Average office cap rates in Kyiv could grow by 1-2% by late 2011, says expert

Kyiv, March 2 (Interfax-Ukraine) – The average office cap rates in Kyiv, which today amount to 12-14%, could increase by 1-2% by late 2011, according to the director of the valuation department of Samson consulting company, Vsevolod Zhoholev.

"Today the office cap rates in Kyiv stand at around 12-14%. They could grow slightly by the end of the year - by some 1-2%," he said at a press conference at Interfax-Ukraine on Tuesday.

Zhoholev said that the average trade premises cap rates in the capital are 13-15%. He said that the trade premises cap rates could also grow.

"These kind of cap rates were seen before 2004. After 2004, property was revalued and the rates were not in line with the situation on the market. Everyone was buying property expecting further price growth," he said.

Samson Director General Oleksandr Rubanov, and Zhoholev presented an office and trade premises market indicator system for Kyiv at the press conference. The indicators, which reflect the pace and the structure of the said market segments, have been calculated since the middle of 2010. The indexes are calculated on the basis of prices of premises of 200 square meters.

According to the analysis conducted, today office cap rates and trade premises cap rates in Kyiv are lower than in the outlying districts, which could be evidence of the revaluation of premises in downtown Kyiv.

According to the indexes, from the middle of 2010 the price of offices and trade premises in the capital continued falling, and the price of trade premises fell by 13.4% with the average price as of February 25, 2011 of $2,273 per square meter and that for offices by 7.1% ($1,648 per square meter).

Zhoholev said that the trade premises and office tenancy markets were relative stability, with a weak upward trend.

The experts said that the average discount for the sale and purchase of offices and trade premises is 15-20%.