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Kiev

Rental rates in Kiev shopping centres return to the pre-crisis level

Prime rate has grown for two years in a row


Kiev, July 16, 2018 – According to JLL data, in Q2 2018, maximum rental rates in quality shopping centres in Kiev increased by 12% and exceeded USD1,140 per sq m per year (USD95 per sq m per month). Rates have been growing for two years after reaching the rock bottom in 2015.

“Maximum rental rates have almost reached the pre-crisis level of 2010-2013, when they amounted to USD1,150-1,200 per sq m per year. Significant growth is associated with a limited supply faced by existing and actively expanding retailers, and by new companies entering the market. New brands try to open their stores in the most successful objects, yet to find necessary premises in such shopping centres is not an easy task,” – notes Ekaterina Vesna, Head of Retail Department, JLL Ukraine.

Prime base rents in Kiev shopping centres
Prime base rents in Kiev shopping centres_260718.png
Source: JLL

Opportunities for expansion are limited by the low level of completions. In Q2 2018, retail space in Kiev increased by 15,000 sq m : Smart Plaza Polytech shopping centre entered the market. “We expect no new SC openings in the second half of 2018, as the completion of previously announced projects will likely be postponed to 2019-2020. As a result, shopping centre completions in 2018 will match the result of H1, 49,000 sq m. The current pipeline for 2019 exceeds 250,000 sq m. Provided all announced projects will be completed, this will be a record for the Kiev retail market,” – comments Darina Kulaga, Analyst, JLL Ukraine.

Shopping centre completions in Kiev
Shopping centre completions in Kiev_260718.png
Source: JLL

Despite the new object entering the market, the vacancy continued to decline in Q2, falling by 0.3 ppt to 4.2%. Completed in early April, Smart Plaza Polytech had been 95% occupied by the end of the quarter. Therefore, its impact on the average vacancy rate was not significant. According to JLL forecasts, the vacancy will decline further and reach 3.5% by the end of 2018.

Vacancy rate in Kiev shopping centres
Vacancy rate in Kiev shopping centres_260718.png
Source: JLL

The vacancy rate reduction is driven by high retailer activity. Four new international brands have entered the Kiev market in Q2: the Turkish clothing brand Koton with stores in Lavina Mall SEC and Sky Mall SEC, the Spanish household goods store Zara Home, a boutique of the Swedish of children's clothing brand Livly in Gulliver SEC, and the Turkish clothing brand DeFacto in Globus 1. In addition, a number of retailers have expanded their network, including Under Armour, Lush and L'Occitane. In addition, Reserved opened the flagship store in Globus 2.


About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with nearly 300 corporate offices, operations in over 80 countries and a global workforce of 83,500 as of March 31, 2018. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated.

In Russia & CIS JLL has offices in Moscow, St. Petersburg and Kiev. JLL Ukraine was voted The Best Real Estate Consultancy at the Ukrainian Property Awards in 2013 and received the Award of Excellence in the Consulting company nomination at the EE Real Estate Project Awards in 2017.​