DTZ 2013

DTZ Ukraine in the Regions

Established , 1784 Established , 1994

Kyiv Population 2 844 000 inhabitants

Major existing multi-tenant retail centres in Kyiv Major pipeline multi-tenant retail centres in Kyiv

Project Delivery Size (sq m) Project Delivery Size (sq m)

1. Dream Town 2009 / 2011 (in phases) 90 860 15. Respublika 2014 139 000

2. Ocean Plaza* 2012 72 200 16. Lavina Mall 2015 115 000

3. Sky Mall* 2007 / 2010 66 000 17. Retroville 2015 82 700 (in phases) 18. KyivMall 2015-2016 75 400 4. Gulliver 2013 45 500 19. Kvadrat Vyrlytsa 2015-2016 75 000 5. Marmelade 2013 40 000 20. Manhattan Mall 2015-2016 69 200 6. Karavan Megastore 2004 / 2005/ 2008 37 700 (in phases) 21. Blockbuster Mall 2014-2015 66 370

7. Bilshovyk 2007 / 2008 36 200 22. Petrivka Mall 2015-2016 61 800

8. Promenada Centre 2004 / 2007 30 000 23. Hartz 2015-2016 57 000

9. RayON 2012 23 000 24. River Mall 2015 49 070

10. Domosfera* 2009 21 600 25. Retail and leisure centre 2015 / 2016 48 000 on Zdolbunivska Str. (in phases) 11. Magellan 2004 21 000 26. Lukyanivka Mall 2015-2016 45 000 12. Ukrayina 2003 (reconstruction) 20 800 Department Store 27. Happy Mall 2014-2015 42 500

13. Globus 2002 / 2003 (in phases) 18 600 28. Prospekt 2014 40 390

14. Manufaktura outlet village 2013 18 200 29. Art Mall 2013 36 750

* extension planned 30. Atmosphere 2014 30 000 31. TSUM 2015 (reconstruction) 22 500 Supply & Demand Rents

Total modern retail stock in the city amounted to During the period from October 2011 to around 1,280,000 sq m (GLA) in late October 2013, or October 2013 inclusive, average monthly rents in 449 sq m (GLA) per 1,000 inhabitants. quality retail schemes in Kyiv remained generally stable at USD 70-90 per sq m for premises of 100-250 sq m, In January-October 2013, approximately 134,500 sq m reaching highs of USD 160-200 per sq m per month (GLA) of modern retail space was delivered in Kyiv. in the most sought-after prime properties. Major schemes delivered during the period included ‘Gulliver’ in the central area of the city, ‘Silver Breeze’ High street retail rents in Kyiv also remained generally in the densely populated neighbourhood on the eastern stable during the period. As of late October 2013, bank of the River and the secondary quality average high street rents in the Ukrainian capital were retail and leisure centre ‘Marmelade’. registered at $110-230 per sq m per month, with asking monthly rents randomly reaching the highs October 2013 saw opening of ‘Manufactura outlet of $250-300 per sq m. village’ in the Greater Kyiv area, which is located on the land plot adjacent to the operating retail and leisure Taking into account present dynamics of retailers centre ‘MegaMarket Khodosivka’. on the Ukrainian market combined with significant pipeline supply of quality retail stock, DTZ anticipates During the remainder of the year, the retail and leisure that base rental rates during the remainder 2013-2015 centres ‘Art Mall’ and ‘Atmosphera’ are scheduled for will remain stable in relation to the best properties delivery in the southern periphery of Kyiv. However, let at sustainable rents. At the same time, rental rates DTZ projects that opening of these schemes will be in poorly conceived retail schemes in Kyiv and across delayed through to 2014. Ukraine will be subject to downward pressure. This is due to the lack of critical mass of actual new market As of late October 2013, DTZ estimates that entries combined with significant retail stock in around 1,100,000 sq m (GLA) of new ‘modern’ retail pipeline, as well as economic uncertainty both globally space is in active stage of planning or construction and in Ukraine. in Kyiv. If these properties were commissioned in accordance with the announced plans, by end of 2016 The longer term sustainability of current rental rates current retail stock in the Ukrainian capital may double. will depend on the actual commissioning and quality of new sizeable pipeline retail schemes scheduled Majority of pipeline retail stock scheduled for opening for completion in 2013-2016 and beyond, as well as in Kyiv by 2016 are regional and super-regional general macroeconomic conditions in Ukraine and shopping malls. The formats of retail parks are yet to globally. appear in Ukraine. Kyiv

Retroville Shopping and Entertainment centre

Location and description Retroville Shopping and Entertainment centre will be located in Podilskyi district, on interception of two stratigically important arterial streets, Pravdy and Poryka avenues.

