Indicators of the retail property market in Results of 2015 Retail... · Overview of the retail property market of Kiev| Results I 2015 Real GDP (I Q 2015) - 7,2% Inflation + 42.3%

Overview of the retail property market of Kiev| Results I 2015

Indicators of the retail property market in

Kyiv

Results of 2015


Indicators of the retail property market of Kyiv .……………...……..8

Socio-Economic Development of Ukraine……………….……3

Market Offer………………………………..……….9

Vacancy Rate / Store traffic in SC …..…...…..…14

Dynamics of Rental Rates …………………………..………15

Demand Analysis ………………..…………..…….…………..16

Trends and Forecasts ………………………..……….………18

2


Socio-Economic Development of

Ukraine

3


Socio-Economic Development of Ukraine

4

Real GDP (Quarter III of 2015.)*-7.2%

Inflation (end of year) * +43.3%

Exchange rate (UAH/USD)** +34.3%

Retail trade turnover -21.4%

Export * -30.8%

Import * -32.3%

Industry * -14.4%

Agricultural Sector -4.7%

Public Debt** +27.66%

Construction * -9.5%

Commissioned Housing* -3.1%

Average Salary ** -21.8%

Direct Investments -3.9%

* in relation to indicators of the similar period of 2014

** in relation to indicators of December 2014


Real GDP (I Q 2015) - 7,2% Inflation + 42.3% Retail trade turnover - 21.4%

The dynamics of GDP, billion UAHGross Domestic Product

Nominal GDP of Ukraine for the III quarter of the year 2015

amounted to 1,372.2 billion UAH., that is 248,559 billion UAH or

18.11% higher than an index for the similar period of previous

year (1,123.6 billion UAH). Real GDP displays a 24% drop that in

money equivalent makes up 1,031.9 billion UAH.

Consumer Price Index

The inflation index in Ukraine by the end of 2015 made up

143.3% that first of all is caused by devaluation of hryvnia

and, respectively, increase in prices mainly for imported

production.

Commodity Turnover

Turnover for 11 months of 2015 amounted to 918.4 billion

UAH., that is 11.7 billion UAH or 18.11% higher than an index

for the similar period of the previous year. Such a positive

dynamics was achieved through the depreciation of the national

currency and the growth of prices for food products. By

comparing the turnover of January and November 2015 in

comparable prices of 2014, it makes 78.6 per cent of the January-

November 2014 scope, i.e. less by 21.4%.

The peak months of growth of retail commodity turnover

in Ukraine following the results of the period January-

November, 2015 were: February-March, July, October.

The greatest decrease in retail commodity turnover in comparison

with the similar period January-November, 2014 is recorded in

Luhansk (by 76.5%) and Donetsk (by 67%).

The leaders of the absolute volume of retail trade turnover

are Kyiv region (47.2 Billion UAH, Kyiv – 141.2 Billion

UAH), Dnipropetrovsk region (85.4 Billion UAH), Kharkiv region

(75.6 Billion UAH) and Odesa region (65.5 Billion UAH).


Ukraine

5

544

720

948 913

1,079

1,300

1,404 1,4491,566

1 3727%

8%

2%

-15%

4% 6%

0% 0%

-13%

-24%

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

0

200

400

600

800

1000

1200

1400

1600

1800

2006 2007 2008 2009 2010 2011 2012 2013 2014 Q3. 2015

Nominal GDP, billion UAH. Real GDP, %

1,042

1,3511,806

1,906

2,239

2,6333,026

3,619

4,012 4096

12%17%

22%

12%9%

5% 0%

1%

25%

43%

25%29%

19%

-17%

8%

15%

16%

-2%

-15%

-21%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

2006 2007 2008 2009 2010 2011 2012 2013 2014 Q3. 2015

Average salary Consumer price index

Dynamics of retail commodity turnover

Consumers market


Export -30.8% Import -32.3% Commissioned Housing* -3.1%

Foreign economic activity

The current negative situation in the country

continues to adjust requirements to the external economic

activities of the country.

As of November, a decrease of exports of goods

compared to the same period of 2014, is by 30.8%, of

imports - by 32.3%. Due to the significant reduction of

imports a positive balance of $ 380,960 million dollars is

recorded.

The dominant share in the structure of the Foreign

Economic Activities belong to the following partner

countries: the Russian Federation is leading (export-

19.1%, import-24, 6%), China(4.6%, 9.8%), Turkey

(6.4%, >2%), Poland (5%, 5.7%), Italy

(4.6%, 2.8%), Germany (3%, 9.6%).

Foreign economic activity of Ukraine


Ukraine

6

Construction

For the period from January to November 2015

enterprises in Ukraine completed construction works in the

amount of 46,990 billion UAH, that is 9.5% below the rates

of construction for the entire 2014 (in money equivalent

51,108 Billion UAH), and by 4.7% more than for the same

period of 2014. (in money equivalent 46,990 Billion UAH).

New construction, reconstruction and technical re-

equipment amounted to 80.7% of the total amount of

construction works, capital and current repairs-10.9% and

8.4% respectively.

253,707

323,205

444,859

423,564

549,365

707,953

717,347

681,899

770,121

31341659,8

269,200

364,373

520,588

438,860

580,944

779,028 835,394805,662

834,133

30960699,8

0

10 000 000

20 000 000

30 000 000

40 000 000

50 000 000

60 000 000

70 000 000

80 000 000

90 000 000

2006 2007 2008 2009 2010 2011 2012 2013 2014 Q3. 2015 Export Import

8 628

10 244 10 496

6 400

9 339 9 410

10 75011 217

9 741

1 620

10,40%

18,70%

2,50%

-39,80%

45,00%

0,80%

4,40%

-2,10%

-19,30%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

0

2000

4000

6000

8000

10000

12000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Ukraine, thousand sq.m. Growth rate, %

Volume of housing put in operation in Ukraine in dynamics


63

7873 72

8289

82

73

8479

0

10

20

30

40

50

60

70

80

90

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Investments

Active military operations against economic recession

suspended business activity in the country, first of all curtailment

of plans of foreign investors is observed.

