ukraine and regions retail real estate market overview| results of the 1 st half of 2015 kiev retail...

Ukraine and regions retail real estate market overview| Results of the 1st half of 2015

Kiev retail real estate market overviewResults of the 1st half of 2015


Kiev retail real estate market overview .……………...……..8

Socio-economic development of Ukraine……………….……3

Market supply …………….………………………………..……….9

Vacancy rate/ attendance in shopping centers…………….14

Rental rates dynamics …………………………………..………15

Demand analysis……….…………..…………..…….…………..16

Tendencies and forecasts …………………………..….………18

2


Socio-economic development of Ukraine

3



4

Real GDP (1st quarter of 2015)* -19,3%

Inflation** +40%

Retail turnover* -24,6%

Export * -35,60%

Import* -37,10%

Industry* -21,8%

Agricultural sector -5,40%

National debt** +22,2%

Real estate development * -31,2%

Commissioning of residential properties* -19,2%

Average wages** +1%

Direct investments -23,1%

*according to index of the similar period in 2014

**according to index of December 2014


Real GDP (I Q 2015) - 19,3% Inflation + 40% Retail turnover 24,7%

GDP dynamics, bill.hrnGross Domestic Product

According to the results of the 1st quarter of 2015 the nominal GDP in Ukraine is 367, 577 bill. hrn., that is 54 bill. hrn. or 15% more than in the similar period of the last year (313, 568 bill. hrn.). Real GDP displays the 19,3% fall, that in money equivalent accounts 296, 712 bill. hrn.

Consumer price index

Inflation index in Ukraine was 102,2% in May 2015. As a result of hryvnya devaluation and consequently increase in price of imported products, inflation has become 140,1%.

Retail turnover

Retail turnover for 5 months of the year 2015 is 385,2 bill. hrn., that is 11 % more than in the similar period of the last year. Such a positive dynamics was gained due to national currency devaluation and price increase of food products. But if to compare the retail turnover in 2015 of compared prices in 2014, it is 75,3% volume of January-May 2014, that is 24,7% less. Retail turnover in Ukraine decreased in 15% as a result of 2014, whereas the similar period in 2013 showed the decrease in 2%. Decrease in trade started in May, 2013.The most vivid decrease in retail turnover as compared to the similar period in 2014 was fixed in Lugansk (87%) and Donetsk regions (68%).Absolute leaders of retail turnover volume index remain Kiev (14,591 bill. hrn, Kiev - 45, 065 bill. hrn), Dnepropetrovsk (27,657 bill. hrn), Kharkov (26,6 29 bill. hrn) and Odessa (20,615 bill. hrn) regions. 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

1 0421 351

1 8061 906

2 239

2 6333 026

3 619

4 012 3998

12%17%

22%

12%9%

5% 0%1%

25%

40%

25%29%

19%

-17%

8%

15%

16%

-2%

-15%

-25%

Average wages Consumer prices index Retail turnover dynamics

Consumer market of Ukraine

2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

200

400

600

800

1000

1200

1400

1600

1800

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

544720

948 9131 079

1 300

1 404 1 4491 566

367.577

7%8%

2%

-15%

4% 6%

0% 0%

-13%

15%

Nominal GDP, bill. hrn. Real GDP, %


5


Export -35,6% Import -37,1% Volume of residential properties commissioning -19,3%

International economic activity

Current state of the country has significantly influenced its foreign economic situation.As of April, a 35,6% decrease in products export and 37,1% decrease in import is observed in comparison with the similar period in 2014. As a result of a significant decrease in import, positive surplus in the amount of 59, 7555 mln. dollars is fixed in the country.Dominant position in the structure of the international economic activity take in the following countries: Russia remains the leader (export-11,8%,import–16,2%), China (7,4%, 10,9%), Turkey (7,3%, 2,2%), Italy (5,4%, 2,3%), Poland (5%, 5,5%), India (3,7%, 1,3%), Germany (3,4%, 11,3%), Spain (2,8%, 1,3%).

Ukrainian international economic activity

2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

2000

4000

6000

8000

10000

12000

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

8,628

10,244 10,496

6,400

9,339 9,410

10,75011,217

9,741

1,620

10.40%

18.70%

2.50%

-39.80%

45.00%

0.80%4.40%

-2.10%

-19.30%

Ukraine, thousand. sq. m Growth rate, %

Volume of residential properties commissioning in Ukraine

in dynamics in 2006-2014

2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

10000000

20000000

30000000

40000000

50000000

60000000

70000000

80000000

90000000

253 707

323 205

444 859

423 564

549 365

707 953

717 347

681 899

770 121

12495908.2

269 200

364 373

520 588

438 860

580 944

779 028 835 394805 662

834 133

11898353.2

Export Import


6

Construction

As of May 2015, Ukrainian enterprises have completed construction activities for the value of 15705,7 bill. hrn, that was 31,2 % less than in the similar period in 2014 (in money equivalent 17639,5 bill. hrn).New construction, reconstruction and technical recommission makes 84,9% from the total volume of performed construction activities, major and current repairs – 7,7% and consequently 7,7%.


