Ukraine’s Alfa Development Group is completing the construction of new warehouse real estate projects with a total area of about 244 thousand square meters, with commissioning scheduled for 2023-2024, said Maxim Onufrienko, CEO of the group.
According to him, the construction of the second and third phases of the Oleksandrivskyi logistics center (Chubynske village) with a total area of 115.2 thousand square meters is being completed in Kyiv region. Completion of the second stage (12.6 thousand square meters) is scheduled for October 2023, and the third stage (40.7 thousand square meters) – in March 2024.
“This is a multi-mode warehouse complex, which means that there is both freezing, refrigerators, and dry storage. I must say that we have already leased 50% of the second stage, scheduled for commissioning in October 2023, and signed contracts with customers. This confirms the growing demand for warehouse real estate in Kyiv,” Onufrienko said at RAU Expo 2023 in Kyiv on Tuesday.
Other projects in the Kyiv region, he said, include the Dudarkiv warehouse center with a total area of 45.5 thousand square meters, scheduled for commissioning in January 2024. About half of the first phase’s area (23.1 thousand square meters) has already been leased.
In addition, the construction of a logistics complex with a total area of 159.6 thousand square meters is underway in Chaiky village. The completion date for the first (19.5 thousand sq. m) and third (27.2 thousand sq. m) phases is March 2024, and the second phase (23 thousand sq. m) is May 2024. After that, the project envisages the implementation of two more stages.
In Dnipro region, Alfa Development Group is building two projects: the Shynnyi Industrial Park (Dnipro) and the Peredovyi warehouse center (51.3 thousand square meters, Chumakivska village council).
“Shynnyi is the first industrial park in Dnipro. We started it in early 2022, before the war. We negotiated with Ukrposhta, but this is still a thing of the past. So now we are building an industrial park. The construction plans for January 2024 include 130 thousand square meters, of which 34% have already been signed with a major client,” said Onufrienko.
In addition, a warehouse complex in Kropyvnytskyi with a total area of 14.2 thousand square meters is planned to be commissioned in October 2023.
The group also has a facility in Odesa, Odesa Logistic Park, which was damaged during Russian shelling.
“In Odesa, we have two warehouse complexes, one dry warehouse with a total area of 38 thousand square meters and a cold logistics facility with 27 thousand square meters. We had an arrival in Odesa, after which we have half of the dry warehouse left, which we are reconstructing. In September, we will complete 14 thousand square meters, which is almost half. We restored the refrigerators back in May,” said the CEO.
Next year’s plans also include the construction of a new logistics complex in Lviv with an area of 50 thousand square meters. Onufrienko told Interfax-Ukraine that the warehouse will be put into operation in 2024.
The expert noted that all of the company’s facilities are equipped with generators in case of power outages in the face of Russian aggression. In addition, shelters are being built at the facilities and new fire safety systems are being installed.
Alfa Development Group was founded in 2005. It holds one of the leading positions in the warehouse real estate market of Ukraine. Its portfolio includes 16 completed facilities with a total area of over 326 thousand square meters.
The Belgian company Granex-Cherkasy LLC (Dengi village, Cherkasy region) is completing the construction of a grain drying complex with a capacity of up to 600 tons per day, according to the project developer ProjectLine.
“The customer set the task to make the most compact layout possible, so ProjectLine specialists placed the complex on a plot measuring only 19×23 m,” the designers noted.
According to the report, the farm plans to build an elevator for 15 thousand tons of simultaneous storage, a grain final cleaning department, and a loading unit for vehicles.
Granex-Cherkasy LLC was established in 2002. The company specializes in growing grains, oilseeds, potatoes and onions under irrigation, with 450 hectares of the total land bank of 3.5 thousand hectares under cultivation. The company has a floor potato storage facility with a capacity of 6 thousand tons and a vegetable storage facility for onions with a capacity of 2 thousand tons. The main beneficiary of the company is a Belgian citizen Tom van Goy, and the manager is a Belgian citizen Wim de Schutter.
