RETAIL SERVICES GLOBAL CITIES RETAIL GUIDE CUSHMAN & WAKEFIELD CUSHMAN & WAKEFIELD 2013/2014. ukraine

Transcription

1 RETAIL SERVICES GLOBAL CITIES RETAIL GUIDE 2013/2014

2 Overview Ukraine is a market of some 45.4 million people in Eastern Europe which borders the Russian Federation to the east and northeast, Belarus to the northwest, Poland, Slovakia and Hungary to the west, Romania and Moldova to the to the southwest, and the Black Sea and Sea of Azov to the south and southeast. It gained its independence from the USSR in It has had a Partnership and cooperation agreement with the European Union since The market is gradually recovering after a downturn in but the Ukrainian economy is heavily influenced by foreign economic factors and the country s traditional risks. Positive dynamics of the Ukrainian basic industry rate and real GDP growth have been observed recently while a rate decrease was registered in H Consumer market indicators show stable annual growth. Although Ukraine has the sixth largest population in Europe, the country s per capita retail sales are significantly lower than those in Russia and Western Europe. Retail is one of the biggest sectors for foreign direct investment in the country and has potential for future growth. It has high potential and low level of competition in many sectors. Ukraine also has enormous unrealized tourism potential due to the variety of tourist attractions: ski resorts in the Carpathian Mountains, Crimea, Black Sea beaches, medieval cities and castles etc, which attract million tourists annually. It also jointly hosted (with Poland) the European Cup 2012.

3 Economic Overview economic summary ECONOMIC INDICATORS* F 2013F GDP growth Consumer spending Manufacturing production Investment Unemployment rate (%) Inflation Hryvnia/EUR (average) Hryvnia /US$ (average) Interest rates 3-month (%) n.a. n.a. n.a. n.a. n.a. Interest rates 10-year (%) n.a. n.a. n.a. n.a. n.a. NOTE: *annual % growth rate unless otherwise indicated. E estimate F forecast Source: CEEMEA Business Group economic breakdown Population 45,4 million (2013) GDP US$ 176,2 billion (2012) Public sector balance -2.8% of GDP (2011) Parliament Head of State Prime Minister Presidential-parliamentary republic President Victor Yanukovich Nikolay Azarov Election date February 2015 retail sales growth: % change on previous year* Retail Volume, bn. USD (JAN - APRIL) Retail Growth -43% 22% 26% 18% *Source: Governmental Statistics Committee

4 Largest cities largest cities (2006) CITY POPULATION Kyiv 2,848,014 Kharkiv 1,452,228 Dnepropetrovsk 999,310 Odessa 1,014,849 Donetsk 955,041 Zaporozhie 768,949 L viv 758,043 Source: the latest Population Census (2001)

5 Retail Scene MAJOR DOMESTIC FOOD RETAILERS ATB-market, Frozzy Group (Sil po, Frozzy Cash&Carry, Fora), Furshet, Kviza Trade (Velika Kishenya, Prosto Market), Volwest Group (Nash Krai), Karavan MAJOR INTERNATIONAL FOOD RETAILERS Billa, SPAR, Auchan, Metro Cash & Carry MAJOR DOMESTIC NON-FOOD RETAILERS Comfy, Technopolis, Foxtrot, Epicenter INTERNATIONAL RETAILERS IN COUNTRY Marks & Spencer, GAP, Mango, Zara, Desigual, Bosco Sport, Christian Dior, Trussardi, Ralph Lauren Home, MAC FOOD & BEVERAGE OPERATORS McDonald s, Coffee House, Domino s Pizza, Puzata Khata, Planeta Sushi, T.G.I. Fridays TYPICAL HOURS MONDAY-FRIDAY SATURDAY SUNDAY

