Ukraine, H2 2020

Ukraine, H2 2020

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Real estate market overview, Ukraine, H2 2020

  • From the start of 2020 Ukraine’s economy slowed down with real GDP contracting for the first time since 2016 amid the COVID-19 outbreak and nationwide lockdown. Despite the COVID-19 quarantine measures, jump in unemployment and economic recession during the year, retail sales increased by 7.8% yoy during 11 months of 2020.

 

  • The worldwide slowdown due to COVID-19 affected occupier demand on the office property market in Kyiv during 2020. As a result, primary vacancy increased from 6.5% in December 2019 to 11.7% at the end of 2020, while prime office rents decreased by over 10% during the year.

 

  • The year 2020 turned to be particularly challenging for the retail property market globally and in Ukraine. Nevertheless, new supply in major cities of Ukraine in 2020 amounted to around 113,500 sq m GLA with more shopping centres scheduled for commissioning in 2021-2022 including over 420,000 sq m GLA in Kyiv. Also, several international retailers entered Ukraine, and a number of local operators demonstrated positive performance.

 

  • New supply in the warehousing and logistics property sector in the Greater Kyiv area exceeded 85,000 sq m in 2020, which is the largest annual new supply since 2014. After reaching record low level of 0.8% in 2019, vacancy slightly increased and remained at around 2-3% during 2020, while rents remained generally stable.

 

  • In 2020, total volume of secondary investment transactions on the commercial property market in Ukraine reached around USD 153 million, which accounted for only 41% and 47% of the figures in 2019 and 2018 respectively, but was on a par with 2017 and significantly exceeded the annual indicators reported during 2013-2016. Due to the lockdown and general uncertainty caused by COVID-19, since mid-March investment activity in Ukraine slowed down with a number of transactions put on hold.