Despite the slower pace, the economy remained on track to grow during the first 6 months of 2019 with real GDP growth reported at 2.5% in Q1 2019 yoy, and the Ukrainian hryvnya remaining generally stable. As of July 2019, Oxford Economics projects real GDP growth at 2.7% in 2019, but also envisages a risk of a full-year growth dropping below this forecast due to slow export and investment growth prospects.
Low development activity combined with relatively strong occupier demand continues putting upward pressure on rents. Prime base office rent remained at around USD 30 per sq m per month in Q2 2019 and is unlikely to change until the year-end. Primary vacancy in the office property sector in Kyiv decreased to 6.2% in Q2 2019.
In H1 2019, new supply on the retail property market in Ukraine amounted to over 67,000 sq m GLA, comprised of the neighbourhood shopping centres ‘Smart Plaza Obolon’ and ‘Oasis’ in Kyiv, as well as the shopping and entertainment centre ‘Spartak City’ in Lviv and extension to the shopping centre ‘Gagarinn Plaza’ in Odesa. More shopping centres are scheduled for commissioning during H2 2019-2021 in Ukraine, including around 720,000 sq m in Kyiv, providing attractive opportunities for retailers to penetrate the market.
In H1 2019, new supply in the warehousing and logistics property sector in the Greater Kyiv area amounted to around 16,800 sq m. Due to continued low new supply combined with strengthening occupier demand, market-wide vacancy further decreased to 1.9% at the end of June 2019.
In H1 2019, total volume of secondary investment transactions in the commercial property market amounted to around USD 131 million, which is 23% lower than in H1 2018, but almost equals the annual figure in 2017 and well exceeds the annual figures reported in 2013-2016. Cushman & Wakefield anticipates that the investment dynamics will remain positive in 2019, if no economic shocks occur in Ukraine.