Developer STOLITSA GROUP

Architect UAB ‘GEDIMINO JUREVICIAUS STUDIJA’

Delivery 2015

GBA 104 496 sq m

GLA 82 761 sq m

Levels 2

Parking 3 600 spaces

Anchors Food hypermarket, ice rink, fitness club, electronics, entertainment zone, cinema High Street Retail Khreshchatyk Street

Location and Retail premises, located in the heart of Kyiv, on 34 Khreschatyk Street. 2 façade entrances, 7 large show windows on the description first level and 10 blocks with 2 show windows each on the second level.

Owner Legal entity

Intended Footwear and clothes stores, or restaurant use

GLA 1446,4 sq m, which can be divided in two stores with separate entrances with areas of 700 sq m each.

Levels 3 Kyiv

Happy Mall Shopping and Entertainment centre

Location and Happy Mall Shopping and Entertainment centre will be located in Golosiivskyi district on Trutenko Street, providing access description to several city districts.

The shopping mall is planned for commissioning in 2014, becoming a major family shopping destination for daily visits from the densely populated neighbourhoods in Golosiivskyi and Solomianskyi administrative districts of Kyiv.

DTZ DTZ was appointed by Liko Holding to provide concept optimisation, tenant mix development and architectural concept involvement optimisation services, as well as to become an exclusive leasing agent of this project.

Developer Liko Holding

Architect Chapman Taylor

Delivery 2014

GBA 92 000 sq m

GLA 42 000 sq m

Levels 3

Parking 2 000 spaces

Anchors Food supermarket, furniture, electronics, sport stores, entertainment zone, cinema Globus Shopping and Entertainment centre

Location and Home to over 140 stores of the world’s leading fashion and lifestyle brands, GLOBUS is located at the historical central description square of Kyiv – Maydan Nezalezhnosti (in English – Independence Square). It started life, as a retail destination in the early 2001-2003, when the city decided to do a capital reconstruction of the square and Globus was built.

Located both under and over Independence Square, with immediate metro access, Globus Shopping and Entertainment centre is perfectly situated to attract visitors 12 hours per day, 7 days per week.

DTZ DTZ has been involved in the project as a leasing agent on behalf of the landlord. involvement

Landlord London & Regional

Architect Local architect

Delivery 2002-2003

GBA 39 500 sq m

GLA 18 600 sq m

Levels 5

Anchors Billa, Brocard, New Look, Adidas, Walker, Oodji Odesa Population 1 010 900 inhabitants

Major multi-tenant retail schemes : existing and in pipeline until 2016

Project Delivery Status Size (sq m) Developer Major brands / anchors Auchan, OBI, Comfy, 9-screen cinema 1. Riviera Shopping Argo Real Estate 2009 Operating 65 000 with IMAX, Leopark kid’s play, Jysk, City Opportunities Fund Inditex Group brands, LPP brands, others Food supermarket, DIY, electronic 2. Odessa City 2015 Planned 59 000 Amstor appliances store, furniture store, cinema, kid’s play Under BUD HOUSE Food supermarket, retail gallery, fitness 3. Zebra 2014-2015 38 000 construction GROUP centre Sport Life, cinema Silpo, Foxtrot, Comfy, Brocard, Igroland, 33 000 (phase 1) / 4. City Centre I 2012 / 2014 Operating local developer Piazza Italia, Detskiy Mir, Oodji, Intertop, 20 000 (phase 2) Adidas, Planeta Kino, M&S, others Under Tavria-V, Planeta Kino, Gloria Jeans, Oodji, 5. City Centre II 2014 20 120 local developer construction others Furshet, Comfy, Antoshka, Monton, 6. Srednefontanskiy 2007 Operating 19 530 Local developer Adidas, Bomond, Cinema Citi, Igroland , others Supply & Demand

With a total population over 1 million inhabitants, Odessa is one of the largest cities of Ukraine located in its southern part. The city is an important trade sea port on the Black Sea and a popular tourist destination.

Total modern retail stock in Odessa was estimated at around 420,300 sq m in October 2013, or 411 sq m (GLA) of modern retail stock per 1,000 inhabitants.

The modern retail stock in Odessa has been dominated by multi-tenant retail centres and shopping malls, which presently account for approximately 65% of total stock in the sector. Big box retail developments account for the remaining 35% of total retail stock in the city. There are no retail parks or fashion outlets in Odessa, but several retail parks are scheduled for delivery in the city by 2017.

The 65,000 sq m (GLA) retail and leisure centre Riviera Shopping City is the largest and most notable retail scheme in Odessa, which was developed by the LSE-listed company Argo Real Estate Opportunities Fund during 2009. The scheme is anchored by Auchan and OBI, while its gallery benefits from the presence of majority of quality retail brands operating in the city. Furthermore, despite after-effects of economic crisis, the opening of Riviera Shopping City triggered many new market entries in Odessa, including (but not limited to) real,- and later Auchan, OBI, IMAX, Inditex Group, Marks&Spencer, New Yorker, LPP (House, Cropp Town, Reserved).

