Despite generally positive dynamics in 2011, Ukraine’s economic growth slowed down and deteriorated in 2012, however a relatively stable national currency and low inflation enhanced domestic consumption in the country. During the first quarter of 2013, general business dynamics in Ukraine remained suppressed.
Around 27,200 sq m (GLA) of offices were delivered in Kyiv in the first quarter of 2013. However, during the remainder of the year new office supply in the city may amount to around 250,000 sq m (GLA), representing an increase of over 17% on the existing stock and putting further downward pressure on effective rents in the sector. Increased availability of office space and lack of unified pricing strategy, undertaken by landlords operating on the market in Kyiv, provides opportunities for office occupiers to optimise their rental position.
Since the onset of the financial crisis in Ukraine in late 2008, total modern retail stock in Kyiv increased by over 82%. More projects are in delivery pipeline both in Kyiv and across Ukraine, which, if delivered to current schedules, will lead to a considerable increase in retail stock in the country by the end of 2015. As a result, the Ukrainian market will offer more opportunities for retail chain expansion, but localised retail rents will be subject to downward pressure, particularly in poorly conceived first generation retail schemes in light of the strengthening competition within the sector.
Robust demand combined with low volumes of pipeline speculative stock in the warehousing and logistics property market in the Greater Kyiv area form preconditions for further increase in occupancy and rents in the short to medium term. Nevertheless, the price elasticity of warehouse supply is higher compared to other sectors of the commercial property market in Ukraine, and new logistics delivery could recommence relatively quickly.
Whilst the amount of M&A volume within real estate sector in the first quarter of 2013 was significant, DTZ estimates total direct investment volume in Ukraine during the period at only around USD 4 million. Prime property yields in Ukraine remain at high levels compared to other European capitals, showing increases during the last six months of 2012 and stabilising in January-March 2013.
Source : DTZ (Groupe UGL)