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 half of 2013, general business dynamics in Ukraine remained suppressed with negative economic dynamics in thecountry for three quarters in a row.
Significant new office supply was delivered in 2011 – H1 2013 and more is scheduled for delivery in Kyiv during the remainder of 2013. Therefore, all other things being equal, DTZ expects market-wide rents to be subject to some further downward pressure in the short term. In the longer term, occupier demand dynamics should be adequate enough to sustain the current level of office rents in the Ukrainian capital.
Though the second quarter of 2013 did not bring any changes to the supply side of the retail property market in Kyiv, by the end of the year total modern stock in the city may increase by 15%. DTZ estimates that presently around 1,200,000 sq m (GLA) of new modern retail space is in active stage of planning or construction in Kyiv. If these properties were commissioned in accordance with the announced plans, by 2016 current retail stock in the Ukrainian capital may double, which will not only lead to strengthening competition in the sector, but also may create more opportunities for occupiers.
Low development activity in the warehouse and logistics property market in the Greater Kyiv area combined with relatively robust demand form preconditions for further decrease in vacancy and upward correction of rents for speculative space in the sector 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.
DTZ estimates total direct investment volume in Ukraine during the first half of 2013 at only around USD 18 million. Prime property yields in Kyiv remain at high levels compared to other European capitals, reflecting country risk.
Source : DTZ (Groupe UGL)