As of October 2013, there was over 270,000 sq m (GLA) retail space planned for delivery until late 2017.

Out of this pipeline stock in the sector, DTZ projects that during the period from November 2013 through to late 2015 new supply in the retail property sector in Odessa will amount to around 87,000 sq m (GLA) formed by City Centre II, Zebra, Atrium and Equator in northern Kotovskyi neighbourhood, as well as extension to City Centre I.

Other major schemes planned for delivery by end of 2017 in Odessa include the retail and leisure centre Odessa City on Generala Petrova Street developed by Amstor, Europort Retail Park by the Israeli company Europort, Odessa Mall by Arricano Development, as well as Retail Park Odessa Nord in the northern residential neighbourhood of the city.

High street retailing is well-developed in Odessa due to the urban structure of the city and its high popularity among the tourists.

Odessa, together with , is considered to be the second after Kyiv most attractive destination to enter for majority of retailers in all pricing categories. Demand remains very strong for quality retail space both in high street locations and multi-tenant retail centres across the city.

Rents

In Odessa high street retail rents are higher than average rents in multi-tenant retail centres, mostly due to the urban structure of the city with many tourist attractions in its central part, developed nature of street retailing, shopping habits of local inhabitants and high tourist flows, as well as lack of quality retail schemes in the non-central areas of the city.

Prime high street retail rents in Odessa amount to $70-100 per sq m per month, with the highest rents typically achieved for quality retail premises with the frontage to Derybasivska, Rishelyevska and Yekaterynynska Streets.

In the prime multi-tenant retail centres in Odessa, net monthly retail rents vary in the range of $50-90 per sq m for standard units of area 100-250 sq m. Odesa

Riviera Shopping City Shopping and Entertainment centre

Location and After four years of successful operations, Riviera Shopping City is not only considered the largest shopping description and entertainment centre in the southern region of Ukraine, combining more than 250 popular Ukrainian and international brands, but also an integral part of social and cultural life in the region, seeking opportunities to support the development of modern culture and growth of the new generation.

DTZ involvement DTZ was involved from initial concept development, as exclusive leasing agents and, now as exclusive centre managers.

Developer Argo Real Estate Opportunities Fund

Delivery 2009

GBA 80 000 sq m

GLA 63 000 sq m

Levels 2

Parking 2 200 spaces

Brands , , Stradivarius, Pull & Bear, Mango, Reserved, Marks & Spencer, Benetton, Intertop, Brocard, Monton, House, Adidas, Reebok ,Geox, New Yorker, OYSHO, Yamamay, U.S. Polo Ass., Lee/Wrangler etc

Anchors Auchan, OBI, Comfy, Leopark , Jysk, cinema Odessa City Shopping and Entertainment centre

Location and The project is located on Generala Petrova Street in Malinovsky district of Odessa, close to one of the largest description residential districts of Primorsky and Kievsky.

DTZ involvement DTZ was commissioned by the developer to provide development consultancy and exclusive leasing services for the development

Developer Amstor LLC

Delivery 2015

GBA 72 000 sq m

GLA 59 000 sq m

Levels 2

Parking 1 500 spaces

Anchors ‘Amstor’ supermarket, DIY, electronics, cinema, children entertainment center, furniture store Population 755 600 inhabitants

Major multi-tenant retail schemes in Lviv: existing and in pipeline until 2016

Name Delivery Status Size (sq m) Developer Major brands /anchors Auchan, Praktiker, Foxtrot, Inditex Group brands, 1. King Cross 2008 / 2010 King Cross Operating 52 700 LPP brands, Antoshka, Mothercare, Planeta Kino Leopolis (in phases) Group with IMAX, Leopark (kid’s play), others Under Food hypermarket, electronic appliances store, 2. Leopolis 2014-2015 47 500 Phoenix Capital Construction cinema (7 screens), bowling, kid’s play, others Amstor, Comfy, LPP brands, Inditex Group brands, Under Multi 3. Forum Lviv 2015 36 000 MTI brands, Melon Fashion Group brands, Construction Development Sportmaster, Mango, Planeta Kino, Igroland, others Supply & Demand

Lviv is an important economic, cultural, academic and transportation centre of Ukraine with total official population of around 760 thousand inhabitants. It is the largest city in Western Ukraine and, its historic and architectural heritage makes it a popular tourist destination.

Lviv also hosted the matches of ‘EURO 2012’ Football Championship together with Kyiv, Donetsk and , as well as four Polish cities.

