is given to water activities. Circus Nevertheless most of the citizens of Dnipropetrovsk region prefer to entertain themselves in their hometowns. This is caused by following reasons: 1) a trip to Europe on weekends is difficult to obtain: the share of expenses on airline tickets (round trip departing from Boryspil International Airport) is % of the amount that one resident spends on entertainment on average per year; duration of visa processing; additional transport expenses to get to the Boryspil Airport (since most of international flights departs from there). 2) dissatisfaction in services comparing with their cost, provided by health resorts of the Sea of Azov and the Black Sea, causes the refusal on these forms of recreation in spite of geographical proximity and relative cheapness. 1 Economy Department of the Executive Committee of the Kryvyi Rih City Council 7

9 Amusement park positioning The proposed park is positioned as: PRELIMINARILY. IN ORDER TO DISCUSS A complex offering a full range of high quality services in the field of entertainment for visitors of all ages, preferences and income levels. Unique multifunctional object capable to provide all necessary framework for inhabitants and guests of the city. Concept and design of entertainment complex will meet the peculiarities of the city and the region as a whole. The park is designed both for individuals and corporate clients as well. The following is being provided for inhabitants and city visitors: Individual and group water park and amusement park visits. Entertainment events (discos, shows, animated presentations). Rent of aquapark s or amusement park s accommodation for business events. Rent of advertising space in the complex. Public catering in cafes, bars, restaurants. Cafes, restaurants, bars tenancy to carry out celebrations and corporate events. The amusement park offers a wide range of services for different groups of clients that ensure the stability of revenue base. The uniqueness of services will form stable demand and price leading for the investor 1. 1 Expected profit margins, investment and payback period will be determined only after a complex infrastructure is final approved 8

Expected site for an amusement park in Kryvyi Rih city PRELIMINARILY. IN ORDER TO DISCUSS Comments: Disposition next to large apartment blocks.

10 Expected site for an amusement park in Kryvyi Rih city PRELIMINARILY. IN ORDER TO DISCUSS Comments: Disposition next to large apartment blocks. Disposition close to infrastructure (Sun Gallery shopping mall). Architectural environment provides visual accessibility to the complex. Territory has a calm relief with a slight height difference. Convenient pedestrian and vehicle accessibility. Disposition next to active highways. Coordinates (Google maps) Latitude Longitude Area Landowner The land status ,9 hа The city s authority Not in use Road Infrastructure Highway Bypass road Subway station Distance to the site 600 m 2 km 550 m Source: Department of Urban Planning and Architecture of the Executive Committee of the Kryvyi Rih City Council 9

11 The project s unicity. Preliminarily. In order to discuss ANIMATION, DISCO, PARTIES WATER PARK with various water attractions, able to attract fans of extreme water slides and couples with small children SHOPS, CAFES THEME PARK Unique amusements in the context of operating mining companies (for example virtual museum with panoramic view of pits with the effect of real presence; railroad that will cross the whole site) 2 3 AMUSEMENT PARK for all ages and income levels 10

Mutual beneficial partnership The fundamental principle of future partnership is obtaining mutual advantage from partnership PRIVATE INVESTOR Carrying out the business analysis and risks management.

12 Mutual beneficial partnership The fundamental principle of future partnership is obtaining mutual advantage from partnership PRIVATE INVESTOR Carrying out the business analysis and risks management. Expert knowledge and technologies. Investments in construction. Competence in business management of the sector. AL GOVERNMENT Providing the investor with all necessary information for optimal decision making. Providing land on concessional terms. Assistance in service lines providing. Providing effective assistance to the process of all necessary approvals for the project. Additional benefits under government authority. Benefits from successfully functioning business. Strong positioning of a company for further business expansion in Ukraine. Creation of advanced experience and image raising. Securing the image of a social-responsible company. INTERESTS Extra jobs creation. Providing population with unique services. Additional return to the budget at the expense of taxes. The youth s interest formation in the field of water sports. 11

