Check the Back To Business!

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There are some photos from Back To Business cocktail, kindly provided by Europaproperty.

Real Estate Cocktail Event in Kiev

Hello everyone!

Sorry for short disappearing, there were couple reasons. Now, I'm back in track.

For now, I'd like to announce a great event of this last fall - Real Estate Cocktail Event in Kiev. In these days is very important to meet and share how it's going on the market.

Well-known Europaproperty is organizing this event in Kiev, December 3, at Hyatt Hotel. They are expecting around 150 guests at the event from Ukraine and also guests from outside Ukraine.

You can email to Mark Willis(email: mark@europaproperty.com: SKYPE: mark.europaproperty), who in charge for tickets and sponsorship opportunities

I'll be there and hope to catch up face-to-face definitely.

NAI Global Member in Ukraine Wins Major Commercial Real Estate Award

NAI Pickard, NAI Global’s exclusive member serving the Ukranian market, has been named the Best Commercial Property Agency, Ukraine, by the Europe & Africa Property Awards 2009 in association with CNBC Arabiya.

The award is part of the International Property Awards program, one of the world’s most prestigious competitions dedicated to honoring the best real estate professionals around the world.

Terry Pickard, chairman of NAI Pickard, said of winning the award, “It shows that being entrepreneurial and aggressive in difficult times pays off ‘when the going gets tough, the tough get going.’”

The award will be presented in a ceremony on October 16th.

Source: NAI Global


BTW, this was my 400th post in the blog! Congrats myself :)

Expats In Ukraine: Let's Discuss How It's Going

I've found an interesting article about living of expats in China. There are many unexpected issues, at least, for me personally.

And I wondered why we cannot discuss the such topic here, in Ukraine. It would be great if expats who (as I know) read the blog put a couple notes about their lives and feelings in Ukraine.

I hope it will be interesting

The Impact of the Global Liquidity Crisis on Ukraine and the Road to Recovery

Yesterday, in my previous post it was mentioning about Sigma Bleyzer analytical materials.

The Bleyzer Foundation position paper "is a brief summary of the key economic challenges facing Ukraine. The disproportionately large impact of the recent international liquidity crisis on Ukraine, compared to other peer economies, calls for a thorough assessment of pre-crisis economic conditions and policies. A good understanding of these issues is necessary to evaluate the effectiveness of adopted anti-crisis measures. More than that, this analysis will help to calibrate current macroeconomic policies in order to achieve a quick and sustainable economic recovery."

The major issues covered by the position paper are:

1. Why did the international liquidity crisis affect Ukraine more than other emerging economies?
2. Ukraine’s main vulnerabilities to the financial crisis in 2008.
3. Why the local currency depreciated more than the currencies of other countries.
4. Why the real sector, including GDP and exports, declined so dramatically.
5. What measures taken by the Ukrainian authorities to deal with the crisis were adequate and what measures were inadequate.
6. Measures that the country could undertake to avoid deepening the crisis during the Presidential election period and until a new government is in
place.
7. Measures that the country should undertake in the medium term to accelerate economic development.

Today you can download this excellent report.

Ukraine Shows First Signs Of Economic Recovery

From Interfax-Ukraine

Despite the first signs of economic recovery, the situation in Ukraine in the near-term will remain challenging: Ukraine's GDP may fall by 14% in the 12 months of 2009, experts have said.

This opinion was shared by participants in a press conference in Kyiv on Wednesday, which summed up the First Annual International Forum on the economic development of Ukraine.

The forum, which took place in Washington, the United States, on October 15, 2009, was attended by over 300 representatives from the world's largest companies, international institutions, financial organizations, namely from the International Monetary Fund, the European Bank for Reconstruction and Development, the World Bank, the European Union, as well as high-ranking officials. In particular, among the forum's attendees were Ukrainian Vice Premier Hryhoriy Nemyria and Ukrainian Economy Minister Bohdan Danylyshyn.

Speaking at the press conference in Kyiv, Director of the Institute for Economics and Forecasting under the National Academy of Sciences Valeriy Heyets said that despite the fact that the pace of economic decline in Ukraine has slowed recently, the general economic situation remains challenging.