Total modern retail stock in Lviv was estimated at over 205,500 sq m in October 2013, or 272 sq m (GLA) of modern retail stock per 1,000 inhabitants.

The modern retail stock in Lviv has been dominated by multi-tenant retail centres and shopping malls, which account for almost 74% of total stock in the sector. Big box retail developments, comprised of the DIY-stores Epicentre and Nova Liniya, and two outlets Metro Cash&Carry, account for the remaining 26% of total retail stock in the Forum Lviv city. There are no retail parks or fashion outlets in Lviv. Shopping and Entertainment centre

In addition, several small-format retail centres operate in city centre and other areas of Lviv. DTZ estimates that present lettable area of these properties amounts to approximately 33,600 sq m (GLA). Location and Forum Lviv Shopping and Entertainment description centre can be considered a significant As of October 2013, there was over 137,000 sq m (GLA) modern success case for a whole complex of retail space planned for delivery in Lviv during the period from services by several DTZ departments. November 2013 through until late 2017, an increase on current stock by around 53%. However, delivery of several sizeable pipeline The 69 000 sq m shopping and schemes may be postponed to later periods. entertainment centre, located in central Lviv, is scheduled to open in early 2015. High street retailing is well-developed in Lviv due to the urban 115 Leading Ukrainian and international structure of the city and high tourist flows in its central part. brands will lease retail space in this complex. DTZ believes that the highest potential for retailers in Lviv exists in low, lower middle and middle price segments. Occupiers’ demand DTZ Following the brokering of a JV agreement remains considerable for quality retail space both in high street involvement on behalf of local developer Galereya locations and quality retail centres in the city. Centre and Multi Development, an international developer with wide experience in development of shopping Rents centres throughout , DTZ are appointed as a co-exclusive leasing agent In Lviv high street retail rents were historically higher than average for this centrally located scheme. In early rents in multi-tenant retail centres, mostly due to the urban 2013 DTZ brokered the entry of a third structure of the city with many tourist attractions in its central partner into the J.V. – BudHouse Group. part, developed nature of street retailing, shopping habits of local inhabitants and high tourist flows, as well as lack of quality retail Developer Multi Development Ukraine schemes in the non-central areas of the city. Architect T + T Design

However, after commencement of the leasing campaign in the retail Delivery Q1 2015 and leisure centre ‘Forum Lviv’, which is presently under construction in the central area of Lviv, the correlation between prime high street Project Status Under construction rents and shopping mall rents in the city significantly converged. GBA 69 000 sq m

As of October 2013, prime high street retail rents in Lviv amounted GLA 36 000 sq m to $60-90 per sq m per month, with the highest rents typically achieved for quality retail premises located along Tarasa Shevchenka Levels 4 (including 1 underground parking level) and Svobody Avenues, and on Rynok Square. Parking 620 spaces In the best multi-tenant retail centres in Lviv, such as ‘Forum Lviv’, Anchors ‘Amstor’ supermarket, Comfy, Inditex net monthly retail rents vary in the range of $50-85 per sq m for brands, LPP brands, Teddy Group brands, standard units of 100-250 sq m. Igroland, ‘Planeta Kino’ cinema Kharkiv Population 1 442 600 inhabitants

Major multi-tenant retail schemes in Kharkiv: existing and in pipeline until 2016

Size Project Delivery Status Developer Major brands /anchors (sq m) Retail park, as well as shopping centre based on 2015 / 2017 Multi 1. Forum Kharkiv Planned 87 000 electronic appliances store, sports supermarket, (in phases) Development retail gallery, leisure area and eateries Food hypermarket, electronic appliances store, EASTGATE 2. Cosmo Mall 2016 Planned 73 000 sports supermarket, retail gallery, leisure area, DEVELOPMENT eateries Operating 2011/2012/2014 Hypermarket ‘Krayina’, Argo brands, LPP brands, 3. Magellan (phase 3 under 62 000 Kray Property (in phases) Adidas / Reebok, Megasport, leisure area (planned) construction) Food hypermarket, electronic appliances store, EASTGATE 4. Levada Mall 2015-2016 Planned 60 000 sports supermarket, retail gallery, leisure area, DEVELOPMENT eateries Hypermarket ‘Karavan’, furniture store ‘Karavan- Karavan Group 2006/2007/2008 Mebli’, MD Group brands, MTI brands, Brocard, 5. Karavan Operating 57 050 / CDA Real (in phases) Budynok Igrashok, Mothercare, M&S, SMYK, LPP Estate brands, Igroland, ice-rink, others Hypermakret ‘Fozzy’, OBI, Comfy, Inditex brands, 6. Dafi 2008 Operating 56 070 Dafi Argo brands, MTI brands, L’Etoile, Kronverk Cinema, Ice Hall, kid’s play, others Food supermarket, electronic appliances store, Under BUD HOUSE 7. Nikolskyi 2015 42 000 sports supermarket, retail gallery, fitness centre, construction GROUP cinema, kid’s play, eateries 2006 / 2013 Silpo, Comfy, Megasport, Milavitsa, Planeta Kino, 8. French Boulevard Operating 38 000 Aksioma (in phases) ice-rink, kid’s play, others Multi Food hypermarket, DIY-store, other big box 9. Forum Artem 2015 Planned 33 500 Development retailers Supply & Demand Rents