13 Project s implementation schedule PRELIMINARILY. IN ORDER TO DISCUSS Comments Procedures Preparation and permits issuance for carrying out of construction and installation works Development and coordination of project and technical documents Construction of the main constructive elements Equipment and materials purchase Balancing and commissioning of the equipment Year 1 Year 2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Set in operation One of the key phase of the project implementation within the time limit is the agreement process before construction and installation works start. The municipal authorities secure the optimization both before construction and installation works and after coordination of separate elements of working documents with the relevant supervising bodies by means of: assigning curators for a project passing through the permitting system; organization of an effective system of monitoring of project co-ordination; providing effective assistance to the process of all necessary approvals for the project. 12

PJSC Inhulets Mining and Processing Plant (Inhulets GOK) PJSC Southern Mining and Processing Plant (Southern GOK) PJSC EVRAZ Sukha Balka PJSC Kryvyi Rih Iron Ore Plant

14 Annex. High industrial tourism potential (1/4) Kryvyi Rih contains more than 90% of all iron ore reserved in Ukraine. Kryvyi Rih is the unique city. Only on its territory 7 mining companies are operating: PJSC Northern Mining and Processing Plant (Northern GOK) PJSC Central Mining and Processing Plant (Central GOK) PJSC Inhulets Mining and Processing Plant (Inhulets GOK) PJSC Southern Mining and Processing Plant (Southern GOK) PJSC EVRAZ Sukha Balka PJSC Kryvyi Rih Iron Ore Plant (KZhRK) New Kryvyi Rih Plant (NKGOK) of PJSC ArcelorMittal Kryvyi Rih Central GOK s territory Flooded granite pit The photographs by Igor Kvochka 13

km Central GOK is the only enterprise in Ukraine, which uses both open and underground mining methods

15 Annex. High industrial tourism potential (2/4) Gleiuvatsky opencast mine depth 388 m, length 4,1 km, width 1,6 km Central GOK is the only enterprise in Ukraine, which uses both open and underground mining methods Southern GOK opencast mine depth 370 m, length 3 km, width 2,5 km Southern GOK today is the most promising mining enterprise in Ukraine The photographs by Igor Kvochka 14

400 meters. The height of the Eiffel Tower is 324 meters.

16 Annex. High industrial tourism potential (3/4) Pershotravnevyi opencast mine depth 400 m, length 3,1 km, width - 2,5 km Fact: The depth of the Pershotravnevyi opencast mine is 400 meters. The height of the Eiffel Tower is 324 meters. If you put a tower on the bottom of the Pershotravnevyi mine, even its tip will not be seen above the surface Annivskyi opencast mine depth 275 m, length 1,2 km, width 5,3 km Fact: There were taken m 3 of rock mass or dump-cars from the quarries of the Northern GOK by rail transport. So many trains can circle the Earth 16 times around the equator. The photographs by Igor Kvochka 15

17 Annex. High industrial tourism potential (4/4) Inhulets opencast mine depth m, length 3,0 km, width 2,5 km Fact: Inhulets GOK s pit is the deepest in the territory of Ukraine The photographs by Igor Kvochka 16

office 538 Tel +38 056 742 86 87 +38 056 742 86 21 Fax +38

18 Contact information Dnipropetrovsk Investment Agency (DIA) Address 49004, Ukraine, Dnіpropetrovsk, 2 Kirova prospect, office 538 Tel Fax Web info@dia.dp.ua Dnipropetrovsk 17

INDUSTRIAL TOURISM IN KRYVYI RIH (UKRAINE) - CONNECTION OF TIMES IN ONE PLACE

INDUSTRIAL TOURISM IN KRYVYI RIH (UKRAINE) - CONNECTION OF TIMES IN ONE PLACE Ph.D. in Geography, Associate Professor, Head of the Department VOLODYMYR KAZAKOV Ph.D. in Geography, Associate Professor VIKTORIIA