The CEO of the Bleyzer Foundation, Oleh Ustenko, agreed. He said that the long-term economic forecast for Ukraine remains favorable, although the state of affairs of business environments should be improved to attract investment as a key source of economic growth.

According to the analytical materials issued at the press conference, Ukraine has survived one of the most serious downturns and the strongest devaluation of the national currency at the peak of crisis: in autumn 2008 the national currency fell by over 50% against the U.S. dollar, and the PFTS stock index plunged by over 70%, while real annual GDP shrank by 8% and 19% in Q4, 2008 and in H1, 2009 respectively. Moreover, over the last two months 2008, exports of goods fell by 16% in the annual terms, and in January-July 2009 they fell by 49%.

Starting from spring 2009, more signs that the economic adjustment has reached bottom in the industrial, trade and construction sectors have appeared.
"The further improvement of the economic situation this year will continue thanks to a low statistical base and thanks to recovery of commodity and material stocks and the introduction of fiscal stimuli. The reinforcement of the international economy will promote the more rapid recovery of Ukraine," the experts said.

Among the key achievement of the Ukrainian government in fighting the crisis were agreements with the International Monetary Fund (IMF, the Stand-By program worth $16.4 billion), and with the World Bank and other international financial institutions, which mitigated refinancing of the short-term foreign debt; the high level of fiscal discipline; the cut of the budget's deficit in 2010 to 4% of GDP and satisfaction of IMF quantity criteria regarding the monetary base.

However, the experts said that the Ukrainian government has not drawn up a common coordinated strategy for overcoming the crisis, has not allocated enough funds to support the domestic economy, while the rise in crediting stopped too sharply. The use of funds given by the cabinet to support liquidity was not controlled in the proper manner.

"It's likely that the funds were spent on the purchase of foreign currency to take aboard and not on the recovery of the domestic crediting market. This strengthened the devaluation pressure on the hryvnia," the experts said.

The Ukrainian cabinet has not implemented an IMF requirement to increase prices of gas for households, and on utility public services, to realize a comprehensive strategy aimed at restoration of solvency of Naftogaz Ukrainy and the Pension Fund, to realize initial privatization plans, which affected the financing of the national budget, the experts said.

According to the press conference materials, it is important to receive financial support from the IMF to avoid a worsening of the downturn within the next six months. The authorities should introduce a number of key economic measures agreed with the IMF, reads the document.
"In 2009, the deficit of the national budget should not exceed 6% of GDP, and the national budget for 2010 should foresee a deficit not exceeding 4%. This means that the increase of pensions and minimum wages should not be higher than inflation. Tax relaxations and a moratorium on tax audits should not be adopted.

"The financial state of Naftogaz Ukrainy and the Pension Fund should be improved to a level that will prevent there being a need for extra aid using budget funds," read the materials.

As for monetary policy, the experts said that the NBU should try not to print too much money and refuse proposals to finance projects linked to preparations for the Euro 2012 European football championship using the NBU's profit; to avoid monetization of the deficit of the national budget; improve the transparency of the bank refinancing policy and strictly control target usage of funds allocated to banks.

"The Ukrainian authorities will have to use new ways to increase direct domestic and foreign investment, which will promote growth in production and the creation of new jobs to boost the pace of economic development," the experts said.

Empty Flats

To date, there are at least 30000 flats in Kiev being empty and only 600 lease deals have closed last couple month. Compare these figures with early 2008 when 3000 deals were only per 1 month. Why that's happen? People inflow in Kiev is lower, many flats moved from sale to rent conditions and they are still expensive.

So you have a good options to find a proper deal.

KDD Results - 1H 2009

KDD Group N.V. reported results of its operations for the 1H 2009.

According to the company'report presented at the London Stock Exchange in January-June 2009 KDD Group received EUR 3.087 million net profit, which is 14,9 times lower compared to the same period in 2008.

According to the company, the total amount of management salaries for the 1H reached to EUR 374,000, while at the end of 2008 it amounted to EUR 874,000. To date of June 30 in KDD Group employed 92 people, while at the end of last year - 134 respectively.