Kharkiv is the second largest city in Ukraine with over In Kharkiv high street retail rents currently tend to exceed 1.4 million total population plus thousands more average rents in multi-tenant retail centres, mostly due to commuting to the city due to many higher educational the developed nature of street retailing in Sumska Street establishments located here. In terms of economic within the boundaries of the administrative centre, and base, Kharkiv used to rely heavily on industrial sector, lack of quality retail stock within shopping malls and retail particularly machine building, and is presently in centres in the city. transition. The city hosted matches of EURO 2012 Football Championship. Prime high street monthly rents in Kharkiv presently vary in the range of $50-80 per sq m, with the highest rents Total modern retail stock in Kharkiv was estimated at achieved for properties located on Rozy and around 407,150 sq m in October 2013, or over 282 sq Konstytutsiyi Squares, and those having frontage to m (GLA) of modern retail stock per 1,000 inhabitants, Sumska Street. which reflects one of the lowest retail saturation levels compared to other major cities of Ukraine. In the prime multi-tenant retail centres in the city, net monthly retail rents vary in the range of $45-70 per sq m The modern retail stock in Kharkiv has been dominated for standard units of area 100-250 sq m. by multi-tenant retail centres and shopping malls, which account for approximately 70% of total stock in the sector. Big box retail developments account for the remaining 30% of total retail stock in the city. There are no true retail parks or fashion outlets in the city.

As of October 2013, there was over 292,100 sq m (GLA) retail space planned for delivery during the period through to 2017. This new supply will increase current retail stock by almost 72%, and will bring differing dynamics to the local market, remaining generally static since 2008 (despite the significant number of large-scale development projects in pipeline).

Major schemes planned for delivery until 2017 in Kharkiv include the central retail and leisure centre ‘Nikolskyi’ by Bud House Group, as well as ‘Levada Mall’ and ‘Cosmo Mall’ by the Kharkiv-based development company Eastgate Development. The international firm Multi Development also plans to deliver two sizeable retail schemes in the city, i.e. ‘Forum Kharkiv’ and ‘Forum Artem’.

Though not being a priority destination for expansion, Kharkiv is considered a first-tier city to enter for majority of retailers in Ukraine.

Occupier demand remains significant for quality retail space both in high street locations and quality multi-tenant retail developments in Kharkiv.

DTZ believes that, due to the city’s economic base, the highest potential for retailers in Kharkiv exists in low, lower middle and middle price segments.

The retail market in Kharkiv is strongly influenced by the large-scale covered market ‘Barabashovo’, which extends to around 75 hectare and is a popular retail destination not only among local population, but also visitors from Kharkiv region and other regions of Ukraine. Kharkiv

Cosmo Mall Shopping and Entertainment centre

Location and Cosmo Mall Shopping and Leisure centre will be located in a densely populated and rapidly growing residential area description in Kharkiv, having perfect transport and visual accessibility. Developer EASTGATE DEVELOPMENT Architect Chapman Taylor Delivery Q2 2016

Project Status General Planning Stage GBA 96 000 sq m (including Hypermarket) GLA 73 000 sq m (including Hypermarket) Levels 3 Parking 1 400 parking spaces Anchors Food hypermarket, cinema, electronics, sport goods, entertainment centre Levada Mall Shopping and Entertainment centre

Location and description Levada Mall is located near the central part of Kharkiv - the second largest city of Ukraine.

