Market construction of commercial real estate in Ukraine has frozen, evidence and reason
Market in Kyiv shopping centers for the 2nd quarter of 2016
To satisfy the demand of residents at commercial space is an important task for any city. Every year the number of shopping centers would be increase by offering customers more options for shopping and tenants more lucrative offers. In fact, commercial real estate, including shopping centers, virtually built. For example, in Kiev, since 2013, the volume of retail space fell, with 110 000 square meters (in 2013) decreased to 10 000 square meters.
What is the problem? For many developers, the main reason is the fall of investment attractiveness of the construction of shopping centers by a significant decline in rental rates. Investors began to lose interest in such projects the past two years, some of them froze, afraid to low profitability. They have no confidence in the success of the projects because of the war and the economic crisis in the country.
In addition, the overall decline in social standards and price increases makes people less likely to shop in malls, but attendance remains unchanged. Visitors to the mall smoothly shifted to entertainment and food areas. As a result, the cost of rent for retail space is often justified in the eyes of the tenants of premises. For Shopping center owners it is difficult to find permanent tenants.
Welcome to these latest market research shopping centers in Kyiv, which was carried out by JLL (NYSE: JLL).
Results of the study are:
1. For the second quarter of 2016 in the capital was opened only one new object – TC NewWey (16 000 sq.m suitable for rental space). He is the only new shopping center and on the results of six months.
New Wey
2. Since 2016 retail turnover in Kiev has demonstrated growth (for the first time since April 2014). Ukrainian retailers increase their presence in high-quality retail facilities.
3. The results of the second quarter 2016 level of vacant space in Kiev TC reached 5.6%, only 0.6% less than at the end of the first quarter of 2016 and 2.8% less than the figure for the same period in 2015.
4. In the second quarter of 2016 the maximum rental rate remained stable and amounted to 720 dollars. USA/sq.m per year /$60. USA/sq.\m per month.
The total amount of quality shopping centers
The total amount of quality shopping centers:
Photo by JLL (NYSE: JLL)
The volume of input malls:
Photo by JLL (NYSE: JLL)
Maximum rents / comparison with Europe:
Photo by JLL (NYSE: JLL)
Dynamics of retail trade and real wages of the population:
Photo by JLL (NYSE: JLL)
The share of vacant space:
Photo by JLL (NYSE: JLL)
The share of vacant space:
Photo by JLL (NYSE: JLL)
Availability of commercial centers in t. H. M by region:
Photo by JLL (NYSE: JLL)
As you can see from the results of the study, despite the fact that trade has increased in the capital, shopping centers are being built slower than estimated.
According to analysts expect recovery in the market is not necessary. Although, if the situation in the country stabilizes, it will increase interest in large commercial facilities, both foreign and domestic investors.