2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

10

20

30

40

50

60

70

80

90

63

7873 72

8289

82

73

8476

InvestmentsActive military actions based on economic recession have suspended business activity in the country, first of all rolling back the plans of foreign investors.Regarding the results of 2014 investment volume was cut in 23%, in nominal equivalent is 45 916 bill.dollars (accrued results from the beginning of investment).

Dynamics of direct foreign investments into Ukraine

WEF rankingAccording to WEF data, Ukraine has reinforced rankings in the world competitiveness index GCI (WEF), going up to 76 from former 82. One of the main factors of positive tendency is the change of the government of Ukraine and its actions towards European integration.

Categories 2014

Conduct of business 96

Enterprises registration 76

Obtaining a building/construction permits 70

Joining electric services 185

Property registration 59

Receiving a loan 17

Minority investors protection 109

Imposition of taxes 108

International business 154

Contract performance security 43

Non-solvency permit 142

Competitiveness index of UkraineWEF ranking

Economy of Ukraine in Doing Business ranking

2007 2008 2009 2010 2011 2012 2013 20140$

10,000$

20,000$

30,000$

40,000$

50,000$

60,000$

70,000$

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

$29 489$35 723

$40 026$44 708

$49 362$54 462

$58 156

$45,916.0

39%

21%

12% 12% 10% 10% 4%

-23%

Direct foreign investments into Ukraine (accrued results from the be-ginning of investment, mln.doll.USA)


7


Industry In May 2015 compared to the last month and May 2014, industrial products index became 99,8% and 79,3%, and as a result of January-May 2015 - 78,8%.In raw materials industry and quarries development in comparison with January-May 2014, industrial products index makes 74,5%, processing industry - 79,5%, supply and distribution of electricity, gas and air conditioning- 84,4%.

Dynamics of industry index,%

National debtTotal amount of national and guarantee debt of Ukraine as of May 2015 was 67,660 billion dollars, in hryvnya equivalent - 1,424 trillion hrn.In the structure of national and guarantee debt the internal debt makes 35% from the total debt or 508,137 mln. hrn, the external one – 65% or 915 990,412 hrn.

Dynamics of the change in exchange rate

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 July

0.00

5.00

10.00

15.00

20.00

25.00

30.00

5.05 5.05

7.98

15.77

21.63

6.657.41

10.44

19.23

24.44

dollar euro2010 2011 2012 2013 2014 2015

0

100000

200000

300000

400000

500000

600000

700000

800000

900000

1000000

211,752276,746 299,414 309,000

300,025

508,137

105,133155,490 173,708

206,511

284,089

915,989

Internal debt External debt

Correspondence of internal and external debt, mln. hrn.


8

2009 2010 2011 2012 2013 2014 20150.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

78.80%


Retail real estate market overviewKiev 1st half of 2015

9


Key figures of Kiev retail real estate market

10

Market indicators 2013 2014 1st half of 2015 Alteration

Total supply, sq.m. 1 000 000 1 073 939 1 094 639 +2%

New supply, sq.m. 164 420 80 620 20 700 -75%

Minimal rental rate, hrn./sq. m/month (fashion gallery 100-200 sq. m)

30 25 20 - 20%

Maximal rental rate, hrn./sq. m/month (fashion gallery 100-200 sq. m)

100 80 50 -37,5%

Average rental rate, hrn./sq. m/month (fashion gallery 100-200 sq. m)

70 49,7 30- 35%

*dollar rate fixation

Vacancy, %1,7 7,5 7,5 -

Daily attendance, ppl./1000 sq. m 945 867 742 - 15%

Attendance of regional shopping malls, ppl./1000 sq. m

530 654 620 -5%

Attendance of community shopping malls , ppl./1000 sq. M

1127 937 766 -19%


2 shopping centers have been opened in the capital during the 1st half of the year: Doma center (GLA - 7 000 m2) and Novus (7G Zdolbunovskaya Street), (8200 m2 hypermarket and 5 500 m2 of retail space). As a result, the total market supply as of December 2014 is 1 094 639 m2 of professional rental spaces, having been increased in 2%. Till the end of 2015 a shopping and entertainment center of a large neighborhood type «New Way» is expected to be opened (GLA - 16 200 м2), located in the intersection of Verbitsgogo St./Trostyanetskaya St. and SC at 6 Murmanskaya St. (GLA – 7000 m2). The following projects are planned to be opened in 2016: Retroville, Podol Mall, Respublika, Lavina Mall, Blockbuster Mall, TsUM, SC at Pochtovaya Square with the total leasable area around 496 579m2.

Total supply, sq. m 1 094 639 New supply 2014, sq. m 20 700 Perspective supply 2016, sq. m 496 579

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

F

2016

F

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

-200%

0%

200%

400%

600%

800%

1000%

1200%

Total supply as of the beginning of the year, GLA, thous. sq. m

New supply, GLA, thous. sq. m

New supply share, %

Growth, %

Market supply dynamics, thousand sq.m. Shopping centers opened in 2014 SC Address GLA, sq. m Developer Opening