Developer EASTGATE DEVELOPMENT

Architect Mir LLC

Delivery Q4 2015

Project Status General Planning Stage

GBA 85 000 sq m

GLA 60 000 sq m

Levels 3

Parking 1 350 spaces

Anchors Food hypermarket, cinema, bowling, skate ring, electronics, children entertainment center Donetsk Population 963 400 inhabitants plus 390 700 inhabitants in the neighboring

Major multi-tenant retail schemes in Donetsk: existing and in pipeline until 2016

Size Project Delivery Status Developer Major brands /anchors (sq m) 2008 / 2014 Under construction Immochan Auchan, Eldorado, Sportmaster, LPP brands, 1. Rose Park 48 000 (in phases) (phase 1 operates) Ukraine Planeta Kino with IMAX (9 screens) Varus, Inditex brands, Marks&Spencer, Bonjour, 2006 / 2009 / 2011 2. Donetsk City Operating 43 600 Domus L’Etoile, Multiplex cinema (8 screens), kid’s play, (in phases) others Food supermarket, electronic appliances store, 3. NORD Mall 2016 Planned 30 000 local developer cinema (6 screens), kid’s play, others 4. Makiivka 2006/2007 Operating 27 300 Amstor Amstor, Praktiker, Comfy, BRW, Jysk Retail Park (in phases) Velyka Kyshenya, Polyana, Mothercare, Brocard, 5. Décor Donbass 2008 Operating 23 500 Décor Service bowling, amusement arcade, others 2004 (1965) Boom, Foxtrot, Megasport, Mosaic, Monton, 6. Belyi Lebed Operating 20 000 local developer (reconstruction) Plastilin, kid’s play Supply & Demand

Donetsk with an official population around 1 million inhabitants is one of the major coal-mining and industrial centres of Ukraine, as well as the regional and administrative centre of the Donbas river basin, forming the heavy industrial heartland of the country.

Cumulative modern retail stock in Donetsk and its satellite city Makiivka was estimated at around 365,800 sq m (GLA) in October 2013, or 379 sq m of modern retail stock per 1,000 inhabitants. This figure accounts for all major retail developments in the city of or over 5,000 sq m(GLA), and includes approximately 157,300 sq m of ‘big box’ developments.

The modern retail stock in Donetsk has been dominated by multi-tenant retail centres and shopping malls, which account for around 57% of total stock, whilst big box retail developments for 36%. The remaining 7% of total modern retail stock is formed by a retail park in the city of Makiivka, which is anchored by the food supermarket Amstor and the DIY-store Praktiker.

In addition, over a dozen small-format retail centres operate in the city centre and other areas of Donetsk. DTZ estimates that present lettable area of these properties amounts to approximately 40,000 sq m (GLA) NORD Mall As of October 2013, there was around 220,500 sq m (GLA) modern Shopping and Entertainment Centre retail space planned for delivery in Donetsk until late 2017, an increase on current stock by over 52%. However, delivery of several sizeable schemes is likely to be postponed to later periods. Location Located in the southern part of Donetsk, in one of its most densely populated High street retailing is developed in Donetsk, with the major districts, the scheme is easily accessible existing shopping mall ‘Donetsk-City’ located on the central from the city centre and well-serviced by Artema Street. public transport, providing convenient access to all areas of the city. The scheme Donetsk, as one of the most affluent cities in Ukraine, is regarded benefits from excellent visibility from to share with Odessa the position of the second after Kyiv most Leninskiy Avenue with a 149-metre attractive destination to enter for a majority of retailers, operating frontage along it. in all pricing categories. DTZ DTZ has been involved in the project as However, the deficit of quality retail properties in Donetsk remains Involvement consultant and exclusive leasing agent. one of major obstacles for retailers’ penetration of the market. Developer Public joint-stock company ‘Nord’ Many quality retailers entered the local market together with the delivery of the retail and leisure centre ‘Donetsk-City’, and more Architect Chapman Taylor Ukraine will come with the planned opening of the shopping mall ‘Rose Park’ in Makiivka in 2014. Planned 2016 delivery

Project Planning stage Rents Status

Out of 6 major cities covered by this research, Donetsk is the GBA 67 700 sq m only city with average rents in prime multi-tenant retail centres exceeding high street retail rents. This trend has been attributed to GLA 30 000 sq m ‘Donetsk-City’, which falls in the prime central high street location and is commanding the highest retail rents in the city. No. of retail 3 and leisure Prime high street retail rents in Donetsk amount to floors $40-90 per sq m per month, with the highest rents typically Parking 500 car parking places achieved for quality retail premises located around Lenina Square and along Artema Street. Anchors Food supermarket, electronic appliances store, sports supermarket, home interior In the multi-tenant retail centres in Donetsk, prime net monthly and furniture store, entertainment area retail rents vary in the range of $60-100 per sq m for standard (cinema, kid’s play, bowling / billiards), units of area 100-250 sq m. eateries Dnipropetrovsk Population 992 900 inhabitants

Major multi-tenant retail schemes in Dnipropetrovsk: existing and in pipeline until 2016