Kiev Office Market - Fall 2009

According to CB Richard Ellis, from January to September 2009 the number of deals on office lease has decreased compared to the same period last year, at least twice. This is confirmed by Colliers International, adding that to date more than 90% of transactions are due to migration of tenants from one office center to another one.

Now many are trying to rent in a prestigious office spaces, located in CBD. In particular this applies to the pharmaceutical, FMCG and IT-oriented companies working with offshore partners, as well as representative offices of foreign companies that were least hit by the financial crisis.

At Colliers International argue that because of this trend, A class vacancy is now less than 10%, whereas in the 1H 2009, it reached 15-20%. In some properties, for example, Leonardo 2nd phase, Prime or Podol Plaza, almost no vacant space left.

In B and C class average vacancy rate, grew from the beginning of the year with a 5-10 to 15-20%. Most affected outdated and the poor quality office centers, where there outflow is significant.

Situation is even worse with the unclassified D and E properties, where vacancy has increased since the beginning of the year from 18 to 25%. The most tenants such offices on the first floors - are banks, insurance offices, telecommunications companies, beauty salons - suffered from financial crisis stronger than other companies.

This fall in A, B and C classes most demand space is 100-150 sqm, whereas a year ago there was a strong demand for 2500-1000 sqm. That's the fact many companies have reduced the number of staff and no longer need large spaces.

Increased competition for customers has forced the owners of office property slightly lower prices for rent. If in April 2009 base rent for A Class space estimated as USD30-40/1 sqm - now uSD25-38/1 sqm, USD18-25/1 sqm - now USD 15-22/1 sqm for B class spaces and USD12-18/1 sqm - now USD9-13/1 sqm for C class respectively.

Owners of office centers are also ready to fix the base rate at UAH with fixed USD exchage rate with volatility no more than 15%. If it exceeds this figure, the UAH rent rate should be reviewed.

In turn, tenants are now trying to sign non-breaking lease agreements for a term from 5 to 7 years, offering the fixation of current base rates and penalties for the break up. But to get good terms is possible for limited number of tenants - primarily in the business centers, whose owners want to sell property in the next 2-3 years. Others agree to sign not more than 1,5-3 years with a subsequent renegotiation.

Total Collapse With Okey-Ukraine

Okey-Ukraine is not pay for the delivered goods worth about UAH 130 million UAH, told the retailer' suppliers

A mobile phone of Raul Parusk is not responding. He is a manager of Expert Capital SA, Luxembourg which is owns Okey. Supplies cannot to get rest of goods delivered, thee disappeared.

Among the creditors were large companies such as Nestle.

Meanwhile, according to the suppliers, Okey-Ukraine has paid or agreed to restructure the debt to banks for loans at a much higher amount - about UAH 400 mln. The biggest lenders are Ukrsibbank and Finance and Credit. But Finance and Credit sold the equipment which was a pledge for a loan to Auchan. So, there is no debt from Okey, tell officials from bank

Suppliers have applied the criminal lawsuits against retailer, hoping to protect own business in such manner. They trying to prove that Okey' management was involved into the bringing to bankruptcy for the purpose. In that case, suppliers will have
chance to bring their money back from other owner' income, even from the other business.

Conflict may also affect on the other assets and business of Expert Capital. Until the end of the week suppliers will send a letter to the EBRD head office. They will ask the management not to issue a new USD 39.9 mln. tranche to Expert Capital for the shopping centers construction in Ukraine, due the owner is not fulfilling debt obligations. Last spring, the EBRD provided a loan to three companies belonging to the "Panorama Group", with total amount of USD 139.3 mln. The first USD100 mln. was transfered last year.

Please Join To My Joy!

Dear friend of mine! Dear readers of Ukraine Real Estate Market. Today we are have stepped over 100.000 entries to the blog! I never imagine it can be real. But you did it! Thanks you very much. Blog helped me a lot, and I'd like to believe you either.

Hope to see you further! Good luck!

Totaly Useless Info About Mirax

Moscow office of Mirax (hey, Ukrainian one has gone, remember?) fired 90% of its staff during last year. Before the crisis, they have around 3000 employee only at back-office. Now this figure down at only 300 people. As well as field workers - the same amount is.

