11:26 24.04.2014

Only half of shopping malls declared for opening this year in Kyiv to open in 2014, says JLL

4 min read

Jones Lang LaSalle (JLL) has revised downwards its forecast for the declared commissioning of shopping malls in Kyiv in 2014 to 205,000 square meters, down from the 415,000 square meters projected earlier, due to the impact of the political and economic events in Ukraine on the retail property market, JLL said on Wednesday, April 23.

The company said that it is likely that the opening of some shopping malls declared for this year will be postponed until 2015, and in January-March 2014, no new malls opened in Kyiv.

"In some way the reduction of the commissioning is a negative signal for the market, although the large volume of commissioning in the conditions of the reduction of consumer activity and optimization of development plans by retailers would have resulted in problems with the occupancy of the malls and overly large growth in the amount of vacant space," reads the report, citing the head of the retail space department at Jones Lang LaSalle in Ukraine, Hanna Chubotina.

JLL said that even taking into account the fall in the volumes of the declared commissioning of shopping malls, the result will be a record for Kyiv and it will considerably hit the indicator of 2013 of 112,100 square meters of commissioned space.

According to the report, in 2014, three malls will be commissioned in Kyiv – the Atmosfera shopping and leisure center (opened in April, with a gross lettable area of 30,000 square meters), Respublika (GLA 135,000 square meters) and Prospect (GLA 40,000 square meters).

The total shopping mall market in Kyiv will amount to around 940,000 square meters at the end of the year, reads the report.

Chubotina said that the main events on the retail property market in Kyiv in the first quarter of 2014 are linked to relations between leasers and landlords and their negotiations on the rent rates.

Consumer activity and the pace of growth in goods turnover in the capital in January-March 2014 gradually fell and retailers were forced to optimize their expenses and try to revise rent rates, she said.

Chubotina said that today retailers are trying to fix the rent rates in hryvnias at the old exchange rate or switch to payments of the rent rates as a certain interest of goods turnover.

The revision of rent rates is of an individual character and it is fixed only for a short period of time, while the owners of the mall are ready to give certain discounts to leasers, the level of which depends on the desire of landlords to see the concrete operator as a leaser, she said.

"According to our assessments, the situation will start improving no earlier than the end of the year if the political and economic situation in the country stabilizes," she added.

JLL said that in January-March 2014, the largest rent rate in Kyiv's shopping malls did not change, totaling $1,200 per square meter a year (value added tax and operation cost are not included).

The vacancy on the retail property market in Kyiv was 6.6% as of late Q1, 2014.

"The high vacancy for Kyiv was formed thanks to two factors: the low pace of occupancy of some new facilities on the market, and the increase in the amount of vacant space in the shopping centers which were in the thick of political events of late 2013 and early 2014," JLL said.

Jones Lang LaSalle is a financial and professional services firm specializing in real estate services and investment management. It has over 200 representative offices in more than 1,000 locations in 70 countries. Its turnover in 2012 was $3.9 billion, $3.6 billion in 2011 and $2.9 billion in 2010.

Its portfolio includes around 242 million square meters of property all over the world.

The LaSalle Investment Management division manages assets worth over $46.7 billion.

In Russia and the CIS, Jones Lang LaSalle has offices in Moscow, St. Petersburg, Kyiv and Almaty.

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