{"id":115583,"date":"2020-04-14T15:53:05","date_gmt":"2020-04-14T12:53:05","guid":{"rendered":"\/?post_type=ldaily&p=115583"},"modified":"2020-04-14T15:58:58","modified_gmt":"2020-04-14T12:58:58","slug":"osoblyvist-rynku-komerczijnoyi-neruhomosti-polyagaye-v-tomu-shho-vin-zalyshayetsya-yakisno-nenasychenym-i-perspektyvy-jogo-rozvytku-dosyt-velyki","status":"publish","type":"ldaily","link":"https:\/\/ldaily.ua\/en\/ldaily\/osoblyvist-rynku-komerczijnoyi-neruhomosti-polyagaye-v-tomu-shho-vin-zalyshayetsya-yakisno-nenasychenym-i-perspektyvy-jogo-rozvytku-dosyt-velyki\/","title":{"rendered":"Highly unsaturated\u201d – the peculiarity of the commercial real estate market of Ukraine. The prospects for its development are quite large"},"content":{"rendered":"

Daniil Vladov<\/strong>, the CEO of DCH Infrastructure & Real Estate<\/strong>, about the huge potential of the Ukrainian\u00a0commercial real estate market.<\/p>\n

LDaily<\/span>: Daniil, you are the CEO of DCH Infrastructure &\u00a0Real Estate, company that operates and influences the business of several significant commercial real estate projects in Ukraine. It is very interesting to know your\u00a0opinion about role of Management Companies in the\u00a0modern business environment?<\/strong><\/p>\n

D. Vladov:<\/strong> This term has several meanings, defined even\u00a0on the legislative level. Shortly, Management companies\u00a0are created in order to build a strong vertically integrated\u00a0business. In other words, to effectively control the\u00a0operations of several companies in one group and work\u00a0in the same direction.<\/p>\n

One of the main assets we operate is a network of Karavan\u00a0Shopping and Entertainment Centers in Kyiv, Kharkiv and\u00a0Dnipro (former Dnipropetrovsk). Without one structural\u00a0unit that defines the strategy for the development and\u00a0operation of these SEC, the stated goals would have\u00a0never been achieved. SEC would develop \u201cin different\u00a0directions\u201d. This approach also applies to the other\u00a0assets that we operate.<\/p>\n

Today, our team combines a number of very strong\u00a0profile specialists in the management of various types\u00a0of commercial real estate in Ukraine. The task for each\u00a0of our specialists \u2013 to adapt the best world practices to\u00a0the needs of our portfolio of real estate objects, while\u00a0obligatorily taking into account local characteristics –\u00a0region, city, location, audience. In our case, this form\u00a0of management has proven to be effective in terms\u00a0of business development and achievement of high\u00a0performance.<\/p>\n

LDaily<\/span>: Please, say few words about the history of the\u00a0Karavan brand. What stood behind the idea of creating a\u00a0<\/strong>company? How it developped over the years?<\/strong><\/p>\n

D. Vladov:<\/strong> Let\u2019s begin with the fact that DCH company\u00a0became the owner of the Karavan chain in 2013. By\u00a0that time brand Karavan already had a strong success\u00a0story. Interesting to note that the market of professional\u00a0shopping and entertainment centers in Ukraine began\u00a0with the opening of the Karavan SEC in Kyiv in 2003\u00a0(GLA 44000 sq. m). Almost 15 years ago, Karavan\u00a0was the first professionally implemented project of the\u00a0\u201csuper-regional\u201d format in Ukraine. Karavan immediately became a very popular place, offering Kiev at that time\u00a0absolutely new and unique experiences \u2013 ice skating rink, cinema and a large foodcourt, as well as, of course, a\u00a0number of exclusive tenants that had never been before\u00a0presented on the local market.<\/p>\n

In 2006 Karavan SEC opened also in Kharkiv (61000 sq.\u00a0m), Karavan in Dnipro (64000 sq. m) following in 2008. Yet\u00a0in 2014, we put into operations the new phase of Dnipro\u00a0project, thus increasing the leasing area up to 74000 sq. m.\u00a0The history of each SEC is unique and consists of the\u00a0openings of new phases as well as changes in the\u00a0tenant-mix. Any shoppng center goes through a number\u00a0of periods: development and growth, formation and\u00a0stabilization, strengthening of positions and leadership.<\/p>\n

Brand Karavan went through all these stages first and\u00a0continues to \u201cset the tone\u201d on the retail real estate market\u00a0of Ukraine.<\/p>\n

LDaily<\/span>: How was year 2017 for your company? How would\u00a0you comment the expectations on the market of retail\u00a0<\/strong>real estate in 2017?<\/strong><\/p>\n