ProspektKrasnoarmeyskaya str./

Krasnotkatskaya str.41 000 Arricano Group Q3

Atmosfera 103 Stolichnoe shosse 30 000 De VisionQ3

Doma Cenrter 40 Stroiteley str. 7 000 KDD Engineering Q4

AprelKoltsevaya, 19 Lesja Kurbasa

Avenue5 800 Local developer Q2

Appetite 1, Nikolaya Bazhana Avenue 3 420Ukrainian Investment

AllianceQ3

Specialized shopping centersEpicentr 20d, Polyarnaya str. 70 000 Q4

Leroy Merlin 26, Saperno-Slobodskaya str. 12 500Shopping centers opening in 2015

Doma Center 40, Stroiteley str. 7000 Local developer Q1

Novus 7g, Zdolbunovskaya str. 13700 - Q2New Life Verbitskogo str. 16 200 Local developer Q4Darynok 6, Murmanskaya str. 7 000 Local developer Q4

Shopping Mall Bazhana Avenue 2400 Local developer Q4Shopping centers opening in 2016

Respublika 1a, Koltsevaya doroga 135 000 К.А.Н. Development is specified

Blockbuster Mall 36, Moskovskiy Avenue 100 000 Megaline is specifiedLavina Mall Akademika Palladina Av. 127 500 Megaline is specifiedRetroville Pravdy Avenue 91 254 Stolitsa Group is specified

TsUM 38, Kreshatik str. 20 000 Esta holding QIPodol Mal 23, Elenovskaya str. 13 825 Building Invest Group is specified

Shopping mall at Pochtovaya Square Pochtovaya Square 9 000 Local developer Q2

Total 496 579

11

Kiev retail real estate market supply


Perspective supplies of rental spaces 2017-2018Shopping center Address GLA Developer Opening

Happy Mall Onufriya Trutenko str. 42 000 Liko-Holding 2017HARTZ Zlatoustovskaya str. 68 000 Budhaus Group 2017Lukyanovka 7-7а, Degtyarevskaya str. 47 052 Arricano Group 2017Manhattan Mall 1, Inzhenernaya str. 69 200 Forum Evolution projectVyrlitsa Nikolaya Bazhana Avenue 140 000 ХХI century on hold

River mall10, 14, Dneprovskaya Naberezhnaya str.

55 000 Local developer on hold

Victoria 2, Nikolaya Vasilenka str. 54 300 Viktoriya on holdKyiv mall Petra Grigorenka Avenue 75 400 Dilise on holdAuchan Zdolbunovskaya str. 55 000 Immochan Ukraine projectOcean Mall Horkogo str. 45 000 KAN Development project

Gorky Park 52-54, Horkogo str. 64 500Silver Sky

Development project

Gorodok (2 turn) 23а Moskovskiy Avenue 29 650 KEMZ Svarka projectPetrovka Mall 10, Moskovskiy Avenue 65 360 Tiko Construction project

Nivki City Pobedy Avenue 74 036 Local Developer project

Univer City Vladimirskaya str. 18 700 Kievgorstroy Invest project

Kiev E95 Outlet (1 turn) Odesskoe shosse 18 525Evo Land

Development project

SC on Sklyarenko str.Syretskaya str./ Sklyarenko str.

15 000 Local developer 2016

Avenue48, Kosmonavta komarova str.

39 000Dragon & Tiko-Construction

2016

SC on Geroev DnepraSubway station Geroev Dnepra

7 800 Local developer 2016

According to ICSC classification, except for shopping centers with the area less than 5000 sq. m and stand-alone super- and hypermarkets, the total area of professional capital shopping centers is 1 094 639 sq. m, that corresponds to the indicator 381,1 sq. m per 1000 residents according to the degree of saturation of high-quality retail spaces.

About 20 shopping center projects with the total leasable area of about 983 523 м2 with different percentage of completion (design, construction start, construction on hold) are announced to be opened in Kiev in 2017-2018. Announced super-regional Entertainment and Shopping Malls are the main objects of successful development for Ukrainian and international retail chains. Their commissioning will lead to qualitative market growth and (in case the condition of human wellbeing improves) will contribute to the further expansion of international retailers.

Market saturation, ppl./1000 sq. m

Zaporozhe

Chernigov

Kirovohrad

Lvov

Ivano-Frankovsk

Donetsk

Kherson

Simferopol

Vinnitsa

Nikolaev

Lutsk

Khmelnitskiy

Dnepropetrovsk

Kiev

Odessa

0 50 100 150 200 250 300 350 400 450

72

89

123

182

204

204

230

256

282

279

307

315

373

386

393

12



Действующие торговые центры Киева

Regional Shopping Malls Address

Year of opening GLA, sq. m

Dream Town Obolonskiy Ave. 2009 81 000Ocean Plaza 174, Horkogo St.. 2012 70 000Sky Mall 2, Generala Vatutina Ave. 2007 67 000Karavan 12. Lugovaya St. 2008 44 000

Community Center AddressYear of opening GLA, sq. m

Bolshevik 6b, Vadima Hetmana St. 2008 37 000Gulliver 1а, Sportivnaya Sq. 2013 45 200

ProspectKrasnohvardeyskaya St./Krasnotkatskaya St. 2014 41 400

Marmelade 154, Borshchagovskaya St. 2013 40 000Art Mall 37, Akademika Zabolotnogo St. 2013 37 000Promenada Center 17-21, Bahhoutovskaya St. 2003 34 000Promenada Park 4, Bolshaya Okruzhnaya St. 2009 32 000Gorodok 23а, Moskovskiy Ave. 2003 7 000