And who knows how it would have ended if Mirax has not agreed with the Alfa Group, which had serious intentions to get his money back. Actually, this is Morgan Stanley loan to Mirax, which Alfa bought. But yesterday they had agreement to resolve that problem and Mirax may sleep well another 1,5 years.

In my mind, Mirax is biggest and brightest example of what's going on in development market across Russia and Ukraine.

Yuri Nartov Left Colliers

One of Managing Directors of Colliers Ukraine, Yuri Nartov left a company these days. I know Yuri as an excellent professional and very kind person. It was a please for me to work together. That's why I'm sure he will be very successful in his new track.

Alexandr Nosachenko is only Colliers' Managing Director now.

Good Luck, Yura!

Intermarket Takes A Bankrupcy

Intermarket retail chain, well known by its Arsen supermarkets, has been accepted as bankrupt by Kharkov Commercial Court. Early the retailer' suppliers reported on UAH 200 mln. bad debt from it. Then Intermarket proved only UAH 145 mln. As a final decision the new owner, Eurotech took responsibility to pay back only 75% of given amount

Vox Populi

Attention to people from leading RE players at Ukrainian market: if you want to participate in new media project, feel free to contact me.

New Appointment in Colliers International

Colliers International has announced the appointment of Hadley Dean to the position of Managing Partner in Central and Eastern Europe region.

In his new position Dean will be responsible for regional client strategy, as well as implementation of international initiatives and actios to Colliers International offices in the Czech Republic, Slovakia, Hungary, Romania and Ukraine. He holds his current position of Managing Partner of Colliers International in Poland, too.

Under his management office of Colliers International with 20 employee, grew to three offices with 120 people.

Hadley Dean works in commercial real estate market for 13 years. He began his career in London. In 1999 he moved to Prague to develop agency business. In 2000, Dean moved to Poland, focusing on strengthening the presence of Colliers International in this country.

New Season, New Episodes!

Dear Ukraine Real Estate Market friends! I'm starting a new season of the show:) Almost 3 years together, this does matter. At this autumn - be ready to answer the questions. Stay tuned on UREM!

Retail Rates - As Bad As Possible

According to local CBRE' office, Kiev is one of the TOP-3 city with rent rates fall (I even cannot name it as "decreasing"). Ukraine' capital with -32% figure follows to Buenos Aires (-37%) and Warsaw (-33%). CBRE notes that biggest down numbers are in the weak concept and poor location (50-70% fall) while more succeed SCs have about 30-40% rates fall. Actualy I don't understand how the determine the median (-32%) with provided figures. Sergie Sergienko from CBRE predicts that in case of poor consumptions rent rates will continues to move down at least up to 5-10% more.

Natalia Kravets from Colliers notes that vacancy is pretty predictable: from 1-2% for prime SC up to 5-7% for unlucky ones. Some figures: Globus rent rates (USD120-150 for now comparing with USD 200-250 the same period last year), Karavan (USD 100-140 for now; 150-200 last year), Piramida (USD 50-70 for now; 80-190 last year)

Hot Trend

Taking into growing bad debt in the banks, almost no loans for cap operations, next elections, and low consumption I would be sure enough to make following decision:

Next hot trend in Ukraine is going "distressed assets" deals.

I see that some groups are ready to buy at much lower price level than before. But they have the liquidity. And they wait and tease. It seems these are the guys from Middle East, Russia, Israel. An we can predict the era of overpricing in Ukraine almost ended. Of course, many owners and land banks people can not even imagine such scenario, but life will put all on the table. Just recall XXI Century case.

METRO Changes its CEO

CEO of METRO Cash&Carry Ukraine left the company and moved to Russia, in Lenta, one of the biggest Russian retailer

XXI Cenury Is Waiting For The Better Times

XXI Centuury is not going to re-concept their shopping centers in development phase. They're speaking on Sevastopol and Lviv projects as well as Kvadrat on Miloslavskogo str (cheers to Colliers and Vladimir Timochko! :) CEO of the company said that initial concept is pretty good.