Following the results of 3 quarters of year 2015 the volume of

investments decreased by 4%, in nominal equivalent amounted

43,949 million USD. (overall total from beginning of investment).

Dynamics of direct foreign investments in Ukraine

WEF world ranking

In the world competitiveness index GCI (WEF) according to

WEF Ukraine ranked 79th in the ratings, losing 0.11 points

(from 4.14 to 4.03), compared to 2014. Key factors

of the deterioration of the situation are macroeconomic

indicators, the situation in the financial market.

Besides, the situation in the eastern part of Ukraine has been

tense and it continues to adversely affect the overall situation

in the country.

Categories 2016

Doing Business 83

Registration Of Enterprises 30

Obtaining of the permission for construction. 140

Power connection 137

Registration of property 61

Receiving of Loans 19

Protection of minority investors 88

Taxation 107

International Trade 109

Ensuring performance of contracts 98

Insolvency admission 141

Index of competitiveness of Ukraine in the WEF world ranking

Economy of Ukraine in the rating Doing Business


Ukraine

7

$29,489$35,723

$40,026$44,708

$49,362$54,462

$58,156$45 916

$43,949

39%

21%

12% 12% 10% 10%4%

-23%

4%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

0$

10 000$

20 000$

30 000$

40 000$

50 000$

60 000$

70 000$

2007 2008 2009 2010 2011 2012 2013 2014 Q3. 2015

Direct foreign investments in Ukraine (cumulative since the beginning of the investment, mln. USD)


Industry

In November 2015 compared to the previous month and November

2014, the industrial production index stood at 98.3% respectively and

95.1% in January-November 2015 -85.6%.

In mining and quarrying, compared with January-November 2014 the

index of industrial production was 84.3%, processing-85.6%, supply and

distribution of electricity, gas and air-conditioning-87.8%.

The dynamics of the industry index ,%

Public Debt

The total amount of public and publicly guaranteed debt of Ukraine in

September 2015 amounted to 70,695 billion dollars equivalent to 1,521

trillion UAH.

In the structure of the public and publicly guaranteed debt domestic

debt makes up 34.2 per cent of the total debt or 520,758 million

UAH, external - 65.8% or 1,000,916.1 million UAH.

Exchange Rates Dynamics

5,05 5,05

7,98

15,77

24,00

6,657,41

10,44

19,23

26,22

0,00

5,00

10,00

15,00

20,00

25,00

30,00

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Dec.

dollar euro

Ratio of external and internal debt, mil. UAH.


Ukraine

8

85,60%

0,0%

20,0%

40,0%

60,0%

80,0%

100,0%

120,0%

2009 2010 2011 2012 2013 2014 2015

211 752276 746 299 414 309 000

300 025

520 759

105 133155 490 173 708

206 511284 089

1 000 619

0

200000

400000

600000

800000

1000000

1200000

2010 2011 2012 2013 2014 Q3. 2015

Internal Debt External Debt


Indicators of the Kyiv retail property market of

2015

9


Key indicators of the Kyiv retail property

market

10

Market Indicators 2013 2014 2015 Change

General Quotation, sq. m 1,000,000 1,073,939 1,104,639 +3%

New Quotation, sq. m 164,420 87,220 30,700 -62%

Minimum rent rate, $ /sq.

m/mon.(Fashion Gallery 100-200 sq. m)30 25 18 - 28%

Maximum rent rate, $ /sq.

m/mon.(Fashion Gallery 100-200 sq. m)100 80 29 -56%

Average rent rate, $ /sq.

m/mon.(Fashion Gallery 100-200 sq. m)70 49.7 27

-46%*pegged dollar exchange

Vacancy, % 1.7 7.5 6 -1.5%

Store traffic, People/1,000 sq. m 828 795 699 - 12.1%

Store traffic of Regional SC, People/1,000 sq. m

530 654 650 -1%

Store traffic of Community SC, People/1,000 sq. m

1127 937 747 -20%


Within a year in the capital 3 objects were put into operation: Shopping Center DOMA center (GLA - 7 000 m2) and Shopping Center Novus on

Zdolbunovskaya, 7Г (8,200 m2 hypermarket and 5,500 m2 of trading premises), SC Poznyakoff (2,400 m2), the second stage of SC “Gorodok”

(hypermarket Fozzi of 10,000 m2) was put into operation. Thus, the total market proposal for 2015 amounted 1,107,039 m2 professional retail space, with

an increase by 3%. Commissioning of the «New Way» Community Centre (GLA – 16,200 м2), located at the intersection of Verbitsky str./Trostyanetskaya

St. and the SC on 6, Murmanskaya St., (GLA – 7,000 m2) is postponed to the next year. For 2016 the following projects are declared to opening as well:

SEC Retroville, Podol Mall, Respublika, Lavina Mall, Blockbuster Mall, CDS, Shopping center on the Pochtova square., Smart Plaza with the total rented

area of 429,700 m2.

