Business news from Ukraine

VOLUME OF CONSTRUCTION WORK IN UKRAINE 30% UP IN APRIL

The volume of construction work performed in Ukraine in April 2019 increased by 29.4% compared with April 2018, while the indicator in March 2019 compared with March 2018 rose by 29.7%.
The State Statistics Service said that the data are given excluding the occupied territory of Crimea and the temporarily uncontrolled territories in Donetsk and Luhansk regions.
According to the agency, the volume of construction work performed in April 2019 decreased by 4.1% compared with March 2019 (according to seasonally adjusted data by 3.2%), while in March 2019 it grew by 3% compared with February 2019.
According to the report, in April 2019 compared with April 2018 the volume of construction work decreased only in residential construction and in engineering – by 3.1% and 44.5% respectively.
Nonresidential construction in April 2019 rose by 41%.

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EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT RECOMMENDS TO POSTPONE WHOLESALE ELECTRICITY MARKET OPENING IN UKRAINE

The European Bank for Reconstruction and Development (EBRD) has recommended recommending the postponement of the wholesale electricity market opening in Ukraine, since the current state of groundwork for its implementation is not complete and the detailed regulatory and technical infrastructure required for a successful market is not yet in place.
According to a press release of the bank, on this basis, launching the new market on 1 July is likely to cause market malfunctioning and, therefore, be counterproductive to the interests of Ukrainian consumers and market participants.
“A postponement of the market opening should be, however, accompanied by a clear action plan of sequenced steps that would ensure its smooth introduction,” the bank said, adding that the EBRD is ready to offer all of its support in ensuring that this delay is as short as possible.
The EBRD said that the bank strongly endorse the introduction of a liberalized, competitive wholesale market in the power sector as the best route to deliver the highest possible efficiency in the generation of electricity.

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TWO SHOPPING CENTERS TO BE OPENED IN CHERNIVTSI

Average vacancy of shopping centers in Chernivtsi is growing, and in May it reached 11.2%. By the end of 2022, it is planned that total supply of retail space would expand by 47,500 square meters thanks to the opening of two new shopping and entertainment centers, UTG consulting company (Kyiv) has reported.
“In 2021-2022, the opening of the Maidan-2 shopping center (12, Independence Avenue, gross lettable area (GLA) is 38,500 square meters) and another shopping and entertainment center in Heroyiv Maidanu Street (GLA – 9,100 square meters) is planned. In general, most of the existing and leading shopping centers opened in 2004-2014 are now morally and physically outdated. Despite the high level of supply of retail space, the main urban shopping center has not yet appeared in Chernivtsi,” UTG analyst Oksana Gavrilevich told Interfax-Ukraine.
At the same time, according to UTG, the deadlines for opening the Riazan shopping center (56, Heroyiv Maidanu Street, GLA is 3,500 square meters), the Furshet shopping and entertainment center located at 11, Galytsky Shiakh Street (GLA – 18,900 square meters) are postponed for an unlimited period of time.
“By the beginning of May in Chernivtsi there is a surplus of retail premises in the amount of 2,800 0 square meters. In case of enhancing construction activity and timely commissioning of the declared facilities, the surplus will increase to 50,500 square meters, which will inevitably lead to overflow of visitors and tenants to more successful and modern shopping centers, an increase in vacancy and a review of rentals downwards, especially in morally and technically obsolete non-professional facilities,” Gavrilevich said.
According to UTG estimates, at the beginning of May 2019, five district, two residential district and nine specialized shopping centers and three detached supermarkets and a hypermarket were operating in Chernivtsi.
According to the ICSC classification, the total area of the city’s retail facilities is 122,900 square meters, which corresponds to 464.2 square meters per 1,000 inhabitants or 808.3 square meters per square km of total area of Chernivtsi.
The maximum rental rates are typical for shopping centers in the suburban districts of the city and are $11-26 per square meter a month. Minimum rental rates are fixed in the shopping center, remote from the city center or specialized ones and they are $8-12 per square meter a month, the expert said.

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JOINING CLEARSTREAM INTERNATIONAL DEPOSITARY BECOMES MAIN REFORM IN UKRAINE’S CAPITAL MARKET OVER FIVE YEARS

The accession of the Ukrainian market to the network of the Clearstream international depositary is a very important step for the infrastructure, ensuring long-term prospects for the capital market in Ukraine, and the National Bank (NBU) intends to further actively develop the market infrastructure, as it considers it to be its area of responsibility, Deputy Governor of the NBU Oleg Churiy has stated.
“[Joining Clearstream] is the most important reform in the capital market over the past five years. It will provide an opportunity to more actively attract funds from non-residents,” he told the Interfax-Ukraine news agency on the sidelines of the Sweden-Ukraine Business Forum held in Kyiv.
Commenting on the opinion that such a simplification of entry/exit of non-residents to the Ukrainian market threatens with the outflow of their funds, Churiy noted that “only one-third of the short-term money of non-residents [are invested in government domestic loan bonds] maturing this year, while two-thirds [are invested in those maturing] next year.”
The banker added that often non-residents invest these funds in new government bonds, therefore this does not mean that they will leave immediately after the bonds are redeemed.
At the same time, Churiy stressed it is necessary to do a lot more for the development of Ukraine’s capital market, and the National Bank intends to actively participate in this process.

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TEN-T INVESTMENT PLAN INCLUDES CONSTRUCTION PROJECTS IN EASTERN PARTNERSHIP COUNTRIES, INCLUDING 4,800 KM OF ROADS, RAILWAYS IN UKRAINE

Investment projects in the framework of Trans-European Transport Network TEN-T investment plan include construction projects in the Eastern Partnership countries, including 4,800 km of roads and railways, six ports and 11 logistic centers in Ukraine, the press service of Deputy Prime Minister for European and Euro-Atlantic Integration Ivanna Klympush-Tsintsadze has reported.
Klympush-Tsintsadze at a meeting with Director-General of the European Commission on Mobility and Transport Henrik Hololei said that projects implementation in the framework of Trans-European Transport Network TEN-T investment plan is among government priorities, which includes Eastern Partnership countries. All projects stated in the plan require nearly EUR 13 billion of investment.
“All projects stated in the plan require nearly 13 billion euros of investment. It is planned to build 4,800 kilometers of roads and railways, 6 ports and 11 logistics centers for these funds,” the mission said.
Klympush-Tsintsadze also said that Ukraine is also counting on EU support, as well as on the timely signing of the Common Aviation Area Agreement, which will give impetus to the development of Ukrainian aviation industry, as it will increase the number of flights and passenger traffic.

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