Also he did confirm XXI Century doesn't want to sell their flagship properties - Kvadrat shopping centres, at list on current bid.

About Current Situation On Kiev' Hotel Market

Since the beginning of 2009 hotels occupancy in Kiev has decreased by 10-20%. This is stated in DTZ last report. Most declined segment is 5-star ones. In June this number averaged 35%, 20% lower than the same period of 2008. For example, «Opera» hotel room occupancy fell by 16% compared to same period last year.

The only way to retain customers for the hotel was cut the prices. In average at 1H 2009 that declining was for more than 40%. The biggest fall was 5-star hotels. For example, during last year, a standard room in Hyatt and Premier Palace was about USD550, for now, its price fell to USD 350/day. 4-star hotels (Riviera, Radisson) decreased the price from USD350 to USD230.

Net income per room has dropped significantly either. If in 2008, with each room with average price of $ 550 per night hotel having got USD303 income, in 2009 this figure only USD123 with average price of rooms at USD350 respectively.

However, to further cost reduction will apply, people say. 5-star hotels will not reduce prices, due significantly rosed cost of utilities. This is much expectable for the 3- and 4-star properties.

Bye Bye C&W

Cushman & Wakefield close their Ukrainian office (as well as local entity) and terminate all activities here.

It's very pity, because they are very professional and stable team within other markets, friends of mine were working there and I had a bit relations with them in the past.

CU next time. Hope so.

O'Key Ukraine Change Strategy Again

Till now «O`Key» declared the looking for a strategic investor to keep operations, but now the company is considering to sale the whole business.

The company was ready to sell 50% of the equity to raise funds necessary to maintain the growth - till 2011 the company had planned to take a 3-5% retail market share. Then, experts evaluated 100% of the chain approximately USD56 mln.

«The negotiations are almost done. Three strategic investor came in the last round of and in the next two weeks will be open the buyer», - reported «Renaissance Capital Ukraine», which is consultant of the deal.

There are the few details of expected transactions. In the «Panorama Group», which are the developer of shopping centers (have a same owner with the «O'Key») stated that the intention to terminate the lease with the «O'Key» in 3 SC. This is a "Sky Mall" in Kiev, "Sunny Gallery" in Kriviy Rog and "Flagman" in Zaporozhye.

«O'Key» develop four hypermarkets (total shopping area K36 sqm) in Kiev, Kriviy Rog, Zaporozhye and Kharkiv. Income in 2008 - UAH 740 mln. 100% share of the company (through «Expert Capital») own by estonian investor Hillar Teder.

Shoking Numbers

All of you, who remember situation in commerical real estate in Ukraine, as well as some of my old posts, should be shocked with current cap rates in Kiev. Particurlarly, for property owners. For example 1-1,5 year ago a prime office property deals could be negotiated at 7-7,5% yeild only. But now these figures completely different: 16-17% for offices, 15-17% for retail and 18-20 for logistics.

Feel the difference? Credit crunch in action

The Ukraine Construction: Sharp Fall

With kind permission from CEEC Research, I've posted a brief report regarding Ukrainian construction market

Prague, 3rd April 2009

Total decrease in construction industry in Ukraine

The Ukraine construction sector is experiencing significant and unexpected changes. For the year 2009, 73% of construction companies expect Ukraine construction industry to decrease. These facts are brought by the CEEC Research, whose general partner is KPMG Czech Republic. The research results also show that the first signs of the decline started to appear at the beginning of 2008, nevertheless the companies did not perceive it as the start of a potentially broader and longer crisis. Now the economic crisis fully influences the sector in question. All interviewed companies feel itself limited in their business – mostly by insufficient financial resources as well as a poor demand and a tough competition. Due to mentioned problems the usage of capacities of construction firms decreased by 50 %.

Are there any positive signs for the future? What are the basic issues which will mainly influence the existence of the construction industry in Ukraine? What are the major factors limiting companies growth? How are new business contracts acquired? What is the experience of companies with tenders? Which information sources do the Ukraine construction companies use? These and other important findings are provided by the Ukraine Construction Qualitative Study.

