MID-YEAR 2019 Kyiv retail market overview

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Experts from Colliers International (Ukraine) have prepared Kyiv retail market overview based on the results of the mid-year of 2019.

Increased competition in the retail market in Kyiv has encouraged developers to renovate, and in some cases, completely rebuild their facilities.

Two shopping centers were commissioned in the first quarter of 2019: Oasis (GLA ~ 13,200 sq m) and Smart Plaza Obolon (GLA ~ 10,000 sq m).  In August 2019, the major project River Mall              (GLA ~55,500 sq m) was commissioned. Thus, the volume of new supply for August 2019 is 78,700 sq m. At the beginning of August 2019, the total supply of high-quality retail space in Kyiv increased by ~ 6% compared to the end of 2018 and amounted to an overall increase of 1,392,700 sq m. 

Several projects in the final stage of construction are Retroville and Blockbuster Mall.

During the first six months of 2019, well-known brands such as Decathlon, Weill, Claudie Pierlot, Supreme, Inwear Matinique, Balmain, Esprit, and Escada entered the Ukrainian market.

The demand for local operators remains high, as evidenced by large-scale plans for the development of multi-brand Ukrainian designer supermarkets. The demand for fast-fashion retailers remains strong as well.  In the coming years, many popular global retailers are expected to enter the market, such as IKEA, FUNDAY, The North Face, Calvin Klein (Line 1), Kipling, FLO and others. 

Much like the street food market is also actively developing at a fast pace. Due to the successful operation of many food hall vendors, malls have the opportunity to replenish their tenant-mix with new operators.

The vacancy rate remains unchanged from the end of 2018, standing at 3.8%. The reason for this indicator’s stability is the tenants’ demand for retail space, which allowed new shopping centers to open with a low vacancy rate. In addition, some projects were temporarily put on hold for renovation and remodeling.
The prime headline rent in Kyiv best shopping centers for 100-200 sq m units increased by 6.7% in 2019 compared to the end of 2018. In contrast, the rental rates for Kyiv’s main shopping venues did not change significantly.

According to Alexander Nosachenko, Managing Director of Colliers International (Ukraine), it is unlikely that rental rates will increase in the second half of the year. The dynamics of rental rates will depend on the volume of new supply and the vacancy level within the market. The enormous volume of new supply (~ 653,000 sq m) between 2019-2021 is expected to redistribute visitor flow among existing facilities and to increase vacancy rates.

Considering the increasing competition between retail properties in Kyiv, there is a tendency for developers to change their focus in the region.

 

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MID-YEAR 2019 Kyiv retail market overview

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