General Quotation, sq. m 1,107,039 New Quotation 2015, sq. m 33,100 Perspective offer 2016, sq. m 520,954

Dynamics of the market offer, thousand sq.m

Shopping centres commissioned in 2014

SC Address GLA, Sq m Developer Open

Prospect Krasnogvardeyskaya/Krasnotkatska

ya str.41,000 Arricano Group Q3

Atmosphere Stolichnoye Highway, 103 30,000 De VisionQ3

Doma Cenrter 40,Stroiteley str. 7,000 KDD Engineering Q4

April Ring motorway/ 19, Les‟ Kurbas

ave.5,800 Local developer Q2

Appetite 1 Nokolay Bazhan ave. 3,420 Ukrainian Investment Alliance Q3

Total 87,220 m2

Epicenter 20d,Polyarnaya str. 70,000 Q4

Shopping centres commissioned in 2015

Doma Center 40,Stroiteley str. 7000Local developer

Q1

Novus 7g, Zdolunovskaya str. 13700 Novus Q2

SC “Gorodok”

(2 stage)Moskovsky ave.

10,000 KEMP “Svarka” Q4

Total 33,100 m2

SC Poznyakoff Bazhan ave. 2400 Local developer Q4

Shopping centres declared to open in 2016

Respublika* Ring Motorway, 1A 135,000 K.A.N. Development Being specified

Blockbuster Mall* 36 Moskovsky ave. 100,000 Megaline Q4

Lavina Mall Academica Palladina ave. 127,500 Megaline Q3

CDS 38, Khreshchatyk 20,000 Esta Holding Q3

SC on Pochtova

PloshadPochtova square 9,000 Local developer Q2

New Way Verbickogo str. 16,200 Local developer Q1

Lesnoy 6, Murmanskaya str. 7,000 Local developer Q4

Smart Plaza 26, Pobedi ave. 15,000 Local developer Q3

Total 429,700 m2

11

Offer on the

Kyiv retail property market

* Possible deferral of commissioning for 2017.

-400%

-200%

0%

200%

400%

600%

800%

1000%

1200%

1400%

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016F

2017F

Total supply as of the beginning of the year, GLA, thous. sq. m

New supply, GLA, thous. sq. m

New supply share, %

Growth, %


Perspective offers of floor spaces of 2017-2018.

SEC Address GLA Developer Open

Ocean Mall Gorki str. 45,000 Megaline 2017

SC at Geroev Dnepra Metro station Geroev Dnepra 7,800 Local developer 2017

"Lukyanovka" 7-7a, Degtyarevskaya str. 47,052 Arricano Group 2017

Retroville Pravdi ave. 91,254 Stolitsa Group 2017

Happy Mall Onufry Trutenko str. 42,000 Liko-Holding Suspended

HARTZ Zlatoustovskaya str. 68,000 Budhouse Group Suspended

Manhattan Mall 1, Inzhenernaya str. 69,200 Forum Evolution project

"Vyrlitsa" Nikolay Bazhan ave. 140,000 XXI century Suspended

River mall 10, 14 Dneprovskaya emb. 55,000 Local developer Suspended

Victoria 2, Nicolaya Vasilenka str. 54,300 Victoria Suspended

Kyiv mall Petr Grigorenko ave. 75,400 Dylays Suspended

Podol Mall 23, Elenovskaya str. 13,825 Building Invest Group Suspended

Auchan Zdolbunovskaya str. 55,000 Immochan Ukraine project

Gorky Park 52-54, Gorki str, 64,500Silver Sky

Development project

"Town" (3rd stage) 23a, Moskosky ave. 19,650 KEMP “Svarka” project

Petrovka Mall 10 Moskovsky ave. 65,360 Tiko Construction project

Nivki City Pobedi ave. 74,036 Local developer project

Univer City Vladimirskaya str. 18,700 Kyivgorstroy Invest project

Kyiv E95 Outlet (1 stage) Odessa highway 18,525Evo Land

Development project

Avenue 48, Cosmonaut Komarov str. 39,000Dragon & Tiko

Construction project

According to classification of ICSC, without taking into account the trade objects of up to 5 thousand sq. m and separate super - and

hypermarkets, the total area of professional shopping centers of the capital is 1,107,039 sq. m, that corresponds to the index of 382.7 Sq

m per 1,000 inhabitants as for the level of shopping capacity.

The retail property market of Kyiv stated about 20 SEC projects with the total leased area of some 1,063,602 m2 at different stages of

readiness (the design phase, start of construction, suspended construction) with possible opening in 2017 or 2018. The declared large-

format professional shopping and recreation centers are the main objects of perspective development for the Ukrainian and foreign

distribution networks. Their putting into operation will lead to high-quality growth of the market and (on condition of improvement of welfare

of the population) will promote further expansion of the international retailers.