«Ukraina» dept.store 3, Pobedy Ave. 2003 23 000

Rayon 4, Nikolaya Lavrukhina St. 2012 23 000Arcadia 10a, Dneprovskaya Nab. St. 2008 22 000Magellan 13b, Akademika Hlushkova St. 2003 21 600Kvadrat 36, Perova Ave. 2008 19 000Globus 1, Nezavisimosti Sq. 2002 18 579Alta Center 15, Moskovskiy Ave. 2004 17 000Arcadia 154, Borshchagovskaya St. 2007 17 000Metropolis 12, Malinovskogo St. 2005 15 284Silver Breeze Dneprovskaya Nab. St. 2013 14 600Metrograd Bolshaya Vasilkovskaya St. 2002 11 000Piramida 4, Mishuhi St. 2004 12 000Plazma 20b, Moskovskiy Ave. 2006 12 000Alladin 3-5, Hrishko St. 2004 10 030Atmosfera 103, Stolichnoe shosse St. 2014 30 000Arena City Krasnoarmeyskaya St./Basseynaya 2005 8 000KOMOD 4, Lunacharsoho St. 2007 7 647DOMA center 4, Stroiteley St. 2014/2015 7000

Neighborhood Shopping Mall

Address Year of opening

GLA, кв. м

VMB 136, Pobedy Ave. 2004 5 000Kvadrat 20, Hnata Yury St. 2003 11 502Polyarnyi 2, Maiorova St. 2013 8 630Olimpiyskiy 72, Bolshaja Vasilkovskaya St. 2004 8 250Europort 15А, Lukashevicha St. 2005 4 195Interval Plaza 143/2, Bolshaya Vasilkovskaya St. 2004 7 874

Neighborhood Shopping Mall

Address Year of opening

GLA, sq. m

Kvadrat 2, Belorusskaya St. 2002 6 000InSilver 3, Sribnokilskaya St. 2011 5 909Darnitsa 2/1, Vossoedineniya Ave. 2008 5 830Specialized Shopping

Mall AddressYear of opening GLA, sq. m

Detskiy Mir 3, Andreya Malyshka St. 1987 8 000Blockbuster 34v, Moskovskiy Ave 2008 24 7504ROOM 6, Petropavlovskaya St. 2009 24 000Arax 110, Bolshaya Okruzhnaya St. 2009 16 000Ultramarine 1a, Uritskoho St. 2004 15 000Manufaktura 2 , Novoobukhovskoe shosse 2013 15 000Diamant 14Е, Petropavlovskaya St. 2013 11 250Makros 16b, Moskovskiy Ave. 2004 8 286Dom mebeli 23, Druzhby Narodov Blvd. 1984 16 000B-52 52, Bratislavskaya St. 2008 12 003Domosfera 101, Stolichnoe shosse 2009 24 500Mandarin Plaza 4, Basseynaya St. 2003 9 400

DIY AddressYear of opening GLA, sq. m

Epicentr 20d, Polyarnaya St. 2014 70 000Epicentr 4, Viskoznaya St. 2008 11 000Epicentr 6, Khrustalnaya St. 2008 12 000Novaya Liniya 65/1, Balzaka St. 2004 6 795Novaya Liniya 8,Odesskoe shosse 2005 13 131Metro 26v, Moskovskiy Ave. 2005 9 500Metro 2а, Saburova St. 2009 9 500Metro 43, Petra Grigorenka Ave. 2004 9 500Metro 1v, Bolshaya Okruzhnaya St. 2003 9 500Auchan 15а, Moskovskiy Ave. 2008 15 000Auchan 6, Berkovetskaya St. 2009 15 660Epicentr 11, Bratislavskaya St. 2008 12 000Epicentr 1b, Bolshaya Okruzhnaya St. 2005 30 000NOVUS 7a, Akademika Palladina Ave. 2010 4 008Leroy Merlin 17а, Polyarnaya St. 2010 13 000Leroy Merlin 3v, Brovarskoy Ave. 2013 ~10 000Leroy Merlin 26, Saperno-Slobodskaya St. 2014 ~10 000Epicentr 40, Petra Hrigorenko Ave. 2005 43 000NOVUS 4d, Krasnozvezdnyi Ave. 2013 8 800NOVUS 1a, Krasnohvardeyskaya St. 2013 6 000NOVUS 8, Nikolaya Bazhana Ave. 2013 6 500Epicentr 6v, Berkovetskaya St. 2009 56 000