6 Retail Scene Ukraine is an emerging market with a population of over 45.4 million people. The share of quality retail projects with a professional and diverse tenant mix concept (i.e. projects with various catering and entertainment elements, sufficient parking area, effective floor plans, etc.) is low. The majority of market players are local companies. Property management in about 90% of retail properties is undertaken by owners themselves. One of the main local market peculiarities noticeably influencing market development is the low availability of loan capital. Developers have to implement projects under their own financing. The retail sector is the most actively developing sector and the most in demand for those who consider investments in commercial real estate in Ukraine. With growing activity among local and foreign retailers vacancy rates have decreased. Demand for prime locations currently exceeds supply. The prevailing retail format on the market is shopping centers. A number retail park and retail outlet center projects have been announced and are currently at different stages of development. The total existing stock of shopping center space in Ukraine totalled over 2.8 million sq.m GLA as at January, Kyiv is leading in terms of quality retail supply volume. Dnipropetrovsk, Kharkiv, Odessa and Donetsk are also in the top five cities by this indicator. Meanwhile, the Ukrainian retail market is undersupplied with less than 60 sq.m of quality retail space per 1,000 inhabitants; considerably lower than in Russia and all Western European countries. It is possible to enter the Ukrainian retail market directly, but due to economic instability and financial risks many international brands prefer to use franchise schemes. The majority of luxury brands have entered the market in partnership with franchisees. There are no restrictions on foreign companies either buying or renting property in Ukraine, but there are some limitations applied on land purchase. The market for quality professional retail property is considered to be a landlord s market due to the low vacancy rate particularly in the most sought after projects. new entrants to the market REAL LC Waikiki Desigual KFC OBI Burger King The Body Shop

7 Key Features of Lease Structure KEY FEATURES OF LEASE STRUCTURE Lease Terms On average leases in Ukraine are for a term of 1-5 years. In quality professional projects the lease period for anchor tenants varies from 3 to 10 years, while for gallery/mall tenants it is usually 3-5 years. For smaller neighbourhood-type retail projects with a large share of local operators the lease period is 1-3 years. Break options are not common in Ukraine. In well-demand projects this option is not considered at all, especially for shorter lease periods (less than 5 years). Rental Payment Rent Review Service Charges, Repairs and Insurance Property Taxes and other costs Disposal of a Lease Rents are typically nominated in USD per month while agreements are signed and payments are made in Hryvnias. Rents are usually pre-paid on a monthly or quarterly basis. Monthly advance payments are more common. Currently turnover/percentage rents are not common in Ukraine. For premises in shell & core condition a rent free period of 1-3 months is frequently provided. Security deposits are required and comprise 1-3 months rent equivalent. For tenants with a strong covenant such as well-known anchor tenants a bank guarantee can be used. In some cases a mixture of both is used. Indexation is a common practice. Frequently it is considered as an equivalent to a CPI indicator, but not less than 3%. On average yearly indexation comprises about 5-10%. In some cases fixed rent increase for several years can be used. A service charge usually covers management fees, security, cleaning, landscaping, internal maintenance of common parts, external maintenance and insurance, servicing of elevators, water, heating, air conditioning, and other maintenance costs. It excludes internal maintenance and insurance of rented accommodation, utility charges and VAT. The landlord is responsible for external /structural matters in shopping centres (charged back via service charge). The tenant is responsible for internal matters. VAT at 20% is charged on rental payments. Property ownership tax is paid by the landlord annually. Sub-letting is a subject for the landlord s approval. But it is not a common practice in professional shopping centres.

8 JOHN STRACHAN Global - EMEA Ph: Portman Square London, England W1A 3BG john.strachan@eur.cushwake.com MATT WINN Americas Ph: Ivan Allen Jr. Boulevard, Suite 700 Atlanta, GA matt.winn@cushwake.com JAMES HAWkEy Asia Pacific Ph: Unit 1407 yanlord Landmark Office Tower No. 1 2nd Section kenmin South Road Chengdu, Sichuan, China james.hawkey@ap.cushwake.com No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals Cushman & Wakefield, Inc. All rights reserved.