Shopping capacities,

people/1000 sq. m

12

Offer on the


72

89

123

182

204

204

230

256

282

279

307

315

373

383

393

497

0 100 200 300 400 500 600

Zaporozhe

Chernigov

Kirovohrad

Lvov

Ivano-Frankovsk

Donetsk

Kherson

Simferopol

Vinnitsa

Nikolaev

Lutsk

Khmelnitskiy

Dnepropetrovsk

Kiev

Odessa

Chennovtsy


Operating shopping centers of Kyiv

Regional SC AddressStart-up

yearGLA, Sq m

Dream Town Obolonsky ave. 2009 81,000

Ocean Plaza 176 Gorky str. 2012 70,000

Sky Mall 2, General Vatutin ave. 2007 67,000

"Caravan" 12,Lugovaya str. 2008 44,000

Regional SC AddressStart-up

yearGLA, Sq m

“Bolshevik” 66, Vadim Getman 2008 37,000

Gulliver 1a Sportivnaya Ploshad 2013 45,200

ProspectKrasnogvardeyskaya/Krasnotkatskay

a str.2014 41,400

«Marmalade» 154 Borshagovskaya str. 2013 40,000

Art Mall 37 Akademika Sabolotnogo str. 2013 37,000

Promenada Center 17-21 Baggoutovskaya str 2003 34,000

Promenada Park 4 Bolshaya Okruzhnaya str. 2009 32,000

"Town" (1,2 stages) 23a, Moskosky ave. 2003/2015 17,000

Department Store

“Ukraina”3, Pobedi ave. 2003 23,000

Rayon 4, Nicolaya Lavruhina str. 2012 23,000

Arcadia 10a Dneprovskaya emb. 2008 22,000

“Magellan” 13b Akademica Glushkova str. 2003 21,600

“Quadrate” 36, Perova blvrd. 2008 19,000

"Globe" 1, Independence Square 2002 18,579

«Alta Center» 15 Moskovsky ave. 2004 17,000

Arcadia 154 Borshagovskaya str. 2007 17,000

«Metropolis» 12 Malinovskogo str. 2005 15,284

Silver Breeze Dneprovskaya emb. 2013 14,600

"Metrograd" Velyka Vasylkivska str. 2002 11,000

“Pyramida” 4 Mishugi str. 2004 12,000

“Plasma” 20 b, Moskovsky ave. 2006 12,000

"Alladin" 3-5, Grishko str. 2004 10,030

“Atmosphere” 103, Stolichnoye highway 2014 30,000

Arena City Krasnoarmeyskaya/Basseynaya str. 2005 8,000

KOMOD 4, Lunacharskogo str. 2007 7,647

DOMA center 4, Stroiteley str. 2014/2015 7000

Community Centre AddressStart-up

yearGLA, Sq m

VMB 136, Pobedi ave. 2004 5,000

“Quadrate” 20, Gnata Yuri str. 2003 11,502

«Polarny» 2, Mayorov str. 2013 8,630

“Olympic “ 72, Velyka Vasylkivska str. 2004 8,250

"Evroport" 15A, Lukashevitch str. 2005 4,195

"Interval Plaza» 143/2, Velyka Vasylkivska str. 2004 7,874

Community Centre AddressStart-up

yearGLA, Sq m

“Quadrat” 2, Belorusskaya str. 2002 6,000

InSilver 3, Sribnokilskaya str. 2011 5,909

"Darnitsa" 2/1, Vossoedineniya str. 2008 5,830

Specialized Centres AddressStart-up

yearGLA, Sq m

"Children's World" 3, Andrey Malishka str. 1987 8,000

Blockbuster 34 V, Moskovsky ave. 2008 24,750

4ROOM 6,Petropavlovskays str. 2009 24,000

"Araks" 110, Bolshaya Okruzhnaya str. 2009 16,000

“Ultramarine” 1A, Uritski str. 2004 15,000

“Manufacture” 2,Novoobuhovskoye highway 2013 15,000

“Diamant" 14 E,Petropavlovskays str. 2013 11,250

“Macros" 166, Moskovsky ave. 2004 8,286

"House of furniture" 23, Druzhbi Narodov boulvard. 1984 16,000

«B-52» 52, Bratislavskaya str. 2008 12,003

“Domosphere” 101, Stolichnoye highway 2009 24,500

“Mandarin Plaza” 4, Basseynaya str. 2003 9,400

Big boxes AddressStart-up

yearGLA, Sq m

"Epicenter" 20d,Polyarnaya str. 2014 70,000

"Epicenter" 4,Viskoznaya str. 2008 11,000

"Epicenter" 6, Hrustalnaya str. 2008 12,000

«New Line» 65/1, Balzak str. 2004 6,795

«New Line» 8,Odessa highway 2005 13,131

Metro 26 V, Moskovsky ave. 2005 9 500

Metro 2a, Saburov str. 2009 9 500

Metro 43, Petr Grigorenko ave. 2004 9 500

Metro 1v, Bolshaya Okruzhnaya str. 2003 9 500

"Auchan" 15a, Moskovsky ave. 2008 15,000

"Auchan" 6, Berkovetskaya str. 2009 15,660

"Epicenter" 11, Bratislavskaya str. 2008 12,000

"Epicenter" 1b, Bolshaya Okruzhnaya str. 2005 30,000

NOVUS 7a, Academica Palladina str. 2010 4,008

Leroy Merlin 17a ,Polyarnaya str. 2010 13,000

Leroy Merlin 3V, Brovarskoy ave. 2013 ~10 000

Leroy Merlin 26, Saperno-Slobodskaya str. 2014 ~10 000

"Epicenter" 40, Petr Grigorenko ave. 2005 43,000

NOVUS 4d, Krasnozvezdny ave. 2013 8,800

NOVUS 1a, Krasnogvardeyskaya 2013 6,000

NOVUS 8, Nikolay Bazhan ave. 2013 6,500

NOVUS 7g, Zdolunovskaya str. 2015 13,700

"Epicenter" 6v, Berkovetskaya str. 2009 56,000

13

Offer on the



Regional SC

Community Centre

Community Centre

Big boxes

Specialized Centre

Regional SC:

1) Dream Town Obolonsky ave.

2) Ocean Plaza - 176 Gorky str.

3) Sky Mall 2, General Vatutin ave.

4) «Caravan» - Lugovaya St., 12

District shopping centers:

5) "Bolshevik” - 66, Vadim Getman str.

6) Gulliver – 1a Sportivnaya Ploshad

7) «Marmalade» - 154 Borshagovskaya str

8) Art Mall - 37 Akademika Sabolotnogo str.

9) Promenada Center - 17-21 Baggoutovskaya str

10) Promenada Park - 4 Bolshaya Okruzhnaya str

11) «Town" (1,2 stages) - 23a, Moskosky ave.

12) Department Store “Ukraina" - 3, Pobedi ave.