13



Regional SC

District SC

Community SC

Free standing hypermarket

Specialized SC

Regional shopping centers:1) Dream Town - Obolonskiy Ave.2) Ocean Plaza – 174, Horkoho St.3) Sky Mall – 2, Henerala Vatutina Ave.4) «Караван» - 12, Luhovaya St.Community shopping centers:5) Bolshevik- 6b, Vadima Hetmana St.6) Gulliver – 1a, Sportivnaya Sq.7) Marmelade- 154, Borshchagovskaya St.8) Art Mall - 37, Akademika Zabolotnogo St. 9) Promenada Center - 17-21, Bahhoutovskaya St10) Promenada Park – 4, Bolshaya Okruzhnaya St.11) Gorodok- 23а, Moskovskiy Ave.12) Department store Ukraina- 3, Pobedy Ave.13) Rayon – 4, Nikolaya Lavruhina St.14) Arcadia - 10a, Dneprovskaya Naberezhnaya15) Magellan- 13b, Akademika Hlushkova St.16) Kvadrat- 3b, Perova Blvd.17) Globus- 1, Nezavisimosti Sq.18) Alta Center- 15, Moskovskiy Ave.19)Arcadia – 154, Borshchagovskaya St.20) Metropolis- 12, Malinovskoho St.21) Silver Breeze - Dneprovskaya Naberezhnaya St.22) Metrograd- Bolshaya Vasilkovskaya St.23) Piramida- 4, Mishugi St.24) Plazma- 20b, Moskovskiy Ave.25) Alladin- 3-5, Hrishko St.26) Atmosfera- 103, Stolichnoe shosse27) Arena City - Krasnoarmeyskaya/ Basseynaya28) KOMOD – 4, Lunacharskogo St.Neighbourhood shopping centers:29) VMB – 13 b, Pobedy Ave.30) Kvadrat- 20, Hnata Yury St.31) Polyarnyi- 2, Maiorova St.32) Olimpiyskiy-72, Bolshaya Vasilkovskaya St.33) Europort- 15а, Lukashevicha St.34) Interval Plaza- 143/2, Bolshaya Vasilkovskaya St.35) Kvadrat- 2, Belorusskaya St.36) InSilver - 3, Sribnokilskaya St.37) Darnitsa- 2/1, Vossoedinenija AveSpecialized shopping centers:38) Detskiy mir- 3, Andreya Malyshko St.39) Blockbuster – 34v, Moskovskiy Ave.40) 4ROOM - ул. Петропавловская, 641) Araks- 110, Bolshaya Okruzhnaya St.42) Ultramarin- 1а, Uritskogo St.43) Manufaktura- 2, Novoobukhovskoe shosse44) Diamant- 14e, Petropavlovskaya St.45) Makros- 16b, Moskovskiy Ave.46) Dom mebeli- 23, Druzhby Narodov Ave.47) B-52 – 52, Bratislavskaya St.48) Domosfera- 101, Stolichnoe shosse49) Mandarin Plaza- 4, Basseynany St.

14

Map of existing and announced shopping centers in Kiev


Kiev shopping centers, announced to be opened in 2016-2018

Respublika**Kiev, Koltsevaya doroga, 1а

GLA – 135 000 m2

Lavina mall**Kiev, Ak,Palladina Ave.

GLA – 127 500 m2

Ocean Mall**Kiev, Horkoho St.GLA – 45 000 m2

Blockbuster Mall**Kiev, Moskovskiy Ave.

GLA – 100 000 m2

Kiev mallKiev, P.Hrihorenka Ave.

GLA – 75 400 m2

«Vyrlitsa»*Kiev, N.Bazhana Ave

GLA – 140 000 m2

Petrovka Mall*Kiev, Moskovskiy Ave.,10

GLA – 65 360 m2

Manhattan Mall**Kiev, Inzhenernaya St., 1а

GLA – 69 200 m2

«TsUM»Kiev, Kreshchatik St., 38

GLA – 20 000 m2

HARTZKiev, Zlatoustovskaya St.

GLA – 68 000 m2

«New Life»**Kiev, Verbitskogo St.

GLA – 15 952 m2

RetrovilleKiev, Pravdy Ave.GLA – 91 254 m2

* UTG - consultant** UTG – consultant иand exclusive tenant mix agent

15


Average daily attendance of shopping centers(ppl. per 1000 sq. m, GLA)

AttendanceAccording to the results of the 1st half of 2015 the average daily attendance in Kiev shopping centers is: for regional entertainment and shopping malls - 620 ppl. per 1000 sq. m GLA, for community shopping malls - 766 ppl. per 1000 sq. m GLA. Average indicator - 742 ppl. per 1000 sq. m. We observe a positive tendency of increasing of visitors in regional entertainment and shopping malls. This factor indicates the significant competitiveness of regional shopping centers, able to offer a wide range of product groups and entertainment to a final consumer.The highest attendance rate of about 30 000-40 000 people in weekdays and about 60 000 people in weekends is observed in Ocean Plaza, Sky mall, Dream Town (1st part), Karavan.

Vacancy

Average market vacancy rate in the existing shopping centers and shopping entertainment centers continues to be 7,5% during 2012-2014, due to shrinking plans of development from retailers, complicated economic situation, decrease in consumer demand. For some new big trade facilities the vacancy rate exceeds 50%. Appearance of free leasable areas can be witnessed even in the most successful shopping centers - Ocean Plaza, Dream Town (1st part), Sky Mall, which are traditionally characterized by the lack of vacant leasable areas.

