1H 2020 | Kyiv, Ukraine
Retail market overview | Colliers International
RESEARCH & FORECAST REPORT 1H 2020
RETAIL
KYIV, UKRAINE
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1H 2020 | Kyiv, Ukraine
Retail market overview | Colliers International
DEVELOPMENT ACTIVITY
During 1Н 2020, the Retroville shopping mall (GLA construction slowed down, but did not stop completely.
82,283 sq m) at 47 Pravdy Ave. entered the market. Therefore, many of the initially stated opening dates
Thus, the overall supply of high-quality retail space in are likely to be postponed.
Kyiv during the half-year increased by ~ 5.4% and The volume ratio of the retail space supply in Kyiv as
amounted to 1,584,300 sq m. of the end of 1H 2020 amounted to about 535 sq m
According to developers, commissioning of other malls per 1,000 inhabitants.
is not expected until the end of the year. Compared to other European cities, this figure is low,
There are 12 shopping malls with a total area of more but taking into account the number of plans to open
than 763,000 sq m currently under construction. Their new facilities in the next few years, this figure is likely
commissioning is scheduled for 2021-2023. Due to the to grow to 801 sq m per 1,000 inhabitants.
pandemic and quarantine restrictions, most of the
0
Figure 1. TOTAL RETAIL REAL ESTATE STOCK IN 82
KYIV, ths, sq m 188
8 70
168
14
155
126
100
Total stock as on the 90 60 1,502 1,584
beginning of the year, ths, sq 1,236 1,244 1,314
m 1,054 1,068
916
New supply during the 798
647 698
year, ths, sq m 557
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1H 2H
2020 2020F
Figure 2. SATURATION BY MODERN RETAIL In case of commissioning all malls that
SPACE, GLA PER 1000 INHABITANS are currently under construction
saturation of retail space could
increase to
801 sq m per 1000 inhabitants.
1,405 1,013 711 595 535 369 360
Bratislava Warsaw Prague Bucharest Kyiv Sofia Belgrad
Source: Colliers International
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Retail market overview | Colliers International
1H 2020 | Kyiv, Ukraine
CONSUMERS
Consumers` demand
The consumer confidence index, after having reached 2018). In 2014, the consumer sentiment index was 40
a 12-year high in September 2019 (97.5 points), started points. It was the lowest level since the 2008 financial
to decline, mainly due to the political crisis out of crisis (then the indicator was 41 points). As the
government changes and a lack of confidence in a deal pandemic spread, people began to spend less, due to
with the IMF. cuts in wages and layoffs, which led to a decrease in
purchasing power, particularly for non-essential goods,
In March 2020, the index had already dropped to 73
and to a reduction of turnover for retailers accordingly.
points, which was the level of April 2019. With the
However, after the lifting of quarantine measures in a
intensification of the pandemic-related lockdowns,
number of segments, there was a significant increase in
consumer confidence continued to decline throughout
sales due to a latent and overdue demand from
April, dropping to 66.2 points (the lowest indicator since
consumers.
March 2019). As of June 2020, the consumer
confidence index was 65.1 (the lowest since December
Figure 3. CONSUMER SENTIMENT INDEX,
points
Source: Colliers International, Focus Economics, InfoSapiens
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1H 2020 | Kyiv, Ukraine
Retail market overview | Colliers International
RETAILERS
Retailers` demand
At the beginning of the year, a number of retailers had attendance, it has negative repercussions on the
planned to expand and open new locations in Kyiv and turnover of neighboring tenants.
in the regions. However, the warm winter season was
one of the main reasons for declining sales of winter With the resumption of traffic in shopping malls, the
collections compared to the same period in 2019. segment of food courts and catering within the malls
began to show improved performance. When the
In 1Q 2020, the Danish multibrand company DK
quarantine measures were eased and shopping malls
entered the market and opened its first stores of Fransa
and b.young brands in River Mall. re-opened, the results were modest, but now the
turnover in this segment is showing a gradual increase.
In the second half of March 2020, in order to prevent
the spread of COVID-19, the government decided to During the lockdown period, almost all negotiations
shut down shopping malls and other operators, except about new openings or new developments had slowed
for essential shops such as food supermarkets, down or were completely frozen. But today retailers
groceries, health & beauty shops, pharmacies, pet have become more willing to discuss opening new
shops etc.
locations, compared to March-April 2020.