13) Rayon - 4, Nicolaya Lavruhina str

14) Arcadia - Dneprovskaya naberezhnaya, 10a

15) «Magellan» - 13b Akademica Glushkova str

16) «Quadrate» - . 36, Perova blvrd.

17) «Globe» - 1, Independence square

18) «Alta Center» - 15 Moskovsky ave.

19)Arcadia - 154 Borshagovskaya str

20) «Metropolis» - 12 Malinovskogo str

21) Silver Breeze - Dneprovskaya emb.

22) «Metrograd» - Velyka Vasylkivska str

23) «Pyramida» - 4 Mishugi str

24) «Plasma» - 20 b, Moskovsky ave.

25) «Alladin» - 3-5, Grishko str

26) «Atmosphere» - 103, Stolichnoye highway

27) Arena City - Krasnoarmeyskaya/Bascejna

28) KOMOD - 4, Lunacharskogo str

Commodity centers:

29) VMB - 136, Pobedi ave.

30) «Quadrat» - 20, Gnata Yuri str

31) «Polarny» - 2, Mayorov str

32) “Olympic “ - 72,Velyka Vasylkivska str

33) «Evroport» - 15A, Lukashevitch str

34) "Interval Plaza» 143/2 Velyka Vasylkivska str

35) «Quadrate» - 2, Belorusskaya str

36) InSilver - 3, Sribnokilskaya str

37) «Darnitsa» - 2/1, Vossoedineniya str.

Specialized Centres :

38) "Children's World” -3, Andrey Malishka str.

39) Blockbuster - 34 V, Moskovsky ave.

40) 4ROOM - 6,Petropavlovskays str

41) «Araks» - 110, Bolshaya Okruzhnaya str

42) «Ultramarine» - 1A, Uritski str

43) «Manufacture» - 2 Novoobukhovskoye Highway

44) “Diamant" - 14e, Petropavlovskaya str.

45) «Macros» - 166, Moskovsky ave.

46) «House of furniture» - . 23, Druzhbi Narodov

boulvard.

47) «B-52» - 52, Bratislavskaya str

48) «Domosphere» - 101, Stolichnoye highway

49) «Mandarin Plaza» - 4, Basseynaya str

14

Map of existing and prospective shopping

centers of Kyiv


Shopping centres in Kyiv, declared to open in 2016-

2018.

SEC Respublika**

Kyiv, Ring Motorway, 1A

GLA – 135,000 m2

SEC Lavina mall**

Kyiv Academica Palladina ave.

GLA – 127,500 m2

SEC Ocean Mall

Kyiv, Gorky str.

GLA – 75,000 m2

SEC Blockbuster Mall**

Kyiv, Moskovsky ave.

GLA – 100,000 m2

SEC Smart Plaza**

Kyiv 26, Pobedi ave.

GLA – 15,000 m2

SEC Vyrlitsa

Kyiv Nikolay Bazhan ave.

GLA – 140,000 m2

SC on Pochtova*

Kyiv, Pochtova square

GLA – 9 000 m2

SEC Lukyanovka

Kyiv, 7-7a, Degtyarevskaya str.

GLA – 47,052 m2

SEC CDS

Kyiv, 38, Khreshchatyk

GLA – 20,000 m2

SEC HARTZ

Kyiv, Zlatoustovskaya str

GLA – 68,000 m2

SEC New Way**

Kyiv, Verbickogo str.

GLA – 16,200 m2

SEC Retroville

Kyiv, Pravdi ave.

GLA – 91,254 m2

* UTG - consultant

** UTG - consultant and an exclusive leasing agent

15


Average daily store traffic SC traffic

(people per 1,000 sq.m, GLA)

16

Store traffic

Daily average store traffic of the Kyiv shopping centers by results

of 2015 made up: for regional SEC 650 people per 1,000

sq.m, GLA, for Community Centres – 747 people per 1,000

sq.m, GLA. Average value - 724 people per 1,000 sq.m, GLA.

It should be noted that following the results of 2015. there was a

decrease in the average level of store traffic by 12%, at that store

traffic of Community Centres decreased by 20%, and of regional

SC by 1%, that shows the stability and a demand for these

formats. The highest store traffic is in the best Kyiv shopping

centers at the level of 30-40 thousand people on weekdays and

to 60 thousand people during the week-end.

Addressability

By the end of 2015, the vacancy rate decreased by 1.5% to 6%. It

is connected with the beginning of stabilization of the trade

segment and with the results of building relations between tenants

and owners of shopping centers. Besides, in 2015 there was a

record-breaking low volume of floor spaces (30,700 sq.m), despite

the considerable volume of the trade offer which was declared, but

postponed for 2016. The relative stabilization of the national

currency and receiving more favorable lease terms by tenants

contributed to the decrease in the vacancy as well. For some

retailers, this crisis was a period of active development.

