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Ukraine
The Ukraine whilst offering the potential of one
of the largest commercial real estate markets
in Central and Eastern Europe has as yet
failed to fulfil this potential despite a number
of periods of active international investment
into the market deriving largely from Western
European, Israeli and, CIS funded sources. It
remains one of the smallest markets by stock
in Europe as political instability in the country
remains an issue.
Since its independence in 1991, Ukraine has attracted
speculative investors, with funds going into both
existing prime assets across all sectors, as well
as development pipeline. This interest in Ukraine
has typically followed periods of political change,
following the post independence activity between
1996-1998 and 2004-2008. Whilst a majority of
interest has been towards the capital city Kyiv,
international retail investors and developers have
been active within the 6 main regional cities of
Ukraine.
Following a severe economic downturn in late
2008-2009, despite the economy demonstrating
for the last 3 years moderate economic growth
from a European comparison, investor confidence in
Ukraine has continued to deteriorate along with the
availability of debt financing driven by the exit of a
number of foreign banks from the country.
Whilst affordable debt remains elusive, this is
driving the need for investors to seek some joint-
venture opportunities particularly for larger schemes.
Investment assets presently placed to market
demonstrate a material inverse liquidity relationship
between lot size and liquidity due to the high costs
and low availability of debt finance.
Market sizing
Ukraine
Europe
Invested stock
(Total stock)
EUR 14bn
(EUR 115bn)
EUR 3,335bn
(EUR 8,201bn)
Liquidity ratio
(10y average)
0.6%
(1.6%)
5.6%
(4.6%)
2014 volumes
(10y average)
EUR 0.1bn
(EUR 0.3bn)
EUR 187bn
(EUR 142bn)
Market pricing – Kyiv (Q4 2014)
Office
Retail
Industrial
Current Yield
13.50% 10.00% 15.00%
Min/Max (10y)
9.20-20.00% 9.60-16.00% 10.00-30.00%
Yield definition
Net initial yield
Source: DTZ Research
Investment activity by source of capital, 2014
Investment activity by asset type, 2014
Source: DTZ Research
Source: DTZ Research
Domestic
Non-European
European
Office
Mixed Use
Retail
Industrial
Other
100%
2%
16%
9%
73%
120 Investors Guide to Europe 2015