Ukraine has great potential for the development of office real estate
October 17, 2019 a round table was held on the topic “Office real estate in Kiev: a paradigm shift”. Ilya Velichko, Commercial Director of NEST, took an active part in this event. During the discussion of the situation on the office real estate market, the head noted that the rate of provision of office space in Kiev is significantly lower compared to other European cities. At the same time, an increase in demand from tenants, a decrease in vacancy and an increase in rents indicate the potential of this market segment and the prospects for its development.
During the round table, organized by the B2B edition of Commercial Property, market experts evaluated the qualitative and quantitative indicators of the Ukrainian market of business centers. According to analysts, currently in Kiev, the supply of office space is about 0.4 m2 per person, while, for example, in Warsaw this figure is 1.4 m2.
“In other words, the availability of office space in Ukraine is one of the lowest in Europe, even Kiev is significantly behind other European cities,” Ilya Velichko emphasized. At the same time, according to the results of the current year, the average vacancy rate in Kiev decreased to 6.2%. This is due to the fact that for several consecutive years the offer of new business centers on the market was minimal, and those premises that were commissioned were absorbed relatively quickly due to the development of the IT industry in Ukraine and the activities of outsourcing companies. At the same time, as the head noted, the leaders in popularity among tenants are high-quality class A business centers located in the central areas of the capital that meet such requirements as a well-thought-out concept, the presence of a large parking lot, excellent views, modern engineering systems, etc. “Proof of this is the demand from tenants for our Hillfort Business Mansion class A on the street. Mikhailovskaya, 12, which is in the active phase of construction. In 2020, we plan to commission the facility, but now we are signing precontracts,” Ilya Velichko said.
Thus, this year’s trends in the office real estate market of Kiev confirm a paradigm shift and demonstrate a shift in emphasis from the tenant market to the market of business center owners. Against this background, developers are intensifying their activity – they are completing frozen projects or planning to commission new modern facilities. However, as the head of NEST notes, despite the fact that there are currently a large number of land plots for the development of office centers, a shortage of funds and difficulties in attracting borrowed capital remain a limiting factor in the market.