It’s nearly spring, and the first green shoots are starting to appear in Kyiv.
Not only that, some green shoots of economic recovery can be seen in the capital as well: Demand for commercial property is growing as Ukraine recovers from the political and economic upheaval of 2014 and 2015. New construction is under way, frozen projects are thawing out, and new buildings are sprouting up.
Nick Cotton, the managing director at Cushman & Wakefield in Ukraine, has figures that illustrate the recovery: In 2018, investment transaction in all sectors of commercial real estate increased by more than 130 percent, or by over $400 million, compared to 2017.
And the trend is expected to persist, he says.
Here is the Kyiv Post’s guide to the major commercial and retail projects under construction in Ukraine’s capital.
Commercial: Retail
Six new shopping malls were opened in Kyiv in 2018, adding 85,000 square meters to the 1.2 million square meters of already existing space. That was an 11-fold increase compared to 2017, according to report by real estate consultancy Colliers International.
Last year 12 new global retailers entered the Ukrainian market for the first time, boosting the national economy. Among them were H&M, DeFacto, Zara Home, All Saints and Tru Trussardi.
Driven by the high demand from incoming business, the plan for new space in 2019 is impressive — 300,000 square meters.
The following list shows some of the long-awaited new and largest developments for retailers scheduled for delivery in 2019.
Blockbuster Mall
Address: 34B Stepana Bandera Ave.
An extension of the Blockbuster entertainment center, the Blockbuster mall is scheduled to open in the first quarter of 2019. The mall will be joined to the existing center.
With more than 500 stores and 40 restaurants located on total area of 270,000 square meters, the mall is expected to be the largest in Ukraine.
The mall will include an 18,000-square-meter indoor amusement park and a giant, 10,200-square-meter Silpo supermarket, according to the Ukrainian Trade Guild.
Ocean Mall
Address: Druzhby Narodiv Street — Horkoho Street
Right next to famous Kyiv’s Ocean Plaza shopping mall, new Ocean Mall is scheduled to open by the fourth quarter of 2019, offering additional 84,000 square meters of space for retailers, according to Cushman & Wakefield.
Ukraine’s first, long-awaited store of Swedish retailer IKEA will occupy space on the below-ground level, while shops and galleries will be located on the first to third levels.
The fourth level will have an entertainment zone with IMAX and 4DX cinemas, as well as a giant digital entertainment park.
Retroville
Address: 47 Pravdy Avenue
Located in one of the capital’s most densely populated neighborhoods, Vynohradar, the two-level Retroville multifunctional complex with 77,040 square meters of leasable area is expected to open in the third quarter of 2019.
Besides 250 stores, the mall will have a 10,250-square-meter Novus supermarket, a sports complex with three pools, and an ice rink with a figure skating school.
Around the ice arena, which will be equipped with all of the necessary infrastructure for professional athletes, will be a food court, according to real estate website Commercial Property.
On the second floor, the mall will have an entertainment zone with a nine-hall Multiplex cinema.
Commercial: Office centers
Eight new business centers were opened in 2018, including the A-class Astarta center with nine to 11 floors, and the Unit.City innovation park.
Altogether around 50,000 square meters was added in 2018 to the 1.88 million square meters of total space in the Ukrainian capital’s office real estate market, according to Colliers International.
Demand for office space in Kyiv increased in 2018, while at the same time there was low development activity. The upward pressure on rents intensified as vacancies dropped to 4.9 percent in December 2018, the lowest level since 2009.
Increasing developer activity and growth in the number of sales of business centers were the two main trends seen by experts in 2018.
Stable demand for office space was generated by upcoming business projects, together with a further decrease in the vacancy rate, which reached its lowest value for a decade in December 2018, at 4.9 percent, according to a report by Cushman & Wakefield.
New supply on the office property market in Kyiv amounted to around 26,400 square meters in the second quarter of 2018, while the total new annual supply reached approximately 50,700 square meters in 2018. Significant projects last year included three business centers: the Europassage, the continuation of ASTARTA, and the center at 101 Volodymyrska Street.
This led to a record per square meter rental price for the past four years of $32.
“Many developers now see clear prospects that future projects can be profitable,” said Oleksander Nosachenko, managing director at Colliers International.
However, experts forecast no significant market growth before 2021, as in previous periods growth was very low.
As of December 2018, around 90,000 square meters of gross leasable ares of new office space was under construction in Kyiv and scheduled for completion in 2019, while approximately 138,000 square meters may potentially be delivered during 2020. The current lack of affortable credit remains a major obstacle to a significant increase in office supply, say real estate analysts Cushman & Wakefield.
Here are business centers expecting to be commissioned this year in Kyiv.
Wave Tower
Address: 9V Stepana Bandera Ave.
Wave Tower is expected to offer 22,000 square meters of a leased area after it’s delivery in 2019, according to Colliers International. It is located in an outlying district of Kyiv on the right bank of the River Dnipro, between Dorohozhychi and Obolon metro stations, near the Freedom Hall theatre and concert complex.
Unit.City, Phase 4
Address: Dorohozhytska, 3
A city within the city on a territory of 25 hectares, Ukraine’s the first innovation park opened its second and third phases of around 16,300 square meters in area in 2018, according to Colliers International.
But this is not the final stage of the project: already with ten R&D laboratories, Unit.City is expected to deliver another 9,520 square meters — mainly space for startups, companies, students, professionals and more research laboratories, according to Cushman & Wakefield.
According to JLL, upscale hotel occupancies did not change in 2018 compared with the previous year, while midscale occupancy saw a slight increase.
Business Center at 98 Velyka Vasylkivska Street
This new A-class business center, developed by Dragon Capital, an investment firm, will add another 9,200 square meters of space to Kyiv’s office commercial property stock in 2019, according to Cushman & Wakefield.
Located in Kyiv’s central Pechersky district, the as-yet-unnamed business center next to the Toronto Business Center is under construction across the road from the Roman Catholic Church of Saint Nicholas, between the Olimpiyska and Palats Sportu metro stations.
Dragon Capital, together with the Goldman Sachs Group, also controls Horizon Park, one of Kyiv’s largest office centers with a total area of 68,800 square meters.
Kyiv’s office property space has been steadily increasing since 2016. The third quarter of 2018 provided most of the new supply of office space while the forth quarter didn’t add any space at all and showed the lowestvacancy rate since 2009. Prime rents have significantly increased since 2016 as well, reaching $22 to $29 per square meter monthly, according to Cushman & Wakefield.
