Ukraine’s booming real estate market has attracted one of the world’s largest commercial real estate firms in opening an office in the capital.
Ukraine’s booming real estate market has attracted one of the world’s largest commercial real estate services firms into
opening an office in Ukraine’s capital.
CB Richard Ellis Group, Inc. announced on Feb. 18 that it opened its Ukraine office in the Solomianskiy district of Kyiv on Jan. 22.
“The country is one of Eastern Europe’s fastest growing economies and the huge potential for expansion of its real estate market makes it attractive for CB Richard Ellis’ international clients,” the company said in a press release.
The arrival of CB Richard Ellis confirms Kyiv’s newfound status as a top emerging market for real estate development where the world’s biggest players compete, including Jones Lang LaSalle, DTZ, Cushman & Wakefield, and Colliers International.
The company will broker office, warehouse and land deals, focusing on the Kyiv market during the next two years, said Sergiy Sergiyenko, general director of CB Richard Ellis in Ukraine.
After two years, the company’s goal is to have at least an equal clientele base as its competitors in each market segment, he said.
The company may consider other regions if they demonstrate potential.
Sergiyenko declined to mention what local and international clients the firm is already serving in Kyiv.
CB Richard Ellis was already considering Kyiv after opening its Russia branch in 2006 by acquiring market leader Noble Gibbons in April 2006.
The company’s typical strategy is to enter a new market as a leader “and not start from scratch,” Sergiyenko said.
He explained that development of CB Richard Ellis on the European market is done through its affiliated structures.
Such companies enter into affiliation agreements with CB Richard Ellis and can use its brand, like Noble Gibbons did in Moscow.
Later CB Richard Ellis acquires the companies and directly enters a market through such an acquisition.
Ukraine was an exception, however.
“Since within a year, the company did not find a partner in Ukraine, it decided to enter the market and … start from scratch by entering into a legal partnership with two individuals who have experience on the local market,” Sergiyenko told the Post.
The office will be led by Sergiyenko, who served as managing director of Colliers International for five years and worked for Akron Group, and Radomyr Tsurkan, who worked for Colliers International and HCM Group, a Ukrainian property development company.
Volodymyr Tymochko, junior partner at Dragon Asset Management, said that the “coming of CB Richard Ellis to Ukraine is a good sign for market development since it shows that the quality of consulting services in this sphere is increasing.”
He added that a very important factor is the personnel employed by CB Richard Ellis in Ukraine.
Today, practically all major international players on this market are already present in Ukraine, Tymochko said, but “their scale of work will substantially grow in the future and market saturation of consulting services will be based on the growth of activity of its market players.”
The local market’s sharp growth will continue for the next several years, Sergiyenko said.
“Many businesses operating on the European market are actively entering the Ukrainian market,” he said.
“Such dynamics create significant pressure on a narrow market that offers few properties and land plots. As a result, prices continue to rise drastically,” he added.
Nevertheless, rent for warehouses did not grow in 2007, and Sergiyenko doesn’t expect much growth in 2008, since “the market is offering new premises very quickly and practically manages to satisfy the demand.”
Meanwhile, office rental has grown between 30 and 40 percent during the last two years, and retail space has also dramatically risen and will continue to do so because of limited demand.
CB Richard Ellis Group, an S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm based on its $6 billion revenue in 2007.
The company has more than 300 offices worldwide.