Highlights from the Ukraine Construction Qualitative study:

• 73 % of the respondents expect the sector to decrease in 2009 (from the 2008 basis, which was already a 16% decrease on the 2007 results). ). If we look on a more detailed level, the reality could be even worse (36% of respondents expect a decline of more than 20%).For the 2010-2011 period, the expectations are a bit more optimistic: in average respondents expect the sector to grow by 3 %.
• 100 % of the interviewed companies experienced limitations to their business. It means a significant increase from the previous years – only 64% in 2007 and 82% of companies in 2008.
• The most frequently mentioned limiting factor was insufficient financial resources (68 %, 22 % in 2007), followed by tough competition (increased from 15% in 2007 to 68% in 2009) and high material costs (which have doubled from 33% in 2007 to 66% in 2009).
• Companies have also decreased their employment of foreign workers on their projects from 16% to 7% 2008/2009.
• The Internet is used by 100 % of the interviewed construction companies, 89 % of companies use internet for information search, 50 % for company presentatin and about half of the companies use the Internet as an information source for potential new business deals
• Long-term contacts were rated as the main source of information (91 %), followed by meetings and presentations and the Intenet.
• The most often used sources of new deals/contracts for construction companies are preferred partnering agreements (frame contracts), long term contacts/networking (personal contacts) and tenders.
• Companies were asked: “Have you ever been asked for a bribe during the selection process/tender? 19% of respondents replied that they have never been asked for a bribe and the same share of companies replied “yes”. Nevertheless there was a great increase in “no comment” answers.
• Construction companies provided the tenders with one of the lowest transparency rating in the CEE region (only 3.2 points out of 10max, even lower than in Moscow with 3,9 points), which indicates that the transparency level is very limited. 25% of companies shows that public tenders are completely non transparent.
• 59 % of construction companies assess their risk management as intermediate; 5 % as advanced (decrease from 13 % in 2008), 33 % as basic and 3 % as low level.
• Only 29 % of the construction companies have never breached their risk management policy. The majority confirmed that they breach their risk policy to secure a new contract either rarely (34 %) or exceptionally (26 %); 11 % of firms do so often (increase from 2 % in 2008).
• The most often used methods for the selection of suppliers are preferred partnering agreements (which have further increased their share from 68% in 2008 to 83% in 2009), followed by long-term contacts/networking (60 %) and also recommendation (growing from 2007 until 2009 – 49 %).
• Key criteria during the supplier selection process are: price, mentioned by 74 % of the construction companies, experience of the supplier (68 %) and applied technologies (60 %).
• In the long-term, companies predict that the major factors impacting their business development will be mainly: financial situation of their company (increased from 63% in 2008 to 73% in 2009).
• The key investment areas for 2008-09 will be project management processes (increased from 38% in 2008 to 51% in 2009), the construction mechanization (top priority last year) has slightly decreased its share in the respondents’ samples.

The Ukraine Construction Qualitative Study is the first succefull report published by the CEEC Research in 2009. The interviews with construction companies operating in this region were performed in the Q1 2009 and provide findings based on 47 face-to-face structured interviews with the representatives of the local construction companies.

The analysis results provide interesting insight into the current construction situation which is visibly impacted by the financial crisis. The report is focused on the three key areas which are crucial for the qualitative analysis of the sector. These three areas are: companies’ expectations for the sector development, used sources of information about new business opportunities and last but not least applied methods for acquiring new business deals.

The full version of The Ukraine Construction Qualitative Study can be downloaded on the CEEC Research web site: www.CEEConstruction.Eu free of charge. At the same place you can find all details about the methodology, targets of the research and also qualitative reports of the other nine researched countries. The Central and Eastern European Construction (CEEC) Research project was conducted in partnership with KPMG in the Czech Republic.

IMF Mission Chief Notes Progress In Talks With Ukraine On Stand-By Programm

Source: Interfax-Ukraine

IMF Mission Chief in Ukraine Ceyla Pazarbasioglu has noted progress made in the talks between Kyiv and the International Monetary Fund on resuming their cooperation under the stand-by program.

"We have moved ahead rather significantly in our discussions," she said at a briefing in Kyiv on Monday.

