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Investor Guide to Europe 2014
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, although liquidity levels
have picked up recently. 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 13bn
(EUR 125bn)
EUR 3,380bn
(EUR 8,150bn)
liquidity ratio*
(10y average)
0.6%
(1.5%)
4.0%
(4.5%)
2013 volumes
(10y average)
EUR 0.1bn
(EUR 0.3bn)
EUR 139bn
(EUR 135bn)
Investment activity by asset type, 2013
Source : DTZ Research
Investment activity by source of capital, 2013
Source : DTZ Research
Market pricing – kyiv (Q4 2013)
office
Retail
Industrial
Current Yield 12.50% 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
uKRaInE
* 2012 figures
