commercial real estate of Ukraine

Commercial real estate of Ukraine: problems and market prospects

Commercial real estate in Ukraine is experiencing a shortage of supply. This is due to the entry of large foreign corporations on the market and demand from domestic companies. Experts analyzed this segment of the market and offered recommendations that will help to increase the attractiveness for investment.
Last year showed disappointing results. Compared to the previous period, the vacancy rate in shopping centers has decreased by 28% and is 3.8%. This is a record low figure, which is close to the values of 2013. In the segment of office real estate there is also a decrease in vacancy by 15% and is 6.5%.
These results, on the one hand, show the problems of the segment and, on the other hand, encourage developers to erect new buildings.
Commercial real estate in Ukraine is also interesting in terms of investment. Last year about $300 million was invested in the segment, and this figure is expected to grow in the next period. The aim of investors is to obtain stable income, but without active participation in asset management.

Now in Ukraine there are 649 square meters of office space per thousand people, which is quite modest compared to other major cities. For example, in Bucharest for the same number of people there are 15228 sq.m., in Berlin – 5228 sq.m., in Warsaw – 3130 sq.m. The emergence of many IT-companies leads to the demand for office space. Demand is growing and supply cannot fully satisfy it. This year it is planned to put into operation 50 thousand sqm, but this amount is not enough.
According to analysts’ forecasts, the demand in the segment of commercial real estate will increase for 2-3 more years. This will lead to an increase in the value of objects, and therefore now is the best time for investment.

State of retail real estate segment

Interest in commercial premises is also increasing. Last year was marked by the appearance of such giants as H&M, Zara, Livly, Polo Ralph Lauren, DeFacto and others on the domestic market. All of them need large areas in shopping centers of the capital. Last year 85 thousand sq.m. appeared, which are ready to be rented out. For the current and next year it is planned to open another 633 sq.m.
Vacancy rates of premises in SCs and SECs have significantly decreased, and the growing demand makes investors invest in the construction of new facilities.
Retail premises located in places with large crowds of people remain a profitable investment. The underground and crossings with their large passenger flow are in demand, which is guaranteed to bring income.