However, once the lockdown measures were lifted,
almost all tenants resumed work, and recently Fashion and drogerie are still cautious with their
operators of the entertainment segment have started development plans, but supermarkets which worked
opening up again too. To date, there have been no during the lockdown, as well as retailers of domestic
mass closures which would have significantly affected appliances, electronics and sports goods are more
the vacancy rate. confident in discussing brand development in new
projects.
In the first months immediately after the quarantine, the
fast-fashion & sports segments skyrocketed due to an The omnichannel is also gaining momentum. In
overdue demand, with some retailers boasting record general, retailers have noticed that when offline sales
sales compared to the pre-quarantine period. Hovewer, fall, the online alternative can save the situation to some
the turnover of tenants showed a moderate decline in extent. Today, even those operators that did not pay
July. enough attention to this format before the lockdown are
developing online.
Cinema networks and entertainment segment
operators are still suffering the worst, considering the According to international retailers operating in the
extremely low attendance after the reopening. Since Ukrainian market, we can see that when the lockdown
such tenants often function as anchors to the shopping measures were lifted, the level of sales in Ukraine in
malls they are in, attracting significant visitor traffic to percentage terms (period to period) rebounded higher
their locations, when they suffer a decrease in than in most other European countries, which inspires
optimism on the pace of the market recovery in Ukraine.
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Retail market overview | Colliers International
1H 2020 | Kyiv, Ukraine
VACANCY
During the first three quarters of 2019, vacancy rates stable - about 6.0%. Nevertheless, the vacancy rate in
remained at a low 4.4%. However, with the the most popular shopping centers operating on the
commissioning of the first stage of Blockbuster Mall market for several years has remained at nearly 0%.
(GLA ~110,000 sq m), vacancy increased to 11.9% by
By the end of 2020 - beginning of 2021, the indicator is
the end of 2019. As of the end of 1H 2020, vacancy
likely to increase, which is related to business
rates have dropped slightly to 10.7%. Despite market
optimization and closing of unprofitable locations by
expectations that vacancy rates would increase
retailer. But at this stage retailers need time to assess
significantly, this has not happened. The indicator grew
losses and prospects for further development.
due to the opening of new projects Blockbuster Mall and
Retroville. Excluding these projects, the vacancy rate is
COMMERCIAL TERMS
As of the beginning of March 2020, the highest rental reopened, including the entertainment segment. This
rates in the best shopping centers in Kyiv for shop areas confirms the ability of market players to reach short-term
of 100-200 sq m remained at the level of 2019: agreements to resume operations. The amount and
$80/sq m/month. Rental rates in the city’s main shopping discount period are determined individually, depending on
streets were $83/sq m/month.* the performance of each retailer in the shopping mall.
Restrictions on the operation of shopping malls during the Globally, it will be possible to define the level where
lockdown for more than two months significantly affected market will stop after two full quarters of different
the financial condition of retailers. Parliament adopted a seasons. Only then we can talk about the stabilization of
number of initiatives, allowing retailers who were forced to rates at a certain level, but for now it is too early to draw
close their locations to be exempt from temporarily paying conclusions about this. At the same time, leading
their rents. Among the retailers surveyed in early May
shopping malls will feel less the effects of lockdown
2020, only 11% admitted that they continued to pay the
restrictions and will quickly reach their usual rental
full rental rate. This mostly applied to the segments that
payments.
were able to function without restrictions.
Agreements concerning new projects are more difficult,
When the malls were allowed to start working again, after
the end of the strict lockdown phase, almost all tenants considering the need to invest in the stores’ construction.
* Depending on SC/SEC location and format
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Blockbuster Mall
1H 2020 | Kyiv, Ukraine
Retail market overview | Colliers International
commissioning
Lavina Mall
commissioning
Figure 4. VACANCY, % 11,9%
10,7%
10,0%
7,3% Excluding
Blockbuster Mall
6,0%
3,5% 3,9%
3,0% 5,6%
5,0%
1,7% 4,5% 4,4%
3,8%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1П 2020
Moment vacancy rate at the end of the year, caused by the commissioning of large
projects: Lavina Mall (December 2016) and Blockbuster Mall (November 2019)
Figure 5. RENTAL RATES, %
$300
$270
$250 $240
Globally, it will be possible
to define the level where
market will stop, after two
full quarters of different
seasons.