EUR60 mln will be invested in the construction of the Monsanto plant in Pochuiki village (Popelnyansky district, Zhytomyr region) by Bayer to produce corn seeds, said the head of Zhytomyr regional military administration Vitaliy Bunechko.
“Today together with the director of “Monsanto-seeds” LLC Vladimir Onishchenko laid a symbolic “time capsule” at the site of construction of new capacities of this enterprise. More than EUR60 million of additional investments during the war is the best evidence not only of international support for Ukraine, but also of the fact that large investors believe in our victory,” he wrote in Telegram.
Bunechko emphasized that Monsanto Seeds is already one of the largest seed plants in Eastern Europe. It provides corn hybrids not only to Ukrainian farmers, but also to agrarians in Romania, Hungary and France. After the construction of additional capacity, its potential will increase even more.
“Expansion of production is simultaneously the creation of new jobs in Zhytomyr region, increase of tax revenues to the budget, as well as foreign currency earnings, which is very important for the Ukrainian economy in war conditions,” he said.
At the same time, the head of Zhytomyr OVA noted the responsible position of Bayer, which in 2022, two months after the start of the full-scale invasion to support farmers who were sowing in super difficult conditions, gave them free of charge 140 tons of corn seeds of Monsanto selection.
The investment will reportedly be used to build a new seed dryer, purchase modern farming equipment, build storage facilities and two bomb shelters for employees. The plant employs about 100 full-time employees and 250 to 300 seasonal workers. The plant is one of the largest in the region.
Bayer is a multinational company that operates in the fields of medicine and agriculture. The company is headquartered in Leverkusen, Germany. In 2022, Bayer Group employed about 101 thousand people and its sales amounted to EUR50.7 bln.
The company has been operating in Ukraine since 1992 and is represented by the pharmaceutical division, OTC department, as well as the agricultural division. The total number of employees is 700.
The construction of the Vinnytsia Industrial Park (Volia Agri-Food Park Vinnytsia) has started, said Andriy Ocheretyanyi, deputy mayor of Vinnytsia.
“Preparatory work is already underway. Over time, the agri-food park will have a modern business center for residents, a logistics center and a Light Industry Box to accommodate the production of small food enterprises,” he wrote on Facebook.
A total area of 35.7 hectares has been allocated for the construction of Volia Agri-Food Park Vinnytsia. The expected amount of investment is about UAH 3 billion. The project organizers plan to employ about 2000 people.
According to the press service of the Vinnytsia Regional State Administration, the first stage of construction of the agri-food park involves the development of utilities, roads, and landscaping in the park, the construction of a business center for residents, a Light Industry Box to accommodate the production of small food companies, and a logistics center.
According to the project administration, the infrastructure and service capabilities of Volia Agri-Food Park Vinnytsia can attract residents from the entire product creation chain – from research and innovation, recipe development and new product creation to mass production, as well as warehouse and transport logistics, product certification, sales organization and export potential development.
“Volia Agri-Food Park Vinnytsia will provide international and Ukrainian food companies with ready-made solutions for business relocation and scaling,” the press service quoted Borys Shestopalov, founder and investor of Volia Agri-Food Park Vinnytsia, as saying.
According to the businessman, who is also a co-owner of food tech companies HD Gtroup and GFS, the infrastructure is expected to meet the latest requirements in the field of high technology, energy efficiency and ecology to reduce operating costs and increase the profitability of food companies.
On average, 75% of residential complexes in Ukraine have resumed construction works, while 82% have resumed sales, according to statistics from LUN portal.
According to the research presented at the conference “Analytics of the Ukrainian Real Estate Market: First Half of 2023”, more and more developers are resuming construction. As of today, 75% of residential complexes have resumed work on construction sites, while at the end of last year this figure was 69%.
The leaders in the resumption of construction work are the western and central regions of Ukraine, where the number of active construction sites is 88-96%. At the same time, 62% of residential complexes in Kyiv resumed construction, and 68% in the region. Kharkiv (19%), Mykolaiv (35%), and Zaporizhzhia (32%) regions show low rates of construction resumption.
