04. Februar 2010 
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DTZ : Real estate market outcome in 2009 and company results
Nick Cotton Managing Director DTZ in Ukraine: “2009 has been an extremely challenging year for all businesses directly engaged in Real Estate. The market has witnessed contraction of demand from all sectors which, coupled with the currency devaluation has placed increased downward pressure on effective rentals. Bank finance has become extremely difficult to source or draw down and, and many development projects became frozen. As a consultancy business, we are directly affected by the difficulties that our clients feel in the market and, have had to adjust our business approach to accommodate these changes.”
“To maintain our market position we have also had to deploy new initiatives and, open new business lines or enter new markets. DTZ have in 2009 launched it’s retail centre management department taking on the full centre management of the 83,500 sq.m Riviera Shopping City in Odessa. Further afield, DTZ Ukraine have been engaged in consultancy assignments in Tbilisi on behalf of the Tbilisi City Authorities and, are leveraging from this experience to seek to undertake further work in the city in 2010.”
The year ahead will remain extremely challenging as the full effects of what was very clearly an unsustainably overheated sector of 2006-2008 faces the reality of a very abrupt correction that will in the short term see a degree of ‘overcompensation’. The Kiev real estate market remains some way from the stabilization point that is required before systematic reinvestment and growth can recommence. Of positive signs though are indicators that some banks are now considering providing debt finance on both new development projects as well as refinancing existing assets. This in turn has driven the more pragmatic developers to revise earlier ‘mega’ development concepts so as to provide more ‘deliverable’ viable concepts DTZ’s approach will be to continue to develop and invest in business lines and regions where we see opportunities to improve our diversification, market coverage and, ensure full deployment of our resource base”
Offices
In 2009, new office supply in Kyiv amounted to around 123,860 sq m, representing a decrease of over 29% compared to 2008.
In 2009, around 106,000 sq m of offices were transacted in the market in Kyiv, which is approximately 34% less than in 2008. During the year, these transactions were largely driven by renegotiations, as well as relocation of the companies seeking to minimize their occupational costs, improve the quality of occupied space and/or optimize business processes by means of staff redundancies and/or consolidation within one building or smaller suites.
As a reflection of the general economic downturn in Ukraine, since the fourth quarter of 2008 the market-wide vacancy increased significantly on the office property market in Kyiv. At the end of 2009, the primary market-wide vacancy reached 17.6% compared to 4.2% in 2008 and 1.3% in 2007.
The office property market in Kyiv can now be characterized as a tenant’s market. From the third quarter of 2008 until late 2009, office rents in Kyiv fell by over 50% in the US dollar equivalent. Prevailing monthly office rents are now at around US$ 25-35 per sq m per month for prime space, reducing down to US$20-25 per sq m for B class space, and US$ 12-17 per sq m per month for C class property.
Looking ahead to 2010, whilst overall demand remains suppressed, there is evidence that a number of larger occupiers are now taking the opportunities presented by the depressed rental market and, forthcoming lease breaks to seek relocation to more efficient better grade space than they presently occupy. This strategic relocations of corporate occupiers is likely to be a major driving force in the further maturity of the market.
During 2009 DTZ office team leased 10 857 sq m, securing office premises for such clients as HSBC, Seven Hills, Mitsubishi Heavy Industries, Ewopharma A.G., WND, Velltop Ltd. and, CIKLUM, occupying space in BC “Leonardo BC” (phase1, 2), BC “Prime”, Forum Business City, “ Panorama” BC, HPBC II and others.
Retail
The retail property market throughout Ukraine, including Kyiv, remains underdeveloped in terms of its saturation and quality of existing stock compared to other countries and capital cities in Central and Eastern Europe.