$130
$120
$110 $105
$83 $83
$75 $80 $83
$70
$80
$65 $72 $75
$57
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1H 2020
Prime hight street rent, Prime headline rent for 100-200 sq m
$/sq m/month units in most popular SCs
Source: Colliers International
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Retail market overview | Colliers International
1H 2020 | Kyiv, Ukraine
TRENDS & FORECAST
As it has always happened in times of crisis, the current begun to change and by the end of the year the number of
situation may be reflected in the timing of commissioning tenants ready for development may grow.
of new retail spaces. Most retailers are now more interested in projects that are
Over the next four years (2021-2024) more than scheduled to be commissioned later in 2021 – 2023, as
807,000 sq m is expected to be commissioned, which will opposed to those scheduled for this year and which require
be the largest increase in retail real estate in the last ten immediate investment – something more difficult to
years. achieve as they adopt a kind a “savings mode”.
Subject to the expected volume of commissioning The quality shopping malls will finish this year with low
according to the above-mentioned timeframes, the total vacancy rates, but with possible rotation of tenants. On the
supply of retail space will increase to more than other hand, vacancy rates in the malls which worked
2,300,000 sq m. inefficiently before the pandemic are likely to increase
The retailers’ survey in early May 2020 showed that only significantly by the end of 2020 – early 2021. Management
15% of retailers are ready to continue expanding their teams will need to resort to a number of anti-crisis
businesses and opening new locations by the end of the measures to maintain and restore the position of these
year. For the most part, such retailers represent the SEC in the market.
supermarket, home goods and drogerie segments. As the experience of past crises shows, retail as a segment
More than 49% of surveyed retailers admitted that they is usually the first to show a dramatic decline, but it also
plan to develop online sales channels in the nearest future. rebounds quickly. This usually depends not only on
After the strict lockdown was lifted, the tenants’ mood has purchasing power, but also on consumer confidence.
Will the COVID-19 crisis affect business expansion plans by the end of the year?
Будем развивать онлайн-направление
We will develop online 49%
Пока не планируем
Weоткрытия новых
are not planning локаций
an expansion yet 45%
Будем
Weсокращать
will reduce theколичество локаций
number of existing locations 37%
Будем
We продолжать расширение
plan to continue expanding и увеличива
and open new locations 15%
0% 10% 20% 30% 40% 50% 60%
Source: Survey overview of retailers operating in Ukraine, Colliers International, May 2020
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1H 2020 | Kyiv, Ukraine
Retail market overview | Colliers International
MAJOR SHOPPING CENTERS DECLARED TO
COMPLETE IN 2021-2024, KYIV*
# PROPERTY ADRESS GLA, sq m
1 Blockbuster Mall (2nd phase) 34B Stepana Bandery Ave 50,000
2 New Ray 21 Drayzera St 34,500
3 Respublika 1 Kiltseva St 132,500
4 Piramida (2nd phase) 4 Mishugy St 7,500
5 HIT Mall 134/1 Peremogy Ave 16,000
6 Ocean Mall Lybidska Square 100,000
7 Rive Gauche (2nd phase) 17 Zbolbunivska St 56,700
8 Lisova Mall Brovarskyi Ave 220,000
9 April City 20 Lesya Kurbasa Ave 52,000
10 Lavina Mall (2nd phase) 6-d Berkovetsska St 20,000
11 Lukianivka Mall 7 Dehtyarivska St 47 000
12 White Lines 1 Vasylkivska St 27,000
Retail Park Petrivka (2nd
13 15A Stepana Bandery Ave 7,100
phase)
14 Sky Mall (3nd phase) 2T Henerala Vatutina Ave 37,100
Total: 807,400
*Expected that opening of some of the buildings will be postponed.
Source: Colliers International
FOR MORE INFORMATION
COLLIERS INTERNATIONAL EXPERT
Igor Zabolotskyi
Igor.Zabolotskyi@colliers.com
Gulliver Bussiness Center
1-A Sportyvna Square
01001 Kyiv
Ukraine
The information contained herein has been obtained from sources deemed reliable. While every Tel. +38 044 499 00 00
reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is
assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to Fax +38 044 499 00 09
acting on any of the material contained in this report.
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Research & Forecasting
