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.
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Ukraine in January-May 2019 increased electricity exports by 2.3% (by 60 million kWh) compared to the same period in 2018, to 2.713 billion kWh, the Ministry of Energy and Coal Industry has told Interfax-Ukraine. Electricity supplies from the Burshtyn TPP Energy Island in the direction of Hungary, Slovakia and Romania increased by 9.6% (by 161.2 million kWh), to 1.847 billion kWh.
Electricity supplies to Poland decreased by 15.2% (by 99.9 million kWh), to 556.6 million kWh.
Electricity supplies to Moldova amounted to 309.5 million kWh, which is 0.4% (1.2 million kWh) less than in January-May 2018.
For the five months of 2018 and 2019, Ukrainian electricity was not exported to Belarus and Russia.
In addition, in the first five months of this year, Ukraine imported 11.8 million kWh of electricity from the Russian Federation and Belarus compared to 14.8 million kWh in January-May 2018.
Ukraine in 2018 expanded geography of export of goods and increased the number of companies, which were authorized to export food of animal origin, according to a report of the State Service for Food Safety and Consumers’ Protection. According to the report, in 2018, 85 new markets were opened for various types of products – these are the markets of Albania and Ghana (poultry and products made of it), Hong Kong (poultry and products made of it, eggs and egg products), Morocco (poultry and products made of it , egg products), Macedonia (dairy products, feed), UAE (live sheep and goats, young poultry, live poultry, hatching eggs), Tunisia (poultry meat), Montenegro (eggs and egg products), and other countries.
In addition, 306 Ukrainian enterprises, including 126 food producers (poultry, fish, honey, eggs, and dairy products) now are authorized to export its products to the countries of the European Union.
Ukraine in January-May of this year exported electricity worth $137.168 million, in particular in May for $27.837 million. According to the State Fiscal Service, Hungary received electricity worth $85.312 million, Poland for $32.575 million, Moldova for $15.629 million, other countries for $3.652 million.
Thus, in monetary terms exports of Ukrainian electricity in January-May 2018 increased by 25% compared to the same period in 2017 ($109.749 million). In addition, Ukraine for this period imported electricity for $658,000 (from the Russian Federation for $629,000, from Belarus for $28,000, and from Moldova for $1,000).
The markets of China, Ukraine, Argentina, South Africa and Turkey are the most vulnerable among all developing countries in terms of financing needs, reserve adequacy, asset valuation, institutional quality and trade resilience, according to a review by the analysts of the Institute of International Finance (IIF). Experts in May reevaluated the potential changes in investors’ interest in the assets of these countries amidst the strengthening of the U.S. dollar exchange rate, the growth of interest rates and the intensification of trade disputes.
The IIF considers the assets of Russia, the Czech Republic, Colombia, Brazil and the Philippines less exposed to such risks.
Turkey, Argentina, the Republic of South Africa, Ukraine and India have the highest need for financing, the IIF analysts believe.
The most notable improvement compared to the previous year, including that in terms of reducing needs for funding and increasing the attractiveness of assets, was demonstrated by Indonesia. In addition, the situation has improved in Malaysia, Chile, Egypt, and Brazil.
India’s position has worsened significantly, which is largely due to an increase in the deficit of the current account of its balance of payments. A comparative increase of risks is also observed in Turkey, Poland, and Ukraine.