A top international developer sold Ukraine’s first and biggest logistics park, revealing increasing demand in the domestic commercial real estate market.
A top international real estate developer sold Ukraine’s first and biggest logistics park, revealing increasing demand in Kyiv’s commercial real estate, particularly office and warehouse space.
Austrianbased GLD Invest Group, which finished the last stage of construction of East Gate Logistic in October 2007, sold its investment for $51 million to AKRON Group, an Austrian real estate investment firm with operations throughout Europe. The deal was signed at the end of January.
The deal is the first of its kind to be conducted in Ukraine.
“The demand for commercial real estate projects built according to Western specifications has shown us that our decision to develop in Ukraine was right,” said Clemens Lehr, managing director of GLD Invest Ukraine.
“GLD is one of the first international developers to venture into this market and our success proves us right,” added Lehr.
Ukraine’s retail boom in recent years has driven the demand for convenient warehouse and office space. The press service of AKRON Group said that in Ukraine “the demand for firstrate logistics space will continue undiminished for a long time to come as consumer spending increases substantially.”
Nick Cotton, managing director at DTZ Ukraine, said that according to research conducted by the company, “in 2007 around 160,700 square meters of logistics warehouse space was delivered to the Kyiv and regional markets and the total stock increased to about 320,000 square meters.”
East Gate Logistic is five kilometers away from Boryspil International Airport and has nearly 50,000 square meters of total space. The park has almost 40,000 square meters of warehouse space and more than 4,500 square meters of office space. The storage facility has climate control.
The facility includes parking places for passenger cars and trucks, 24hour security and is ideal for companies seeking modern warehouse facilities to store and manage their stock.
The park’s construction began last year and was in operation by early 2008, achieving a 100 percent occupancy rate, signing leases with three international companies: FIEGE, a subsidiary of a German logistics service provider; Spot, a company owned by Sportmaster, Russia’s largest sporting goods retailer; and GroupeAtlantic, a French heating appliances manufacturer.
GLD is currently developing a second logistics park, West Gate Logistic, whose first unit with warehouse and office space has already been completed and leased to Mary Kay, one of the world’s largest cosmetic companies.
The second unit will be completed later this year.
West Gate Logistic will be nearly twice East Gate’s size at 94,000 square meters. The complex is one kilometer from Kyiv’s border on the KyivZhytomyr highway.
Arkadiy Vershebeniuk, director of the industrial property department at Colliers International Ukraine, said the purchase of East Gate Logistic by AKRON Group “is an indication that international investors view the warehouse property market as promising and interesting,” adding that the deal is also a good sign that international developers can adapt and be successful in the local market, despite its peculiarities. He added that the Ukrainian FIM Group is a pioneer in the logistics market. In 2006, the company built the thenlargest warehouse in Chaika, a village located several kilometers away from Kyiv.
More international developers are expected to launch logistics parks during the next two years, market analysts said.
Currently the company is developing two more projects near Odesa and Zaporizhia. Construction of Odesa Logistics Park started this month and the company will start the Zaporizhia project later this year.
The Viennabased company specializes in planning, constructing, leasing, and selling logistics and business parks in Central and Eastern Europe.
