MARKETBEAT, Kyiv, Ukraine, Office Q1 2020

KYIV, Q1 2020

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Snapshot: Kyiv office property market, Q1 2020

In Q1 2020, new supply on the office property market in Kyiv amounted to around 7,500 sq m GLA, which is only 15% of the figure for Q1 2019 and around 50% of the figure of Q1 2018. The office building ‘Nyvky City’ developed via reconstruction was the only property delivered in Q1 2020. Net absorption reached only around 3,000 sq m.

As of early April 2020, over 200,000 sq m GLA of new office space was scheduled for completion by the year-end, however the evolving economic slowdown, in Ukraine and globally, is likely to result in a downward correction of the actual new supply in the sector during the following 9 months.

Despite the quarantine measures and economic slowdown, primary vacancy reached 6.7% in March 2020, which is only a minor increase from 6.5% at the end of 2019. Primary vacancy is presently forecast to increase until the year-end, due to a quite sizeable pipeline supply in the sector combined with a potential correction of expansion and/or relocation plans of a number of office occupiers in Kyiv.

In Q1 2020, prime office rent remained at USD 30 per sq m per month (net of VAT, service charge and utility payments). In view of the sharp deterioration of economic situation both in Ukraine and globally, some downward correction in occupational costs across all office property classes is now likely during the coming months, but various properties on the market will demonstrate different rental performance depending on their quality, occupancy and management.