Average vacancy of shopping centers in Kiev, %

16

Attendance and vacancy in Kiev shopping centers

jun

14

jul 1

4

au

g 1

4

sep

14

ocr

14

no

v 1

4

de

c 1

4

jan

15

feb

15

ma

r 1

5

ap

r 1

5

ma

y 1

5

jun

15

jul 1

5

0

100

200

300

400

500

600

700

800

900

1000

01

-Ma

y-1

4

01

-Ju

n-1

4

01

-Ju

l-1

4

01

-Au

g-1

4

01

-Se

p-1

4

01

-Oct

-14

01

-No

v-1

4

01

-De

c-1

4

01

-Ja

n-1

5

01

-Fe

b-1

5

01

-Ma

r-1

5

01

-Ap

r-1

5

01

-Ma

y-1

5

01

-Ju

n-1

5

01

-Ju

l-1

5

0%

1%

2%

3%

4%

5%

6%

7%

8%


Арендные ставки в торговых центрах Киева

Typical lease terms in shopping centers

Lease term From 3 to 10 years, for anchors 5-15 years

Payment policy

Rates are nominated in dollars, payment in hryvnas according to exchange rate, annual indexation at the CPI level. Rate $1 is fixed at the level 18-20UAH

Deposit From 1 to 3 months, possible guarantee for anchors

Rental space

conditionShell and core, fit-out

Electronics supermarkets

Fashion gallery (100-200 sq. m.)

Department stores and large format clothes shops (600-1,500 sq. m.)

Cinema

Children’sentertainment center

Bowlingalley/billiards

Restorants and Cafes

Kiosks, souvenir, gifts, jewellery, accessories shops (1-10 sq.m)

$8

$10

$8

$4

$4

$4

$12

$49

$16

$50

$20

$10

$8

$8

$28

$100

Rental rates

Rental rates at the retail real estate market have significantly changed under the influence of economic and political situation in the country, particularly due to the national currency record devaluation. As a result of the 1st half of 2015 the average rental rate in Kiev shopping centers for fashion gallery (leasable area 100-200 m2) is 28,6$ / m2/ month net of VAT, that is 35% less than in the similar period of 2014. Moreover, landlords practice «individual agreements»: short-term fixation of dollar rate, repair compensation, etc. Percent of retail turnover is a kind of payment scheme, which is widely spread among anchor tenants – 2-5% and retail gallery operators - 7-15%.

Rental rates dynamics in Kiev SC, USD, hrn.

Average scope of rental rates in Kiev SC ($/sq. m/month net of VAT and OPEX)

17

Rental rates in Kiev shopping centers

01

-Ma

r-1

4

01

-Ap

r-1

4

01

-Ma

y-1

4

01

-Ju

n-1

4

01

-Ju

l-1

4

01

-Au

g-1

4

01

-Se

p-1

4

01

-Oct

-14

01

-No

v-1

4

01

-De

c-1

4

01

-Ja

n-1

5

01

-Fe

b-1

5

01

-Ma

r-1

5

01

-Ap

r-1

5

01

-Ma

y-1

5

01

-Ju

n-1

5

01

-Ju

l-1

5

0

5

10

15

20

25

30

35

40

45

0

100

200

300

400

500

600

700

34.833.432.431.5

37.6

33.435.1

38.5

33.3

38.5

29.3

18.221.6

28.628.628.628.6

Rental rate, USD Rental rate, UAH


Brand Country Shopping MallsOpened in 2014

Pedro del Hierro, fashion Spain GulliverSinsay (LPP Group), fashion Poland King Cross, LvovKeddo, shoe shop Great Britain Kreshchatik St.Vittorio Spernanzoni, shoes shop Italy Saksaganskoho St.

Twin Set, fashion Italy Gulliver

Paker, multi-brand shoe shop - Ocean Plaza

Coffee Shop Company Austria Lvov, Sobornaya Sq., 2

Paul, confectionery France Yaroslavov Val St., 26

Calzedonia, underwear Italy KaravanIntimissimi, underwear Italy Karavan

Prenatal, maternity wear Italy Dream Town

Vapiano, chain restaurants Germany Arena City, KievHnatyuka St., 12, g.Lvov

Peacocks, fashion* Great Britain PiramidaFika, fast food outlet Sweden Street retail, Rovno

1st half of 2015

adL/ADILISIK, fashion Turkey Dream TownPiramida

Udress, designer wear Ukraine Gulliver

Bosco*, sports goods Russia Art Mall

Silenza, underwear Italy Проспект, SkyMall, Dream Town, Gulliver

Betty Barclay, fashion Germany Осеan Plaza

Marina Rinaldi *, fashion Italy Осеan Plaza

Marella*, fashion Italy Осеan Plaza

18

Demand

Demand

Despite the economic situation of the country, particularly population solvency, decrease in retailers` turnover, reduce of development plans, we observe a positive tendency and retail real estate market revival.

Over the 1st half of 2015 4 new brands have been entered into the Ukrainian market, among which appear Ukrainian companies, that characterizes the development of this field. It is also worth mentioning that 3 well-known brands have returned: Bosco, Marella, Marina Rinaldi, which shut down their operations in the end of 2014.

Negotiations with large-scale international operators continue to be held (IKEA, H&M, Intersport, Cotton, Defacto, etc.), being not introduced at the Ukrainian market yet and whose introduction is expected in 2016 together with commissioning of large-scale projects.

Due to tense military situation and combat activities in the eastern Ukraine, most operators wrap up their business in Donetsk and Lugansk regions and move to the more profitable regions (Lvov, Kiev).