Average Addressability in Kyiv SC, %

Store traffic и addressability in

shopping centers of Kyiv

Community SCRegional SC

0100200300400500600700800900

1000

Octo

ber

201

4

Novem

ber

201

4

Decem

ber

201

4

January

2015

Febru

ary

201

5

Marc

h 2

015

April 2

015

May

2015

June 2

01

5

July

201

5

August 2

015

Se

pte

mbe

r 2

015

Octo

ber

2015

Novem

ber

201

5

Decem

ber

201

5

0,0%

1,0%

2,0%

3,0%

4,0%

5,0%

6,0%

7,0%

8,0%

Novem

ber

2014

Decem

ber

2014

January

201

5

Febru

ary

2015

Marc

h 2

01

5

April 2

01

5

May

201

5

June 2

015

July

2015

August 2

01

5

Septe

mber

2015

Octo

ber

201

5

Novem

ber

2015

Decem

ber

2015


Rental rates


Standard terms and conditions of rental in shopping centers of Kyiv

Lease

Term.From 3 to 10 years, for anchors 5-15 years

Payment

Terms

Rates are denominated in USD, payments are in UAH

according to the agreed exchange rate, annual indexation

is at the level of the CPI. The rate of $1 is fixed at the level

of UAH 22

Deposit From 1 to 3 months, for anchors warranty is possible

State of

premises Shell and Core condition

17

Rental rates

Beginning of the year 2015 was characterized by technical

reduction of rental rates, in connection with a serious leap in

currency rate. Starting with 2nd quarter, the rates stabilized at

$ 28.5 level. At the end of the year, the average rent in the

shopping centers of Kyiv for the Fashion Gallery (for the premises

of 100-200 m2) made up $27.3 / m2/ month without VAT, that by

24% less than the average rental rate for 2014. Moreover, lessors

use practice of "the individual arrangement": short-term fixing of

dollar exchange rate, repair compensation, etc.

The scheme of payment with percent from commodity

turnover is widely spread– 2-5% for anchor tenants and 7-15%

for operators of the shopping gallery.

Dynamics of rental rates in shopping center of Kyiv, USD, UAH.

Average range of rental rates in shopping centers of Kyiv

($/sq m/m without VAT and OPEX)

Rental rates in


38,5

29,3

18,221,6

28,6 28,6 28,6 28,6 28,6 28,6 29,0 29,0 29,0

0

100

200

300

400

500

600

700

0

5

10

15

20

25

30

35

40

45

Decem

be

r 20

14

January

2015

Feb

rua

ry 2

015

Marc

h 2

015

April 2

015

May

2015

June 2

015

July

2015

August 2

015

Se

pte

mber

2015

Octo

ber

2015

Novem

be

r 20

15

Decem

be

r 20

15

Rental rate, USD Rantal rate, UAH

$4

$4

$15

$8

$4

$4

$15

$60

$25

$20

$50

$20

$15

$8

$28

$300

Grocery supermarkets

Electronics supermarkets

Fashion gallery (100-200 sq. m.)

Department stores and large format clothes shops (600-1,500 sq. m.)

Cinema

Children‟s entertainment center

Restorants and Cafes

Kiosks, small gift shops…(1-10 sq.m.)


Brand Country SEC

Opened in 2015

adL/ADILISIK, women's clothing TukeyОсеan Plaza, Dream Town

Pyramida

Udress, designer clothes Ukraine Gulliver

Bosco, sports goods Russia Art Mall

Silenza, linen ItalyProspect, SkyMall, Dream

Town, Gulliver

Betty Barclay, women's clothing Germany Ocean Plaza

Marella, women's clothing Italy Ocean Plaza

Pimkie, women's clothing France Ocean Plaza

Superstep, footwear Tukey SkyMall

Coqui, footwear Gulliver

Hesburger, fast food Finland Novus ( Osokorki)

Laboka, footwear Tukey Ocean Plaza

Naturel, lingerie Gulliver

Oscar de la Renta, designer clothing

and accessoriesUSA Mandarin Plaza

Hunkemoller, lingerie Holland Осеan Plaza, SkyMall

Melvita, cosmetics France Ocean Plaza

Rene Lezard, clothing and

accessories for men and womenGermany Ocean Plaza

Intersport, sportswear "Epicenter” (at Polyarnaya)

Eterna, clothes for men Germany Gulliver

Maestrami, clothes for men Italy Gulliver

Stefanel, clothing and accessories

for men and womenItaly Manufacture

Baldaccini, footwear Poland Manufacture

18

Demand

Demand

Despite the difficult economic situation in the

country, in particular reduced solvency of the

population, reduction of commodity turnovers of

retailers, reduction of development plans, we have

seen a positive trend and the revival of the retail

market.

For 2015 in the Ukrainian market many new brands

debuted; the list contains Ukrainian companies

which allows to speak about the beginning of

restoration of the segment. In the current environment

actively developing Ukrainian producers got the price

advantage due to higher currency exchange rate. For

example, the Rivne Flax processing business under

the name of Goldi opened about 10 shops over the

year. Among foreign active networks are LC Waikiki

and Collin‟s which continued their development

thanks to positioning in the price segment of average

and average minus

Negotiations with a number of large international

operators proceed

(H&M, Cotton, Defacto, итд.), which aren't presented

in the Ukrainian market and which may appear in

2016-2017 along with the opening of new large-scale

projects of megamalls.


Launch of foreign brands in 2013 Brand Country SEC

Happylon Kazakhstan Ocean Plaza

LC Waikiki Turkey Ocean Plaza

Armani Jeans Italy Ocean Plaza

Cinnabon USA Ocean Plaza

Style Avenue Czech Republic Ocean Plaza

Z-Generation France Ocean Plaza

Petit Bateau France Ocean Plaza

Bebe USA Ocean Plaza

YAMAMAY Italy Gulliver

Versace Collection Italy Gulliver

Antica Murrina Italy Gulliver

Hadley Russia Ocean Plaza

Fabs Italy Gulliver

Nautica USA Sky Mall

Kanzler Germany Ocean Plaza

Camicissima Italy Gulliver

Agent Provocateur UK Gulliver

Launch of foreign brands in 2014

Mango Megastore(Mango,

Mango H.E., Mango kids)Spain Street retail

Pedro del Hierro Spain Gulliver

Sinsay (LPP Group) Poland King Cross (Lviv)

Keddo UK Street retail

Vittorio Spernanzoni Italy Street retail

Twin Set Italy Gulliver

Coffee Shop Company Austria Street retail (Lviv)