D. Vladov:<\/strong> In 2017 we strengthened our positions and\u00a0noted the positive dynamics of all the indicators of or\u00a0chain compared to 2016. The traffic of visitors to all our\u00a0project increased by 4 % and the turnover figures of our\u00a0tenants raised up to 20-40 %, depending on the product\u00a0group. As a result, rental rates in our shopping centers\u00a0have shown an increase of 15% and the vacancy rate across all three SECs dropped below 1% and reached a\u00a0historic minimum.<\/p>\n

Ukrainian retail real estate market expected a significant\u00a0increase in competition in 2017. A number of large\u00a0\u201cregional\u201d format Shopping Centers were announced.\u00a0Among them Blockbuster Mall (GLA 135,000 sq. m),\u00a0Retroville (GLA 92000 sq. m), River Mall (GLA 60000 sq.\u00a0m), 1st phase of Petrivka Retail Park \u2013 first object of this\u00a0format in Ukraine (GLA 12,000 sq. m) and other smaller\u00a0SEC such as Smart Plaza Polytech (GLA 15,000 sq. m)\u00a0and Smart Plaza Obolon (GLA 13,000 sq. m). However,\u00a0all planned launches were postponed to 2018 or later.
\nFrom our side, we are getting ready for the arrival of new\u00a0players on the market: we are constantly improving the\u00a0communication strategy in terms of event-marketing.<\/p>\n

LDaily<\/span>: Construction industry is often called to be the\u00a0locomotive of the economy. How did crisis influence\u00a0<\/strong>the locomotive, is it standing on the siding? Please,\u00a0comment.<\/strong><\/p>\n

D. Vladov:<\/strong> Political and economical instability, currency\u00a0volatility and crisis in the financial market, outflow\u00a0of investments and lack of any available financing\u00a0significantly reduce the development of construction\u00a0sector. Due to these factors, activity on the construction\u00a0market in 2014-15 was minimal.<\/p>\n

However, according to the results of 2016\u00a0and 2017, paces of the construction works\u00a0show the YFY improvement of 20 %.<\/p>\n

In 2017 the construction of residential\u00a0buildings has increased by more than\u00a013 %, non-residential \u2014 by 27 %, and\u00a0construction of engineering structures\u00a0has increased by almost a third \u2014 by\u00a028 %. In the monetary equivalent, the total\u00a0amount of work exceeded 100 billion UAH.<\/p>\n

Thus, when getting back to your comparison, quoting that locomotive\u00a0is standing on the siding \u2014 is not quite\u00a0correct. It\u2019s better to say that under the\u00a0pressure of external factors it lowered\u00a0the pace of movement, but now it gains\u00a0momentum back.<\/p>\n

LDaily<\/span>: Tell us about the features of the Ukrainian modern commercial real estate market.<\/strong><\/p>\n

D. Vladov:<\/strong> The commercial real estate market in Ukraine today has one major characteristic \u2014 it remains highly\u00a0unsaturated qualitywise. And the prospects for the\u00a0market development are quite large.<\/p>\n

Retail real estate is the most developped segment of commercial real estate in Ukraine. Nearly all the conceptual formats of SECs are already present or will\u00a0shortly appear on the market (traditional, specialized, retail parks, lifestyle, outlet, etc.) The city with the highest\u00a0concentration of retail space per 1000 inhabitants is, of\u00a0course, Kyiv. Despite this, the Kiev Indicator (300 sq. m)\u00a0is almost twice lower than the one in Budapest (590 sq. m)\u00a0and three times lower than Warsaw Indicator (about\u00a0900 sq. m).<\/p>\n

Due to the lack of large-scale openings of the Shopping\u00a0Centers in 2017, the total stock of high-quality retail\u00a0property remained at the level of 2016 and amounted to\u00a01 million sq. m, The demand for retail premises increased\u00a0significantly, which led to decrease in the average vacancy\u00a0rate from 9,7 % to 6,1 %, and growth of maximum rental\u00a0rates by almost 3 % in dollar equivalent.
\nOffice real estate market was in a position of situational\u00a0supply surplus. The total volume of office space in 187 business centers of Kyiv is 1 683 000 sq. m, average level of vacancy for class \u201cA\u201d 18 %, and for class \u201cB\u201d 12 %.<\/p>\n

Average rental rate did not change compared to 2016 and was fixed on the level of $ 16-28 (for class \u0410) and $9-17 (for class \u0412). Total volume of new proposal in 2017 amounted to 43000 sq. m. Among the most significant object, put into operations last year are first two phases of Business Center \u201cAstarta\u201d, first phase of the Unit.City Innovation Park and expansion of the Business Park \u201cProtasov\u201d. The market for quality office real estate in the Ukrainian regions has uneven level of development,\u00a0which is directly linked to predominant concentration of business activity in the capital and cities-millionaires.<\/p>\n