Commissioning of foreign brands in 2013Brand Country SC

Happylon Kazakhstan Ocean PlazaLC Waikiki Turkey Ocean PlazaArmani Jeans Italy Ocean PlazaCinnabon USA Ocean PlazaStyle Avenue Czech Republic Ocean PlazaZ-Generation France Ocean PlazaPetit Bateau France Ocean PlazaBebe USA Ocean PlazaYAMAMAY Italy GulliverVersace Collection Italy GulliverAntica Murrina Italy GulliverHadley Russia Ocean PlazaFabs Italy GulliverNautica USA Sky MallKanzler Germany Ocean PlazaCamicissima Italy Gulliver

Agent Provocateur UK GulliverCommissioning of foreign brands in 2014

Mango Megastore(Mango, Mango H.E., Mango kids)

Spain Street retail

Pedro del Hierro Spain GulliverSinsay (LPP Group) Poland King Cross (Lviv)Keddo UK Street retailVittorio Spernanzoni Italy Street retailTwin Set Italy GulliverCoffee Shop Company Austria Street retail (Lviv)Paul France Street retailPrenatal Italy Dream TownVapiano Germany Arena CityPeacocks UK PiramidaPaker - Ocean PlazaCazledonia Italy KaravanIntimissimi Italy KaravanFika Sverige Street retail (Rivne)

Commissioning of foreign brands in 2012

Brand Country SC

Furla Italy Ocean Plaza

Dolce&Gabbana Italy Mandarin Plaza

MaxMara Weekend Italy Ocean Plaza

Kari Russia -

Trussardi Jeans Italy Ocean Plaza

Camper США Karavan

Napapijri Italy Ocean Plaza

Cinque Italy Ocean Plaza

Pepe Jeans Испания Ocean Plaza

Diesel Italy Street retail

Reiss UK Ocean Plaza

Why Denis Romania Ocean Plaza

Strellson Germany Ocean Plaza

Suvari Turkey Ocean Plaza

Michael Kors USA Ocean Plaza

Marina Rinaldi Italy Ocean Plaza

Atelier France Ocean Plaza

Valentino Italy Street retail

Piazza Italia Italy Ocean Plaza

W52 Jeans Portugal Dream Town

Gilda Tonelli Italy Ocean Plaza

KFC USA Ocean Plaza

S.Oliver Germany Sky Mall

Oviesse kids Italy Ukraine

Soocre Greece Ocean Plaza

Dynamics of foreign brands introduction at the Ukrainian market

19


Stakeholders at the fashion retail market of Ukraine

№ Group of companies BrandsNumber of

stores

1 MTIIntertop, Plato, Geox, Ecco, Skechers, Clarks, MARC O'POLO, TIMBERLAND, Armani Jeans, Atelier de Courcelles, Napapijri ,Pandora, Urban United, Lee/Wrangler, Lenovo

213

2MD Group TOMMY HILFIGER, GANT, G-STAR RAW, OGGI, ACCESSORIZE, WALKER,

DKNY Men, Pepe Jeans, Etam lingerie, Diesel, Fornarina 123

3City moda Marc Aurel, Reiss, Marina Rinaldi, Marc Cain, MAX&Co, Airfield,Rene Lezard,

Bogner, Braxx72

4 LPP Group Reserved, Cropp Town, House, Mohito, Sinsay 64

5 Ultra jeans Levi’s, Baldinini, Lagerfeld, Guess, Pierre Cardin 59

6 Delta Sport Nike, Mexx, Converse 55

7 ArgoMango, Benetton, Promod, Parfois, Orsay, Desigual, Only, Piazza Italia, Aldo, Argo Center

54

8 Inditex Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho 52

9 TransUkrainaIntersport Tally Weijl, Pimkie, Karen Millen, Oasis, Warehouse 45

10 KarKat Fashion GroupSpringfield, Women'secret, Pedro Del Hierro, Cortefiel

23

11 BNS Trade Calvin Klein Jeans,Top Shop, Michael Kors 8

20


• During the 1st half of the year 2 new objects have been opened in the Kiev: Doma Center (GLA - 7 000 m2 ) and Novus (8200 m2 hypermarket and 5 500 m2 of leasable areas). As a result, the total market supply in December 2014 come up to 1 094 639 m2 of professional retail spaces, having increased the total supply in 2%. Till the end of 2015 a new shopping and entertainment center of community (large neighborhood) type «New Way» (GLA - 16 200 м2) is expected to be opened in the intersection of Verbitsgogo St./Trostyanetskaya St. and Shopping center at 6 Murmanskaya St. (GLA – 7000 м2).

• The commissioning of new shopping centers is announced to be postponed for the year 2016: Retroville, Podol Mall, Respublika, Lavina Mall, Blockbuster Mall.