Size Name Delivery Status Developer Major brands /anchors (sq m) Operating Karavan Hypermarket ‘Karavan’, furniture store ‘Karavan- 2008 / 2009 1. Karavan (phase 3 to become fully 76 200 Group / CDA Mebli’, Oldi, Eldorado, Brocard, Adidas, Intertop, (in 3 phases) operational in Q1 2014) Real Estate Plato, Centro, Oodgi, O’stin, ice-rink, Multiplex 2. Most City Varus, Comfy, Inditex brands, MTI brands, Argo 2006 Operating 25 300 Alef Estate Centre brands, cinema ‘Most-Kino’, Igroland, eateries Varus, Comfy, Antoshka, Plato, Centro, Oodji, 3. Apollo 2009 Operating 20 000 UMK fitness centre Akselrod GAP, MTI brands, MD Group brands, M&S, 4. Passage 2011 Operating 13 000 Estate Centro, Plato, eateries Supply & Demand Rents

Total modern retail stock in Dnipropetrovsk, the third largest city In Dnipropetrovsk high street retail rents historically tended to in Ukraine, was estimated at over 390,000 sq m in October 2013, exceed average rents in multi-tenant retail centres, mostly due to or 393 sq m (GLA) of modern retail stock per 1,000 inhabitants. the developed nature of street retailing along Karl Marx Avenue within the boundaries of the administrative centre, shopping The modern retail stock in Dnipropetrovsk has been dominated habits of local inhabitants and lack of quality retail schemes in by multi-tenant retail centres and shopping malls, which account the non-central areas of the city. However, delivery of the retail for approximately 72% of total stock in the sector. Big box retail centre ‘Passage’ in 2011 altered this correlation, as prime high developments account for the remaining 28% of total retail stock street and shopping mall rents in the city converged. in the city. There are no retail parks or fashion outlets in the city. Prime high street monthly rents in Dnipropetrovsk presently vary There were no major retail schemes delivered in Dnipropetrovsk in the range of $60-90 per sq m, with the highest rents achieved in 2013. Though none of the retail and leisure centres is for properties along Karl Marx Avenue and Lenin Square. scheduled for delivery in 2014, the company CDA Real Estate (part of DCH) plans to open for visitors the third phase of the Similar prime net monthly retail rents have registered in the retail retail and leisure centre ‘Karavan’, which was delivered in 2009. centres in the city for standard units of area 100-250 sq m.

As of October 2013, there was around 234,300 sq m (GLA) retail space planned for delivery in 2015-2017. This new supply will increase current retail stock by over 60%, and may bring some differing dynamics to the local market, which has been remaining generally unchanged since 2011.

Dnipropetrovsk is considered a first-tier city to enter for a majority of retailers, which are either present or considering expansion to Ukraine. Demand remains strong for quality retail space both in high street locations and multi-tenant retail centres of the city.

In DTZ’s opinion, the high attractiveness of Dnipropetrovsk is related to a combination of such factors as large population, relatively stable and diversified economic base, availability of critical mass of the retail schemes of decent quality in the city and developed high street retailing.

DTZ believes that the highest potential for retailers in Dnipropetrovsk exists in low, lower middle and premium price segments. Ivano-Frankivsk Population 243 700 inhabitants

Major multi-tenant retail schemes in Ivano-Frankivsk: existing and in pipeline until 2016

Size Name Delivery Status Developer Major brands /anchors (sq m) ‘Kolibris’ food supermarket, ‘SHOK’ electronic Operating 1. Veles 2012 16 000 local developer appliances store, Tyhres, Watsons, CentrObuv, (expansion planned) other local brands Under construction Food supermarket, electronic appliances store, 2. Stanislav 2015 15 500 local developer (45% completed) sports supermarket, cinema (5 screens), others Arsen, Eldorado, Фокстрот, Intertop, Adidas, 3. Arsen 2006 Operating 12 000 Intermarket BRW,Top Secret, Kira Plastinina, Junker, Wojas, Luciano Carvari, Colin’s, others Operating 4. Velmart 2010 / 2017 7 800* VK Development Velmart, Adidas discount, others (phase 2 planned) Silpo, Brocard, furniture shops arcade, bowling, 5. Panorama Plaza 2004 Operating 7 100 local developer billiards, night club, others

* Once extended, gross leasable area of shopping mall ‘Equator’ is planned to amount to around 32,600 sq m (including phase 1). Supply & Demand

Ivano-Frankivsk with an official population around 250,000 inhabitants is the regional and administrative centre of Ivano-Frankivsk oblast in Western Ukraine. The city is located close to the Carpathian mountains, in proximity to numerous resorts, including ‘Bukovel’, the major ski resort in the country.

According to DTZ, the retail property market in Ivano-Frankivsk is highly fragmented and immature compared to major cities of Ukraine. Markets and small-format retail centres, occupied by local retailers, remain popular shopping destinations among the city inhabitants.

