Von Olga Solovei

International investors and project developers are turning towards the Ukrainian capital Kiev. However, regional centres are increasingly becoming the focus as well.

Despite its political crises, the Ukraine is one of the most promising countries in Eastern Europe. Strong economic growth and increasing incomes, as well as high demand for modern properties of all kinds offer an attractive environment for local and international investors.

In the commercial real estate market in the Ukraine, the development of the past two years continues in 2007. In all areas, demand is clearly higher than the supply, and each new project that has come onto the market has found a user immediately. The result is that rents are increasing and there are hardly any vacancies. In other words, the market environment is very attractive for investors.

The capital of Kiev still has a pioneering role in the Ukrainian real estate market. It is the trendsetter in the development of modern office properties, new retail formats and other commercial real estate. It also has the highest rents and investments in the Ukraine.

However, development activities spilled over into the bordering regions in 2006. Particularly the cities with more than one million residents and regional centres, such as Dnjepropetrowsk, Donezk, Charkow, Odessa, Lviv and others. Local developers still dominate these markets, but large developers from the capital are starting to expand their activities to the regions.

actively pursuing collaborations with local players. For example, King Cross (Italy) is developing a project in Lviv, Michaniki (Greece) expanded into the Ukraine market with residential and retail developments in Odessa, 1849 Plc (London) bought two properties in Kriwoi Rog and Chernivtsi to develop shopping centres there, and GLD Invest (Austria) is building a large logistics complex in Odessa.

The spectrum of international players

Other international real estate companies are also active in the Ukraine, including ECE Projektmanagement, Quinn Group, Scorpio Real Estate with their subsidiary Seven Hills, the Ingenium Group with Giffels Management Ukraine, as well as Meinl European Land, which develops ping centres and specialty stores for Acteeum. Russian companies, such as Mirax Group and MLP
Multinational Logistics Partnership, are also active in the Ukraine.

Large consulting companies, such as DTZ, Colliers International, Knight Frank, Cushman & Wakefield and CB Richard Ellis are, meanwhile, also active in the Ukraine. Large retail chains, such as Auchan, Billa, Metro and particularly Russian chains, are also active in the Ukraine. Ukraine players, however, still dominate the market, including TMM, HCM Group, XXI Century,  FIM Group, AVEC, UCDC and many more.