Paul France Street retail

Prenatal Italy Dream Town

Vapiano Germany Arena City

Peacocks UK Piramida

Paker - Ocean Plaza

Cazledonia Italy Karavan

Intimissimi Italy Karavan

Fika Sweden Street retail (Rivne)

Launch of foreign brands in 2012

Brand Country SEC

Furla Italy Ocean Plaza

Dolce&Gabbana Italy Mandarin Plaza

MaxMara Weekend Italy Ocean Plaza

Kari Russia -

Trussardi Jeans Italy Ocean Plaza

Camper USA Karavan

Napapijri Italy Ocean Plaza

Cinque Italy Ocean Plaza

Pepe Jeans Spain Ocean Plaza

Diesel Italy Street retail

Reiss UK Ocean Plaza

Why Denis Romania Ocean Plaza

Strellson Germany Ocean Plaza

Suvari Turkey Ocean Plaza

Michael Kors USA Ocean Plaza

Marina Rinaldi Italy Ocean Plaza

Atelier France Ocean Plaza

Valentino Italy Street retail

Piazza Italia Italy Ocean Plaza

W52 Jeans Portugal Dream Town

Gilda Tonelli Italy Ocean Plaza

KFC USA Ocean Plaza

S.Oliver Germany Sky Mall

Oviesse kids Italy Ukraine

Soocre Greece Ocean Plaza

Dynamics of appearance of foreign brands on the market of

Ukraine

19


Main players of the retail fashion market of Ukraine

No Group of companies Brands

1 MTIIntertop, Plato, Geox, Ecco, Skechers, Clarks, Marc O„Polo, Timberland, Armani Jeans,

Atelier de Courcelles, Napapijri ,Pandora, Urban United, Lee/Wrangler, Lenovo

2MD Group Tommy Hilfiger, Gant, G-Star RAW, OGGI, Accessorize, Walker, DKNY Men, Pepe Jeans,

Etam lingerie, Diesel, Fornarina

3City moda Marc Aurel, Reiss, Marina Rinaldi, Marc Cain, MAX&Co, Airfield, Rene Lezard, Bogner,

Braxx, Marella

4 LPP Group Reserved, Cropp Town, House, Mohito, Sinsay

5 Ultra jeans Levi‟s, Baldinini, Lagerfeld, Guess, Pierre Cardin

6 Delta Sport Nike, Converse, All Stars, Delta Sport

7 Argo Mango, Benetton, Promod, Parfois, Orsay, Desigual, Only, Piazza Italia, Aldo, Argo Center

8 Inditex Zara, Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho

9 TransUkrainaIntersport Tally Weijl, Pimkie, Karen Millen, Oasis, Warehouse

10 KarKat Fashion Group Springfield, Women'secret, Pedro Del Hierro, Cortefiel

11 BNS Trade Calvin Klein Jeans, Top Shop/Top Man, Michael Kors

20

Overview of the retail property market of Kiev| Results I 2015 21

• Within a year in the capital 2 objects were put into operation: Shopping

Center DOMA center (GLA – 7,000 m2) and Shopping Center Novus

on Zdolbunovskaya, 7Г (8,200 m2 hypermarket and 5,500 m2 of

trading premises), the second stage of SC “Gorodok” (hypermarket

Fozzi of 10,000 m2) was put into operation. Thus, the new proposal

amounted to 30,700 m2, thereby increasing the total amount by 3%.

As at the end of 2015 the total amounted to 1,107,039 m2 of

professional floor spaces.

• Commissioning of the «New Way» Community Centre (GLA –

16, 200 м2), located at the intersection of Verbitsky

str./Trostyanetskaya St. and the SC Respublica is postponed for 2016.

• Despite the number of the operating shopping centers the retail

property market segment of the capital is not saturated with high-

quality offer, share of objects of modern commercial architecture with

professional concepts does not exceed 20% of the segment.

• Commercial real estate segment experienced a difficult but stable year:

there was the partnership between tenants and developers, the

stabilization of rates and the level of vacancy.

• The market of the tenant who can receive now the most favorable

conditions has been created;

• In the Kyiv shopping centers it was succeeded to keep a binding of

rental rates to US dollar which are fixed on a quarterly basis;

• The percent from commodity turnover became the compensator of

rental rates drop;

• There was the commodity turnover redistribution and flows of visitors

among the commercial sites and retailers from the less successful to

more successful ones;

• Consumer confidence is gradually restored, but there are no

prerequisites for rapid growth;

• Tenants have become very selective in opening new stores in

connection with falling incomes and lack of available loan financing;

• Retailers optimized expenses, reduced unprofitable outlets, the most

progressive networks invested in marketing;

• For some retailers, the crisis has become the time of active

development;

• In the current conditions of exchange differences there were

opportunities and niches for work of the Ukrainian producers

• Since the second quarter of 2015 there has been a small increase in

rental rates in connection with stabilization of the exchange rate and

postponement of almost all new offer of this year for 2016;

• There are still good prerequisites for the purchase of new franchises in

view of the stabilization of the situation in the segment, good promising

places to launch and the minimum lease rates;

• Further development of the segment will be linked to the appearance of

new brands for the Ukrainian market ;

• In general for last year the trade segment took the course on

stabilization and showed positive tendencies. If the economic and

political situation in the country does not deteriorate we can expect

growth of turnover and enhance the development of retailers in the

second half of the year 2016.

Key tendencies of the retail property market

Trends and Forecasts


Consumer preferences of the inhabitants of Kyiv

22

• In the ranking by number of unique

customers the "Ocean Plaza” SEC takes

the leading position. 37% of the surveyed

residents of Kyiv have purchased clothing

and footwear in this SEC at least 1 time over

the past six months. This object has been

ranked by the level of loyalty in Kyiv. 22% of

respondents considered the “Ocean Plaza»

as the best.

