September 09, 2015

Little secondary investment activity in Ukraine

Little secondary investment activity in Ukraine

Due to high country risks aggravated by the ongoing armed conflict in Eastern Ukraine and unfavourable economic situation, there were very few secondary investment deals reported on the commercial property market in Ukraine in the first half of 2015.

According to DTZ’s report, in the first half of 2015, total secondary investment volume on the Ukrainian property market amounted to only around USD 40 million. During the period the following secondary investment deals were reported on the property market:

  • The company Petricol Investment acquired the shopping and entertainment centre ‘Kvadrat’ on Perova Boulevard on the eastern bank of the Dnipro River in Kyiv. Total area of the property extends to around 41,000 sqm, whilst its GLA is 19,100 sqm. Petricol Investment is also owner of the shopping and entertainment centre ‘Komod’ and the retail centre ‘Kvadrat’ near Lukyanivska metro station, both in Kyiv. The deal structure is confidential.
  • The 1,000 sqm business centre at 30 Fizkultury Street in Kyiv is known to have changed hands in the first half of 2015. The deal is estimated in the range of USD 1.5-1.7 million.
  • The Ukrainian company acquired a 10,000 sqm pharmaceutical warehouse in the Greater Kyiv area. The deal is estimated at around USD 3.5 million.
  • A 15,000 sqm warehouse in Kyiv Greater area was purchased by the private Ukrainian company for owner-occupation purposes. The deal volume is confidential.

During the first six months of 2015 the most active vendors, willing to dispose, and disposing their property assets in Ukraine, were the commercial banks, which repossessed assets from borrowers who defaulted on loans. The banks have been considering discounts in the range of 10-30 percent from balance sheet values for the assets put up for sale.

Despite a broad range of prime and secondary assets in all classes now being available for sale, liquidity has remained low due to still largely unattractive investment climate in Ukraine and, near-zero availability of debt finance. Where assets are available with the transfer of some debt then, this materially adds to potential liquidity.

As of late June 2015, DTZ projects that total volume of secondary investment transactions in Ukraine during the second half of the year may potentially amount to around USD 10-20 million. However, the actual semi-annual figure is difficult to forecast due to the current instability in Ukraine and uncertainty over further development of the country.

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