According to LUN, as of July 25, 82% of new buildings out of 1,772 projects that were sold before the full-scale invasion began were sold. This figure corresponds to the data from June and is the highest since February 24, 2022.
Sales are most active in the western regions of Ukraine: 98% of residential complexes are sold in Zakarpattia region, 97% in Ivano-Frankivsk region, and 94% in Lviv region. Cherkasy, Kirovohrad, Zhytomyr, and Vinnytsia regions also have high rates (over 90% of open sales). In Kyiv and the region, the figure is 79% and 80%, respectively.
The lowest number of residential complexes for sale is in Mykolaiv region (67%), Zaporizhzhia region (40%) and Kharkiv region (19%).
At the same time, some developers completed sales during the full-scale war. According to LUN, 218 residential complexes were sold in Ukraine, most of them in Lviv region (46), Kyiv and Kyiv region (20 and 25 respectively), as well as in Odesa (23), Ivano-Frankivsk (20) and Zakarpattia (14) regions.
In the first half of 2023 concluded lease deals for 69 thousand square meters of offices in Kiev, which is 51% more than the same period of 2022, follows from the research of CBRE.
“These are not the volumes we saw before the war. But tenants have increased their activity in the market on the background of attractive discounts and the opportunity to improve the quality of their offices,” said Anastasia Kachan, Senior Office Real Estate Consultant at CBRE, at the conference “Ukrainian Real Estate Market Analytics: first half of 2023”.
According to her, most of the tenant categories have reduced activity in 2022-2023. – FMCG, business services, wholesale, medicine. At the same time, there is an increase in inquiries from public sector companies and non-government public organizations. Before the war, these tenants gave up to 5% of lease transactions, now they have almost 30%. As for the IT sector, it managed to keep its leading positions, last year its share decreased from 45% to 32%, now it is about 47%.
New supply is insignificant: in the first half of the year the office real estate market was replenished with only 13 thousand square meters, which is 86% less than the volume of new supply in the first half of 2022.
“Now only the objects started before the war are being completed, and this situation is likely to last for quite a long time, given the vacancy rate,” Kachan said.
As of the end of Q1 2023, 26.4% (+0.4% vs. the beginning of 2023) are vacant. At the same time vacancy in Class B office centers decreased from 29.2% to 28%, in Class A increased from 22.3% to 24%.
The expert explained the growth of vacancy in class A primarily by a significant amount of new supply of class A at the end of last year.
The effective prime rate has stabilized at $21/sq. m/month.
As for the timing of contracts, Kachan noted the willingness of businesses to plan for the medium term in a war-torn environment.
“Last year, contracts were more often renegotiated for three to six months with the expectation that the war would end soon. In 2023, the terms are fixed “until the end of wartime,” where the “war rate” is prescribed and there is an agreement that after the war it will be revised to reflect market conditions,” Kachan said.
In the spring, CBRE conducted a survey of companies’ plans for their offices. Most of them, 56%, intend to keep the volumes, some are negotiating more favorable lease terms, some are doing nothing. 13% reported that they will partially reduce the office, 12% are considering moving to a co-working space, 12% are closing/canceling the office, 4% are thinking about sub-tenants, 3% want to move to a cheaper office.
At the same time, actual office attendance ranges from 15-20% to 50+%, depending on the business model.
Factors in choosing a new office remain unchanged. Top requirements: equipped bomb shelter, distance from critical infrastructure, energy autonomy.
“Given the uncertainty of energy supply during the 2023 heating season, we anticipate an increase in fall/winter attendance,” Kachan reported.
Headquartered in Los Angeles, CA, CBRE is the world’s largest commercial real estate advisory and investment company, with revenues of $30.8 billion in 2022, according to Fortune, a Fortune 500 list of the world’s largest companies.
Shares of CBRE Group Inc. are traded on the New York Stock Exchange.
CBRE’s Ukrainian office was opened in January 2008 and is part of the company’s affiliated network.
