The views of the International property awards real estate Awards Project EE 2017
The end of the year — time to take stock and to determine the vectors of development of the market for the coming year. URE Club was asked to make their predictions and call trends in the industry-2018 the winners of the annual award in the field of real estate in Eastern Europe EE Project Awards 2017 — experts of the leading consulting companies of the Ukrainian market.
The retail market
Given the very restrained forecasts of further growth, as commented in retail Vadim fidgets,President and founder of UTG, the majority of participants of the market of commercial real estate will continue to be wary of investment opportunities and development of new large-scale projects.
"2018 will be a year of transition the market to the opening of Mall with an area of 25 thousand square meters, as well as the massive reconception facilities, the term of which has more than 8 years. In addition, development activity will focus on existing assets and is aimed at the completion of the large-scale shopping malls," says Vadim fidgets.
This trend notes and Dmitry Gavrilenko, the head of the JLL office in Ukraine, adding that given the limited new supply and sustained increasing demand from retail operators in 2018 is expected to increase rents by at least 10%.
At the same time, according to forecasts by Dmitry Gavrilenko , the owners of existing shopping centres will continue to strengthen tenant mix by increasing the representation more recognizable and sought after brands and reduce the weak and lesser-known brands in their facilities.
A different opinion was expressed by Nick cotton, managing Director of Cushman & Wakefield in Ukraine. The expert believes that despite the stabilization and development of the market of commercial real estate, the derivation of new facilities is unlikely to lead to an increase in rental rates, the occupancy rate will remain at a high level in quality shopping centers.
Dmitry Gavrilenko is also reminded that in 2018 the market will come new players. "In particular, is expected to open big Department stores Turkish (DeFacto, Koton) and Swedish (H&M) retailers. Then we expect to get information from other retailers, who have long been eyeing the Ukrainian market, but in periods of instability delayed the opening of its stores. Will also continue the expansion of the present on the Ukrainian market operators, including through the development of new brands", — said the expert.
The trend of the growing share of operators of public catering and entertainment in shopping centers will increase. According to research, this approach has a positive effect on the coverage area, duration and frequency of visits.
The office market
As for the office segment, according to forecasts by Dmitry Gavrilenko, under condition of preservation of positive dynamics of macroeconomic indicators in 2018, this market will continue to recover, but because the experts of JLL in Ukraine expect a gradual increase in rental rates. The vacancy rate, due to the low volumes of entry and stable demand for office spacewill continue to decline.
According to nick cotton, "From the point of view of the lease market of office and, most likely, logistics real estate will show a decrease in the vacancy rate, which will lead to an increase in rental rates." The expert also noted that from the point of view of development, the commissioning of the facilities office and logistics real estate will remain a nominee, despite the rapid decline of the vacancy rate, while the input of commercial real estate will be at a high enough level.
"At the moment the capital market is pretty saturated — adds Dmitry Gavrilenko. — So next year will actively develop markets in the regions, particularly Lviv, Kharkov and the Dnieper." Will also continue to develop the IT sector, retaining leading positions in terms of absorption.
Prospects for investment
Assessing the prospects, experts unanimously predict that the increased activity on the investment market. "The increase in investment activity, as noted by Nick cotton, Cushman & Wakefield in Ukraine, will depend on the overall economic stability, the demand will be mainly represented by domestic investors and is concentrated in the segment with the value of assets up to $50 million."
On the market, according to JLL in Ukraine, the expected closing acquisitions of real estate that have been initiated in the past year. Major players in the market will continue to be banks in the role of sellers and local developers and investment groups as buyers. Dmitry Gavrilenko believes that "the main driver of deals for local players will be the need for the investment of capital accumulated during the period of "downtime" of the market from existing facilities and/or other businesses." A significant proportion of the deals can be closed as part of acquisition of commercial objects for their own use.
The expert also predicts an increase in the number of foreign institutional investors who will more carefully analyze the investment options, but the probability of closing their transactions low. "The main reason is the high level of political and economic risks, as well as the lack of clear indicators of the preconditions for economic growth. Foreign capital will be on the market in the form of private opportunistic investment of approximately $5 million", — argues Dmitry.