The average price for primary residential real estate in Kyiv increased by 16.2% over the six months and amounted to $1,705 per square meter, Corporate Communications Manager at City One Development Halyna Martynenko has told Interfax-Ukraine.
“The growth in prices in new buildings amounted to 9.3% in the second quarter, which is almost the same as Kyiv’s real estate gained for entire 2018, some 10%,” Martynenko said.
According to her, from 2014 to 2017, the average prices for square meters in Kyiv’s new buildings fell in price (by 24%, 12%, 5% and 3% per year, respectively), but in 2018 and 2019 there was an increase – by 10% and 22%.
“The coronavirus 2020 showed stability – a decrease by a symbolic 0.1%. It is highly likely that, in general, by late 2021, real estate will return growth rates at the level of 2019,” Martynenko said.
According to an analytical report by City One Development, the business class increased in price the most in Kyiv market – in the first half of 2021, the square meter rose in price by 22%, to $2,252. The most stable was the premium (elite) class – an increase of 9%, to $3,571 per square meter. The economy class has risen in price by 15%, to $978 per square meter, and the comfort class – by 17%, to $1,205 square meter.
In general, there are 186 objects in the primary market of Kyiv. More than 40% of them are positioned in the comfort class. The third is business class. Less than 10% – the premium, elite class.
“Once the most capacious segment of the economy occupies today only 15% of the market. It has shrunk over the year from 18% to 15% and continues to decline,” Martynenko said.
According to the analytical report by City One Development, in the second quarter of 2021, sales started in 11 new residential complexes, in total it is more than 4,000 apartments.
The economy class is represented by the only project, Navigator2 from DBK-Zhytlobud developer, for 1,350 apartments. The comfort class – four projects, together for 1,415 apartments, and the business class – five projects with a total of 908 apartments. The premium class is represented by one project for 86 apartments.
Activity of international and Ukrainian retailers has revived attention of developers to building retail real estate in all large cities of Ukraine, UTG consulting company (Kyiv) has told Interfax-Ukraine. “The decline in consumer confidence in Europe, the rapid development of online commerce, the high level of competition in the clothing and footwear segment, the growth of staff salaries led to a decrease in profit margins and a pile of inventory at the largest European retailers, forced them to look for new markets, stimulated exit and the opening of stores in markets of countries not previously covered,” Head of Strategic Consulting at UTG Kostiantyn Oliynyk said.
So, after many years of negotiations, the leading international retailers presented earlier in the country began to return to the national market of Ukraine: H&M, Decathlon, Koton, Defacto, Polo Ralph Lauren, Kilian, AllSaints, PennyBlack, Tru Trussardi, Laurel, XTI, Santoni, Jo Malone, Daniel Hechter and others.
According to him, by the end of 2019, at the various stages of implementation (construction, preparatory work, concept) in Kyiv and the nearest suburbs there are 44 projects with a total rental area of 1.46 million square meters, in Odesa – 15 projects with a total rental area of 419,400 square meters, in the Dnipro – more than 100,000 square meters, in Kharkiv – more than 124,000 square meters, in Lviv – more than 80,000 square meters.
At the same time, the purchasing power and potential of retail space is limited by the size of salaries (in Kyiv – UAH 16,249; in Odesa – UAH 9,473; in Kharkiv – UAH 9,453, in Lviv – UAH 9,729), the pace of their growth, and the size of consumer expenses (in Kyiv – 62.2% of total family income; in Odesa – 67.6%; in Kharkiv – 62.9%, in Lviv – 71.80%) and the growth of the cost of housing and utility services, maintenance/rental of housing, travel, transportation, communication, education, medicine, as well as the level of inflation and the exchange rate of the national currency.
In addition, the success and functioning of retail real estate is significantly influenced by the volume and structure of the existing supply. So, in Kyiv there are five regional, 27 district, 24 micro-district, 19 specialized and 32 separate hypermarkets with a total area of just over 1.6 million square meters. The current offer of Odesa is 449,100 square meters, Kharkiv – 503,400 square meters, and Lviv – 399,100 square meters.
At the same time, the retail real estate offer is constantly increasing. In 2019 alone, the Smart Plaza Obolon micro district shopping centers (GLA is 11,800 square meters) and the Oasis shopping center (GLA is 7,800 square meters) were opened in Kyiv, and the regional River Mall (GLA is 62,200 square meters) and Blockbuster Mall (GLA is 135,000 square meters), the Araks specialized center in Khodosivka (GLA is 10,000 square meters) and street retail located at 2, Kyrpy Street (GLA is 2,500 square meters).
In addition, on December 7, the Karavan Outlet updated shopping center (GLA is 45,300 square meters) was announced for opening after restyling and reconstruction.
“As a result, in the case of the implementation and commissioning of all declared large-scale projects in local markets, a surplus of retail space may occur, which will entail a redistribution of consumer flows between facilities, an increase in vacancy and a correction in rental rates downward, especially in obsolete facilities with serious conceptual flaws,” Oliynyk said.
In his opinion, the approach of saturation and changes in the market are already becoming noticeable, and some developers have begun comprehensive modernization, redevelopment, specialization, or restyling of their retail facilities. For example, such facilities as Karavan, Metrograd, Silver Breeze, InSilver, Lukianivka Kvadrat, Gorodok, Magellan, Marmalade, Dream Town and Sirius started the update. In addition, Oliynyk said that a number of owners of the malls plan large-scale changes in the near future.
The gross occupancy of logistics real estate in the Ukrainian market in January-June 2018 increased by 43% compared to the same period in 2017 and amounted to approximately 100,000 square meters, according to statistics given in the study of CBRE Ukraine international consulting company (Kyiv). According to the CBRE Ukraine survey, the share of occupancy of warehouses by large retailers was 58%, by light industry, pharmaceutical and medical companies some 26%. About 62% of rental transactions were associated with relocation or extension.
The share of large transactions (more than 10,000 square meters) was 23% and was represented by leasing 20,000 square meters by Comfy in the Raben warehouse complex near Kyiv, as well as 20,000 square meters by Eldorado with the move to RLC Fozzy Distribution Center.
According to CBRE Ukraine, the vacancy rate in the first half of 2018 decreased by 2 p.p. and amounted to 4%.
The declared rent rates in A class warehouses at the end of the first half of the year were in the range of $4.6-6 per square meter a month. Effective rental rates in A class warehouse complexes ranged from $3.4 to $5.2 per square meter a month, while in B class warehouse complexes they stood at the level of $2.5-3.4, where the upper limit has grown by 13% since the beginning of the year. As a result of fluctuations in the exchange rate, rates in U.S. dollars were unstable, while most of the deals were signed in hryvnia.