Hotel real estate showed signs of recovery but still remains seriously influenced by the low level of business and tourist activity. Starting from 2015, the level of traffic of airport passengers showed a steady increase. Based on the results of 2017, out of total 14,2 mln foreign citizens (+6,7 % compared to 2016) who visited Ukraine, 39000 (0,3 % of total) indicated the tourism as the purpose of visit and 89000 (0,6% of total) \u2014 business purpose.<\/p>\n

Nevertheless, starting with 2015, the level of passenger traffic of international airport shows stable growth. In 2016 Boryspil and Zhulyany, two major international airports of Ukraine, took a flow of 10 million people. In 2016 Boryspil and Zhulyany, two major international airports of Ukraine, provided the services to 10 million people. In 2017, this figure increased by more than 30 %. This had a reflecton in the figures on the market: the occupancy of hotels went up to 46 %, RevPAR increased by 17 %, reaching the level of $ 68. The ADR remained at the level of 2016 (about $ 150) due to significant currency fluctuations.<\/p>\n

The Ukrainian market of logistics and ware housing real estate in 2017 characterized in a low level of introduction of new areas, as well as growing demand from tenants. For example, in Kiev, the volume of net absorption of space was 53,000 sq. m, exceeding the volume of input by 3000 sq. m. Thus, the vacancy rate dropped to 5 %, and the maximum lease rate remained stable at $ 54\/year. To summarize: the high-quality unsaturation of the commercial real estate market in Ukraine as well as country potential create a wide field of opportunities for the development of new modern projects in all segments of the real estate.<\/p>\n

LDaily<\/span>: Can you please characterize the investment climate of Ukraine today?<\/strong><\/p>\n

D. Vladov:<\/strong> Regardless the positive dynamics in all macroeconomic indicators of Ukraine, our country still belongs to so called \u201chigh risk countries\u201d.
\nThe situation in Ukraine today is based on the fact that the risks are offset by the increased level of profitability of the acquired assets. For example, capitalisation rate\u00a0on the real estate market in Western Europe is 2-4%, in Eastern Europe \u2014 5-6 %, while in Ukraine this indicator is 2-3 times higher \u2014 10-15%.<\/p>\n

The statistics data of Ministry of Finance of Ukraine shows that Foreign Direct investments into economy of Ukraine amounted to 1,85 billion dollars. The forecast for year 2018 is minimum 15 % higher. There was noted a considerable investment activity in 2017 mainly by the local players, such as company Dragon Capital, which received a confirmation from the AMCU for the redemption of the Victoria Gardens SEC in Lviv and 50 % of the company \u201cKray Property\u201d, bought the \u201cPrime\u201d and \u201cEurasia\u201d business centers in Kyiv and company Merx, which redeemed \u201cReneissance\u201d Business Center in Kyiv. It is also necessary to mention European Bank for Reconstruction and Development as one of the main foreign investors, with its annual budget of \u20ac900 million.
\nOur group also remains one of the main investors in Ukraine, and its activity confirms the intention to continue investing in perspective business spheres.<\/p>\n

Effective business management by the DCH Group and successful collaboration with investment funds such as Citigroup Inc., Apollo Global Management and Rothschild Investment Corporation confirm the irreproachable business reputation of the shareholder Alexander Jaroslavsky and DCH Group.<\/p>\n

LDaily<\/span>: What do you think are the most crucial obstacles to the flow of investments into Ukraine?<\/strong><\/p>\n

D. Vladov:<\/strong> There are several factors.
\n\u2022 First of all \u2014 absence of political and economic stability, consequently \u2014 the inability to forecast on the mid- and long-term basis, which is unacceptable for business.
\n\u2022 Second \u2013 absence of legislative base, ambiguous interpretation of laws and disrespect for their fulfillment.
\n\u2022 Third \u2013 lack of any loan financing, so called \u201clong cheap money\u201d.<\/p>\n","protected":false},"featured_media":114468,"menu_order":11,"template":"","issues":[28],"class_list":["post-115583","ldaily","type-ldaily","status-publish","has-post-thumbnail","hentry","issues-28"],"_links":{"self":[{"href":"https:\/\/ldaily.ua\/en\/wp-json\/wp\/v2\/ldaily\/115583","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ldaily.ua\/en\/wp-json\/wp\/v2\/ldaily"}],"about":[{"href":"https:\/\/ldaily.ua\/en\/wp-json\/wp\/v2\/types\/ldaily"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ldaily.ua\/en\/wp-json\/wp\/v2\/media\/114468"}],"wp:attachment":[{"href":"https:\/\/ldaily.ua\/en\/wp-json\/wp\/v2\/media?parent=115583"}],"wp:term":[{"taxonomy":"issues","embeddable":true,"href":"https:\/\/ldaily.ua\/en\/wp-json\/wp\/v2\/issues?post=115583"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}