• High rates by number of unique buyers show

shopping and recreation centers “Dream

Town" and shopping and recreation center

"Sky Mall" (27% and 25%, respectively). By

the level of loyalty prevails SEC «Dream

Town» (17%). SEC «Sky Mall» was chosen

the best in the city by 11% of respondents.

• On the chart objects attracting more than

10% of unique buyers are specified.

Purchases in shopping centers and opinion on the best

shopping center

*Details can be found in the distribution display in % of unique buyers. The unique buyer is meant as at least 1 purchase for the last six months. The quantitative survey of residents of Kyiv was conducted by method of the apartment standardized interview face to face. Selection of 800 respondents, maximum error is less than 3.5%.

15,3%

0,3%

0,6%

3,5%

4,0%

5,1%

5,1%

10,9%

17,3%

21,9%

9,9%

12,6%

11,0%

10,8%

12,9%

12,9%

11,0%

25,3%

27,4%

37,1%

None

Markets of the city

SC Darinok Metro station Lesnaya

SEC 'Gulliver'

SEC 'Prospect'

SEC 'Caravan'

SEC 'Bolshevik'

SEC 'Sky Mall'

ТРЦ 'Dream Town' (1,2stage)

SEC 'Ocean Plaza' M. Lybedskaya

Purchase of clothes and footwear

Best


Socio-demographic profile of residents of Kyiv

23

• The average level of the monthly family income of the Kyiv households makes about 8 647 hryvnias from which 70% are the share of

consumer expenses. The decrease in the level of consumer spending is accompanied by an increase in expenditure share of utility bills.

Average family income-is 8 647 thousand. UAH *.

People in the family - 3.22

Distribution by income level * Distribution of family expenditure, %

The quantitative survey of residents of Kyiv was conducted by method of the apartment standardized interview face to face. Selection of 800 respondents, maximum error is less than 3.5%.

0,6%

5,9%

13,1%

25,9%

10,5%

20,9%

4,6%

1,5%

17,0%

0,6%

5,9%

13,1%

25,9%

10,5%

20,9%

4,6%

1,5%

17,0%

Less than 2959 UAH

2960-4719 UAH

4720-6479 UAH

6480-8239 UAH

8240-9999 UAH

10,000 - 14,999 UAH

15,000 - 19,999 UAH.

20 thousand UAH and more

N/A

1,6%

2,0%

7,9%

18,6%

4,6%

5,2%

9,1%

13,1%

38,0%

Savings

Payment by credit

Transportation

Payment for utilities and other services

Dining out

Entertainment

Other purchases

Purchase of clothes and footwear

Products


Potential of the retail market of Ukraine

Saturation of the Kyiv marketwith shopping capacities,

in comparison with major European cities#11 Volume of retail commodity turnover, USD

0 500 000 000 000 1 000 000 000 000

Estonia

Luxembourg

Latvia

Croatia

Bulgaria

Belarus

Hungary

Finland

Portugal

Denmark

Greece

Norway

Ukraine

Belgium

Sweden

Switzerland

Netherlands

Poland

Spain

Italy

France

United Kingdom

Germany

The successful development and expansion of these retail networks in Ukraine:Auchan, Metro, Billa, Novus, Inditex Group, LPP Group, LC Waikiki, Mango, New Yorker

383

0 1 000 2 000 3 000 4 000 5 000

Warsaw

Prague

Bratislava

Paris

Budapest

Berlin

Sofia

Istanbul

London

Minsk

Moscow

Kyiv

Market saturation, GLA/1000 residents

Total market volume, thousand sq.m.2


Potential of the retail market of Ukraine

#15 Volume of consumer expenditures in the countries of Europe, USD

0 1 000 000 000 000 2 000 000 000 000 3 000 000 000 000

EstoniaLuxembourg

LatviaBelarus

BulgariaCroatia

HungaryUkraine

PortugalFinland

DenmarkGreece

NorwaySwedenBelgium

PolandNetherlandsSwitzerland

SpainItaly

FranceUnited Kingdom

Germany

0 200 000 000 000 400 000 000 000

Luxembourg

Estonia

Latvia

Bulgaria

Belarus

Hungary

Portugal

Denmark

Romania

Finland

Norway

Greece

Belgium

Sweden

Ukraine

Netherlands

Switzerland

Poland

Spain

Italy

Germany

United Kingdom

France

#9 Sales volume of grocery retail, USD


Contact information

Vadim Neposedov

Managing Director

[email protected]

Evgenia Loktionova

Company Director

[email protected]

Victor Oborsky

Head, Department of strategic consulting

[email protected]

Dmitry Terokhin

Analyst, Department of strategic consulting

[email protected]

"Ukrainian Trade Guild» (UTG) - the largest national real estate consulting company. Today, UTG is

55 highly qualified specialists and more than 500 customers. Participation in 450 business projects

and conduction of more than 700 researches of the market allow us to be a reliable, responsible and

competent partner.

Working with real estate of any size and type at different stages of the project, we ensure high

professionalism and individual approach to objectives.

This presentation is the publication of the generalized nature. "Ukrainian Trade Guild" bears no legal liability in

respect of the possible loss of third parties due to the use of the results of the report, nor for the information,

analysis and forecasts posted in this review

Any publication of information materials from the report in whole or in part is possible only with reference to the

company as the source of the data.

THANK YOU FOR YOUR ATTENTION

Contact information

"Ukrainian Trade Guild»

2A, Mechnikov str.,

(Parus business centre)

Kyiv 01601, Ukraine

Tel.: (+380 44) 537 23 64

www.utgcompany.com

mailto:[email protected]
























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