10:53 11.07.2019

Developers driving up construction of malls in regions – UTG

4 min read

KYIV. July 11 (Interfax-Ukraine) – The activity of construction on regional retail real estate markets is growing, and the reconceptualization trend for existing shopping centers would remain, UTG Director Evgenia Loktionova has said.

"The construction of retail real estate is growing, and not only in Kyiv. There are all prerequisites for increasing it in the regions, as the concepts of the last five years are moving into an active construction phase, which will significantly influence the existing market. I think active construction will move to regions, and Kyiv will finish the started projects," she said at a press conference on the results of the real estate market for the first half of 2019 at Interfax-Ukraine on Wednesday.

At the same time, according to Loktionova, in the next two years the reconceptualization trend and redevelopment of existing facilities in the retail real estate market will continue.

"Our most "sleeping" regions, where there are not many shopping centers that felt comfortable enough in the absence of competition, will now feel serious pressure. This is Khmelnytsky, where two facilities of 50,000 square meters are being built, Vinnytsia with a facility of more than 50,000 square meters, Dnipro with a facility of more than 100,000 square meters. Thus, all new facilities will be built taking into account the existing current trends and new tenants in the market, respectively, this will allow new shopping centers to be ahead 10 years of the existing centers," Loktionova said.

In general, according to her, among those announced for opening before the end of 2022, 44 projects with a total lettable area of 1.36 million square meters are at different stages of implementation in Kyiv and the nearest suburbs.

According to Head of the UTG Strategic Consulting Department Konstantin Oleynik, if these projects are implemented and launched, there is a prospect of a surplus of retail space, which will lead to an increase in vacancy and lower rental rates in obsolete facilities.

"There are large facilities that can significantly affect the distribution of forces in the market. Some of the loudest are the River Mall shopping and entertainment center, Blockbuster Mall shopping and entertainment center, Lukyanivka shopping and entertainment center, and the second stage of the Auchan Rive Gauche shopping and entertainment center. In addition, there are a number of facilities that have just been announced, for example, a multifunctional complex in Lesia Kurbasa Avenue, the White Lines complex entering the active phase, the Respublika shopping center frozen in 2014, Ocean Mall shopping center, April Mall shopping center, Retroville shopping center, Lesnaya Mall shopping center," Oleynik said.

According to the expert, among the projects for reconstruction/reconceptualization in Kyiv is the Karavan shopping and entertainment center, which will turn into an outlet center, the Lukyanivka shopping center, the Dream Town shopping center, and the Gorodok Gallery shopping center. The tenants of the Sirius shopping center in Troyeschyna, which will become the New Way shopping center of the district format, will change, and the Marmelad shopping center will also be updated.

According to UTG, in 2019, the Smart Plaza Obolon shopping center and the Oasis shopping center opened.

Thus, as of the end of June 2019, there were six regional trading facilities operating in Kyiv, 26 – district, 24 – microdistrict, 18 – specialized and 32 detached hypermarkets.

Despite this, the company records a reduction in the vacancy rate of retail space to 5.5%, and the entry of new international retailers to the market, such as Decathlon and In Wear Matinique, contributed to this. Until the end of the year, another seven operators are expected to enter the market, among which are Ikea, The North Face, Eataly, Funday, and others.

According to the UTG's information, the average daily attendance of the shopping and entertainment centers at the beginning of July 2019 is 677 people per 1,000 square meters, which is 4% higher than in the same period in 2018. In terms of saturation with high-quality retail space, Kyiv is ahead of Budapest and Sofia, with an indicator of 527.1 square meters per 1,000 inhabitants.

According to the company, rental rates in U.S. dollars have increased by $0.9 since the beginning of the year and amounted to $24-70 per square meter a month. At the same time, fixed rental rates for restaurants and cafes are $15-30, for large-format clothing stores (600-1,500 square meters) – $1.5-20, for fashion galleries (100-200 square meters) – up to $70, for cinemas – $4-15, for grocery supermarkets – up to $15.