The introduction of quarantine measures to combat the spread of COVID-19 dealt a significant blow to the retail real estate market in Kyiv, as in the first month of quarantine it suffered significant financial and reputation losses, loss of human capital and competitive advantages. “The Kyiv retail real estate market in the first month of quarantine suffered losses of about $50 million,” NAI Ukraine consulting company told the Interfax-Ukraine agency.
The head of the Cushman & Wakefield Ukraine retail property department, Yekateryna Vesna, noted several categories of losses for owners of shopping centers: monetary, reputational, human capital and competitive advantages.
The financial ones include loss of rental income from stores that cannot work, income from the commercialization of common areas and sale of advertising space, a decrease in turnover in stores that are allowed to operate, which leads to a decrease or absence of rental payments from sales.
In addition, according to Vesna, costs for protection and disinfection grew.
“Shopping centers now predict an increase in vacancy. The less popular the facility is, the higher the share of free space will be at the end of quarantine,” the expert predicts.
The owners of the trade malls also suffer loss of human capital, as they had to cut employees or send them on vacation at their own expense. Not all workers will be able to return after trade centers resume their work.
JSC Bogdan Motors automobile company, combining the production assets of Bogdan Corporation, in January-March 2020 received a net loss of UAH 610.3 million, while in the first quarter of 2019 its net profit was UAH 161.61 million.
According to the interim report of the company, its net income for this period decreased by 39%, to UAH 13 million.
According to the report, the company received almost UAH 13 million of gross profit (against UAH 21.2 million a year earlier), and the loss from operating activities exceeded UAH 598 million against a profit of UAH 174.24 million for January-March 2019.
By April 1 of this year, the company’s liabilities exceeded UAH 6 billion, in particular a short-term bank loan of UAH 4.5 billion.
Bogdan Motors combines the production assets of one of the leading Ukrainian automakers, Bogdan Corporation (a bus and trolleybus plant in Lutsk and a car factory in Cherkasy).
The company, according to preliminary data, in 2019 posted a net profit of UAH 273 million, which is 10.6 times more than a year earlier, sales revenue almost doubled to UAH 1.255 billion.
The Cabinet of Ministers of Ukraine plans to expand the Big Construction program for building bridges, Ukrainian Prime Minister Denys Shmyhal has said. “We plan to expand the program to building bridges,” he wrote in his Telegram channel.
The government intends to invest UAH 100 billion only in road construction this year, which would create at least 170,000 jobs, he said.
In addition, schools, kindergartens and stadiums are a priority for the Cabinet of Ministers. At the same time, work on such facilities should be completed before the start of the next school year.
The Big Construction program also includes the reconstruction of more than 200 reception departments in supporting medical facilities.
“A third of all funds from the program should be sent to the regions in May,” Shmyhal said.
The grain harvest in 2020 may reach about 72 million tonnes (75.1 million tonnes in 2019), about 51 million tonnes from this volume can be exported, UkrAgroConsult analytical agency said.
“Despite draughts in March and April, in case of May rainfall, the wheat harvest’s level will be high enough, about 26 million tonnes (28.3 million tonnes in 2019). At the same time, its yield is forecast to be 5% lower than the trend value and 5% lower than last year,” UkrAgroConsult said on its website.
According to leading expert on the grain market Yelyzaveta Malyshko, with such harvest, Ukraine may well export 17 million tonnes of wheat.
According to preliminary forecasts, the corn harvest may reach 36 million tonnes in 2020 (35.9 million tonnes in 2019), and barley of 8 million tonnes (8.9 million tonnes).
PrJSC Donbasenergo, an electricity generating company, in January-March 2020 saw UAH 58.03 million in net profit, which is 26.4 times more than a year ago (UAH 2.198 million).
According to a company report in the information disclosure system of the National Securities and Stock Market Commission, its net revenue over the period grew by 1.3%, to UAH 1.587 billion, while gross profit fell by 17.35, to UAH 164.276 million.
As reported, Donbasenergo in 2019 saw UAH 68.997 million of net loss compared with UAH 104.111 million of net profit in 2018.
Sales of business and premium class apartments on the Kyiv’s primary market fell by 65-75% amid lockdown in March 2020 year-over-year, reaching 116 apartments, and in April the sales almost stopped, Kiev Standart has said in a survey.
“The situation with the pandemic and the introduction of lockdown directly affected sales, reducing the figure by 65-75%. According to our estimates, only 116 apartments were sold in March 2020, and this was largely due to the achievements of previous periods, and sales in April almost stopped,” the company said in the survey.
The company explained the decline in sales by lockdown restrictions, customer reactions and a shift in the demand vector towards finished facilities or facilities in the final stages of construction, with more than half of the projects at an early stage.
“We should not forget that some of the customers in the high price segment were foreign citizens. For such an investor, the main barrier is the closure of borders, which also makes it impossible to complete the transaction,” the company said.
At the same time, in January-February 2020, the company recorded a doubled sales rate compared to the same period in 2019, totaling 624 apartments.
The total supply on the market of elite new buildings as of April 1, 2020 was 515,000 square meters or 6,100 business class apartments, 72,000 square meters or 504 premium class apartments. In the first quarter of 2020, sales were opened at IFC Intergal City, phases two of UNIT.Home and Greenville Park, Delrey residential complexes.
The average minimum cost in U.S. dollars in the business segment in April decreased 5% compared with the beginning of the year, to $1,700 per sq. m., while in the premium segment, the price increased 4% and amounted to $3,100 per sq. m.
Kiev Standart experts believe that pent-up demand will positively influence the sales after lockdown, but the demand structure will change as the popularity of suburban formats increases.