Pazarbasioglu refused to disclose the details of the talks, but added that she would report on the progress in the talks within two or three days. She said that the IMF is currently monitoring Ukraine under a special program, as per a condition for allocating the country the first tranche of the fund's loan, worth a total of $16.4 billion.

Pazarbasioglu said that after the IMF mission works out its proposals, it will submit them to the IMF Executive Board and added that the latter would either amend the existing program or would approve a new one. She also refused to comment on the period of the mission's work in Ukraine and on the results of this work.

"Our goal is to reach agreement, and each of the sides in the process is doing everything to achieve this progress," she said.

She said that much depends on tomorrow's voting on anti-crisis bills by the Verkhovna Rada, Ukraine's parliament.

For Those Who Like Colliers Market Reports

If you a fan of Colliers Market Reports (actually, me either :) you can download them from Colliers Reports page. As usual - they're very informative and hi-level performed.

CBRE Evaluate Commercial Deals

Investments in Ukrainian commercial real estate in 2008 fell by 28% compared with 2007 - to 413 million dollars, says CB Richard Ellis' analytical report.

«The total investment for the last year amounted to around 413 million dollars, which is 28% less than in 2007, but 77% more than in 2006. After a sky-rocket 2007, investment activity in 2008, beginning to weaken. Although the number of transactions increased, the amount of each one is more than two times less than the average figures in 2007 - USD 32 mln. against USD 90 mln.», - mentioned in their market report.

Colliers Predict Vacancy Decreasing

According to Colliers Ukraine, they are expecting shopping centers vacancy at 10-15% level. And this is regarding Kiev. Just 1 year ago it has been unbelievable. And with it, rent rates in UAH will fall up to 30% during next 12 month.

Of course this situation is very painful for developers, particularly loaded with loans. I will not be surprised id some of them , will get bank owners. But it could an instrument for retailers for cut cost and prices, what in current situation can be only one solution for keeping sales.

Today I've seen forecast for retail turnover for 2009. These figures are terrible: we have to expect downfall either 35% or even 50% respectively if the economy won't wake up. I'm not sure in that deadly scenario, because significant part of households income is hidden for statistic. But this fall will be significant one, no way.

New personal activity

Now I provide personal negotiation support, consulting and services in RE market in Ukraine. If you interested - feel free to email me.

Flashback: Jan 09 - Feb 09 in Ukrainian RE

Due the many reason I did not post any new stuff for a while. So, I'd like to summarize some news and events in Ukraine for the past 2 month.

• Vacancy in A class office center reached 10-15 % comparing with same time at 2008. Rent rates lower as least for 30% in USD in some cases for the existing lease
• Rent rates in shopping center will drop for 10-15 % in USD next 6 month
• Residential market, especially the primary one has zero demand. So experts waiting for 30-40 % fall during 2009. Construction works are continuing only at 15% of objects-in-progress/
• Belgium IIG review their business in Ukraine, taking into instable condition in Head office.
• Nikolay Tolmachev, TMM's CEO predicts 90% level of bankruptcy in small and mid-developers.
• MOS City Group close their activity on Kiev' "Manhattan" on Rybalski island on Dnepr river
• Africa Israel stops their retail project in Zaporizhe
• Mirax is trying to sell uncomplete Mirax Plaza for USD90 mln. Maximum market price - 30 mln, funds say.
• Colliers Ukraine closed brokerage deals for more than 3000 sqm on Kiev office market
• NAI Pickard ans Metro Group Asset Management Ukraine LLC get into joint venture regarding property management
• NEST sells brand new 8100 sqm offiice center on Mechanizatorov str. But still no tenants there
• Schmidt Investors bougt A class office center "Illinsky" from Ukrsibbank co-owner Galiev
• Russians - Inteco, Sistema-Gals, Mirax, PIK go home - all activities are closed.
• East-Ukraine retaler Amstor has techical default on corporate bonds
• IKEA will start construction their first shopping centre at 3Q 2009
• OKEY seeks strategic alliance for future growth and put on the table 25% stake
• OBI has opened first own DYI in Odessa

Stay tuned!