• Retail real estate market has faced a real challenge: reduction of consumption volumes, retailers` turnover, chain development plans, number of stores, that resulted in 30-70% decrease in rental payment, vacancy growth from 2% to 7,5%, decrease of active tenants from about 1000 to less than 100, and the number of new retailers entering into Ukrainian market was reduced in 2 times;

• Nowadays market relationships and conditions have stabilized. Tenants have got benefits, that is why they can get maximally flexible terms;

• Significant difference in rental payment in new and existing shopping centers;

• Kiev shopping malls managed to maintain currency fixation with the U.S. dollar on a quarterly basis;

• Retail turnover percent became a compensator of the fall of rental rates;

• Redistribution of retail turnover and traffic among shopping centers and retailers;

• Consumer sentiment has been gradually reactivated, but there is no

background for a rapid growth;• Tenants have become more selective regarding new stores opening

due to drop in income and lack of reasonable debt financing;• Retailers have optimized their operation, shut down unprofitable

stores, the most progressive chains have invested into marketing;• For some retail chains this crisis has become a period of active

development;• New possibilities and niches for Ukrainian manufacturers have

appeared in current conditions;• Tendency of tenants rotation from street retail objects into the shopping

centers;• Marketing and promotion have become a crucial factor of successful

business in shopping centers;• Property management companies have optimized OPEX without

reducing the expenses onto objects promotion;• Till the end of 2015 a vague rental rates increase is expected due to

the fact, that new supply of this year has been postponed for the year 2016;

• Due to retail real estate market stabilization, perspective rental spaces availability and minimal rental rates, there is a solid background for new franchise introduction;

• Further real estate development will be connected with the entering of new brands into the Ukrainian market;

• On the whole the situation in real estate segment will remain stable till the end of this year.

21

Key tendencies of retail real estate market

Tendencies and forecasts


Consumer preference of Kiev residents

22

No one

City markets

Magellan

Darynok, Lesnay aundergroung st.

Kvadrat, Perova blvd.

Ukraina

Metropolis

Piramida

Raion, Lavrukhina St.

Aladdin

Promenada Park

Gulliver

Prospekt

Karavan

Bolshevik

Sky Mall

Dream Town, 1,2 turns

Ocean Plaza, Lybedskaya underground st.

15.3%

0.3%

0.5%

0.6%

0.8%

0.9%

0.9%

1.6%

1.8%

1.9%

2.4%

3.5%

4.0%

5.1%

5.1%

10.9%

17.3%

21.9%

9.9%

12.6%

5.3%

11.0%

3.4%

5.5%

4.4%

9.1%

3.1%

6.8%

4.3%

10.8%

12.9%

12.9%

11.0%

25.3%

27.4%

37.1%

Clothes and shoes purchases

Best

• Ocean Plaza is the leader in the number of

unique consumers. 37% of Kiev respondents

have bought clothes or shoes in this shopping

center at least once for the last half of the

year. This mall takes the 1st place for the

loyalty level in Kiev. 22% of respondents

consider Ocean Plaza to be the best

shopping entertainment center.

• Dream Town and Sky Mall (27% and 25%,

accordingly), show high rates of the number

of unique consumers. The loyalty level

prevails in Dream Town (17%). 11% of

respondents consider Sky Mall to be the best

shopping center in the city.

Purchases in shopping centers and opinion concerning the best one

*Data introduced displays the percentage of the number of unique consumers. Unique consumer presupposes at least one purchase for the last half of the year. Quantitative survey of Kiev residents was held in the way of standardized face to face door enquiry. Sample group contains 800 respondents, maximum accuracy is less than 3,5%.


Socio-demographic profile of Kiev residents

23

Save up for future

Credit payment

Transport

Utility services and other payments

Meal outside home

Entertainment

Other purchases

Clothes and shoes purchases

Products

1.6%

2.0%

7.9%

18.6%

4.6%

5.2%

9.1%

13.1%

38.0%

• Average monthly family income level of Kiev households makes about 8 647 hrn., 70% of which are accounted for consumer expenses. Decrease in consumer expenses level is accompanied by an increase in utility fees expenses .

Less than 2959 hrn

2960-4719 hrn

4720-6479 hrn

6480-8239 hrn

8240-9999 hrn

10 000 - 14 999 hrn

15 000 - 19 999 hrn

20 thous.hrn and even more

No answer

0.6%

5.9%

13.1%

25.9%

10.5%

20.9%

4.6%

1.5%

17.0%

Average family income level– 8 647 hrn.*

People in a family– 3.22

Distribution according to income level* Distribution of family expenses, %

Quantitative survey of Kiev residents was held in the way of standardized face to face door enquiry. Sample group contains 800 respondents, maximum accuracy is less than 3,5%.


Contacts

Vadim NeposedovPresident [email protected]

Evgeniya [email protected]

Viktor OborskyHead of Strategic Consulting [email protected]

Dina KaterenuykAnalyst of Strategic Consulting [email protected]

Ukrainian Trade Guilt (UTG) – is a large scale national real estate consulting company. UTG today – is 55 highly qualified specialists and more than 500 clients. Participation in 450 business projects and more than 700 market researches let us remain a reliable, responsible and competent partner.

Working with various types and sizes of real estate at different stages of the project development, we guarantee a highly professional productivity level and individual approach to the tasks assigned by the client.

This presentation is a publication bearing a generalized character. Ukrainian Trade Guilt has no liability towards possible loss of any third parties as a result of information use, introduced in this market overview.

Any publication of the materials presented in the Report, wholly or partially, is possible only in case the company is mentioned as a data source.

Thank you for attention!

Contacts

Ukrainian Trade Guilt2a, Mechnikova str. (BC «Parus»)

Kiev 01601, UkraineTel.: (+380 44) 537 23 64www.utgcompany.com

mailto:[email protected]




ukraine and regions retail real estate market overview| results of the 1 st half of 2015 kiev retail...

Documents