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.