Real estate market overview, Ukraine, H1 2021
- Accelerated by the COVID-19 outbreak, from the start of 2020 Ukraine’s economy slowed down with real GDP contracting for the first time since 2016. In Q2 2021, real GDP was reported to decline by 2.2% and, in accordance with preliminary estimates, to grow by 5.4% in Q2 2021. During H1 2021, business expectations and consumer confidence improved, and economic growth of over 3% is expected in 2021.
- Following the abrupt weakening of occupier demand in 2020 due to COVID-19, from the start of 2021 general dynamics on the office property market in Kyiv has improved. In H1 2021 new office supply was similar to the annual figure for 2020, take-up was three times higher than in H1 2020, while new absorption reached almost 53,000 sq m. Prime rents increased in Q1 2021, remaining generally stable during Q2.
- The year 2020 turned to be particularly challenging for the retail property market globally due to the COVID-19 pandemic. Nevertheless, in Ukraine development activity in the sector remains high with over 76,000 sq m GLA delivered in major cities during H1 2021 and more shopping centres scheduled for commissioning in H2 2021-2022 including over 400,000 sq m GLA in Kyiv. Also, several international retailers entered Ukraine, and a number of local operators demonstrated positive performance.
- During H1 2021, the warehousing and logistics property sector in the Greater Kyiv area demonstrated positive dynamics both on development and occupier demand sides, with the vacancy decreasing to 1.5% in Q1 2021 and stabilising at around 1.6% in Q2 2021, as well as upward pressure on prime rents.
- Since the start of 2021, the market sentiment and actual transactional dynamics in the investment market on the commercial property market in Ukraine markedly improved. In H1 2021, total volume of secondary investment transactions on the commercial property market in Ukraine is estimated at around USD 174 million, which exceeding by over 13% the annual figure for 2020, accounted for almost 47% of the annual figure in 2019, as well as exceeded the annual activity reported during 2013-2017.