Demand is growing, prices are coming back: what is happening with retail real estate in Ukraine
29 May 15:50
Despite the full-scale war unleashed by Russia, the demand for commercial real estate in Ukraine is growing. This is reported by "Komersant Ukrainian", citing an interview with Yaroslav Burykh, a member of the Ukrainian Real Estate Association.
According to him, the greatest investor activity is observed in the western regions, which are considered relatively safe. Most new projects are concentrated here, especially shopping and entertainment centers (SECs). At the same time, in Kyiv, although there is no construction boom, the market remains active.
Demand for commercial real estate in Kyiv: trends and prices
The capital remains attractive due to high purchasing activity and the image of a business center.
In general, there are fewer builders and the pace has slowed down, but the industry is gradually recovering. Thus, according to Burykh, retail rents have already recovered to pre-war levels.
The pace of construction has slowed down, partly due to a lack of labor, but the industry is showing signs of recovery. After the massive closure of shopping malls in 2022, there has been a steady return to active development. The reason is simple: despite the difficult situation, people continue to consume and need places to shop and spend their leisure time.
Rental rates have almost returned to pre-war levels. In prestigious locations, such as Khreshchatyk or Metrograd, the price can reach $50 per square meter. In less popular residential areas, it is about $10. Rental prices depend primarily on demand and location. Some of the space in central shopping malls is empty because of the high price that small businesses cannot afford. Lower rents could revive the market.
Read also: Investors are afraid to invest in Ukrainian shopping malls due to the threat of new attacks
Who rents commercial real estate during the war in Ukraine
According to Yaroslav Burykh, the main tenants today are young Ukrainian brands that are replacing international players who have left the domestic market. These are businesses that believe in the country’s future, focus on domestic consumers and actively open offline outlets. At the same time, online commerce is developing rapidly, changing the structure of demand.
Many brands have gone online. Ukrainian brands are now developing. Ukrainian stores are opening. This is a trend now,” explained Burykh.
Who brings the most profit to the mall
Entertainment areas play a special role in shopping malls: fast food, cafes, cinemas. They generate significant traffic and profit. According to statistics, up to 40% of a shopping mall’s space can be occupied by entertainment. This is not only a way to attract customers, but also a stable source of income for owners.
Is it worth investing in Ukrainian commercial real estate?
A member of the Ukrainian Real Estate Association explains that investments in commercial real estate are now considered relatively profitable. The estimated yield is 7-10% per annum in dollars. There are even collective investment instruments available – investments from UAH 1000 in land or objects under construction. Most of these objects are insured, and insurance companies have adapted their policies to the realities of war.
However, the main risk for investors and entrepreneurs remains the purchasing power of the population. Amid the war, Ukrainians’ incomes have declined, which affects retail trade. That is why effective pricing, flexible lease terms and adaptation to market realities are crucial for business success.
In general, the Ukrainian commercial real estate market demonstrates resilience, cautious optimism and gradual growth even in times of war.
How many shopping centers operate in Ukraine
As of 2024, there are more than 300 shopping centers in Ukraine, despite the war, loss of infrastructure and economic challenges. According to the Ukrainian Council of Shopping Centers (UCSC), at the end of 2024, there were 326 shopping malls in the country, of which 51 were in the temporarily occupied territories. This means that about 275 shopping malls are actually available for business and visitors in the government-controlled areas.
The total area of Ukrainian shopping malls is about 9 million square meters, of which approximately 6 million are available for lease. Kyiv has traditionally maintained its leadership in terms of the number and scale of shopping centers, but the western regions, in particular Lviv, Ivano-Frankivsk, Zakarpattia and Chernivtsi, are showing rapid growth, with higher security levels.
In the coming years, 56 new facilities are planned to open, adding about 1 million square meters of retail space. The growth is due to the restoration of confidence in the market, the development of domestic entrepreneurship and the adaptation of business to the realities of wartime. Many investors are now choosing the co-investment format, investing in shopping malls that are still under construction or in the reconstruction of existing facilities.
Although the number of visitors in many centers has decreased, especially in the regions under the threat of shelling, the business potential of shopping malls remains high. Ukrainian brands are actively replacing international brands that have left the market by opening new stores and food courts that meet the demand of the population.
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