The share of vacant space in the office real estate segment in Kyiv at the end of 2018 was less 5%, and rental rates are growing, Head of the Capital Markets and Land Parcel Transactions Department of Cushman & Wakefield Volodymyr Mysak said at the Ukrainian Center of Steel Construction conference.
“In Ukraine, there is a very interesting comparison between supply and demand. Kyiv has the smallest number of square meters per 1,000 inhabitants in terms of office space among European cities. That is, there is a huge potential for increasing office space,” the expert said.
The company also believes that the investment attractiveness of office real estate is increasing. “If one has previously massively invested in residential real estate, now they are returning to office real estate. That is, many investors are returning to this,” Mysak said.
According to Cushman & Wakefield, by the end of 2018, the vacancy rate of commercial real estate in Kyiv amounted to 4.9%, the total offer was 649 square meters per 1,000 inhabitants. At the same time, rental rates averaged $29 per square meter a month.
According to Mysak, the vacancy rate is also very low in the warehouse real estate market – about 3%, which causes an increase in rental rates.
The expert said that the amount of investment in commercial real estate in 2018 was a record for 10 years.
“In 2018, there was a lot of investment in the economy of Ukraine, in particular in commercial real estate. We actually reached a 10-year peak – more than $300 million was invested in commercial real estate. This shifted the cycle from the point, and this means investors are confident that the market is moving in a positive direction.”
The average vacancy rate of retail space in Kyiv by the end of 2017 decreased by 6 percentage points, to 5% from 11%, in the best shopping centers remained in the range of 0-2%, according to a study by CBRE Ukraine international consulting company (Kyiv).
According to its data, it’s worth expecting an increase in the vacancy of retail space in 2018.
“The general trend towards a reduction in vacancy is largely dependent on the timely completion of the announced projects, including the two large shopping centers River Mall (58,700 sq m of gross leased area) and Retroville (80,700 sq m). Despite the likelihood of delays in commissioning, the average vacancy in the market will increase if all of the announced volume is put in operation on time,” CBRE Ukraine Managing Partner Radomyr Tsurkan said.
At the same time, according to the company, rent rates in 2017 rose by 10-25%.
“Rent rates in the best trade centers remained relatively stable in the range of $60-86 per sq m a month, in other shopping centers fluctuated within $32-45 per sq m a month by the end of 2017,” the study says.
According to the company’s forecasts, rent rates for premises in the most popular shopping centers of the capital in 2018 will continue to grow, while in others it will not change significantly.