Cumulative modern retail stock in Ivano-Frankivsk was estimated at around 81,400 sq m (GLA) in October 2013, or 333 sq m of modern retail stock per 1,000 inhabitants. This figure accounts for all major retail developments in the city of or over 5,000 sq m (GLA), and includes approximately 26,500 sq m of ‘big box’ developments.

In Ivano-Frankivsk there are no modern quality shopping malls with attractive tenant-mix and of gross leasable area over 10,000 sq m. Stanislav The ‘modern’ retail stock in Ivano-Frankivsk’ has been dominated by multi- Shopping and Entertainment centre tenant retail centres and shopping malls, which account for around 67% of total stock, whilst big box retail development, comprised of the DIY-store ‘Epicentre’ and Metro Cash&Carry, – for the remaining 33%. Location The scheme benefits from the In addition, many small-format retail centres operate in city centre and unique core city centre location in other areas of Ivano-Frankivsk. DTZ estimates that cumulative area of Ivano-Frankivsk. It is situated on these properties, predominantly of very low quality, presently amounts to Andriy Melnyk Street in immediate approximately 41,600 sq m (GLA). proximity to the central pedestrian zone and Nezalezhnosti Street, As of October 2013, around 31,000 sq m (GLA) modern retail space was which is major central street in planned for delivery in Ivano-Frankivsk until late 2017, an increase on current the city and important commuting stock by around 38%. There were only two retail schemes in pipeline, i.e. the route. The property is surrounded centrally located retail and leisure centre ‘Stanislav’, and ‘Equator’ planned by prime multi-family residential to be developed in the remote part of the city via extension of the existing buildings and located in front of the ‘Velmart’. The likelihood of delivery of the latter scheme by 2017 remains Memorial Park. very low. DTZ’s DTZ has been involved in the involvement project as consultant on its DTZ noticed that quality chain retailers and leisure operators in Ukraine are concept revision and optimisation, generally interested to occupy space both in high street locations as well as exclusive leasing agent. in Ivano-Frankivsk, as well as in quality and well-conceived multi-tenanted retail developments to appear in the city. Developer OJSC ‘Energetychni Tekhnologii’

We believe that, due to low market saturation, poor quality of existing retail Planned 2015 stock and weak current competition on the retail market in Ivano-Frankivsk, delivery the city has considerable potential for retailers and developers, particularly in Project 45% completed ‘low’, ‘middle minus’ and ‘middle’ price segments. status

GBA 20 100 sq m Rents GLA 15 500 sq m In Ivano-Frankivsk high street retail rents are higher than average rents in multi-tenant retail centres, due to the absence of quality modern retail No. of retail 2-4 schemes in the city, as well as urban structure of the city, shopping habits of and leisure local inhabitants and considerable tourist flows in the city centre. floors Parking 150 car parking places Prime high street retail rents in Ivano-Frankivsk amount to $20-50 per sq m per month. In the small-format multi-tenant retail centres, which are located in the Anchors Food supermarket, electronic downtown, asking base monthly rents vary in the range of $15-25 per sq m. appliances store, sports supermarket, entertainment area In the few, mostly poor quality first-generation, multi-tenant retail centres in (cinema, kid’s play, billiards), Ivano-Frankivsk, prime net monthly retail rents vary in the range of $15-30 per restaurants and food court sq m for standard units of area 100-250 sq m. Lease terms and conditions in the quality multi-tenant retail centres in Ukraine

Lease duration 3-5 years – for standard retail units of 50-250 sq m; 7-10 years – for semi-anchors (500-1,000 sq m) and 10-15 years – for anchor tenants plus a priority right to renew the lease. Rent payment Usually pegged to the US dollar or Euro, but paid in the Ukrainian hryvnya. Indexation Annually, by change in CPI in the United States published by the US Department of Labour, by change of Euro CPI published by Eurostat or by change in CPI in Ukraine published by the State Statistics Committee. Rent Fixed, an additional turnover rent has now become a common practice applied in the new high- quality retail developments (e.g. Riviera Shopping City, Sky Mall, Forum Lviv, , Happy Mall, and others). Service charge USD 2-8 per sq m per month in addition to utility costs, depending on quality of a retail development. Marketing charge USD 2-5 per sq m per month, depending on quality of a retail development. Fit-out of retail Shell & core. Cost contribution for partial fit-out or turn-key condition in sometimes provided to units anchor tenants. Guarantee The form of cash deposit or bank guarantee in the amount from 2 to 6 months of lease period has been common. Parent company guarantee is rarely applied.

Definitions

Retail stock - Individual developments or stand-alone retail units with a gross lettable area exceeding 5,000 sq m.

Small retail format - retail scheme delivered to the market after 1990 or extensively upgraded, with a Gross Leasable Area (GLA) of less than 5,000 sqm, with 5 or more retail units.

Hypermarket - Store selling food or food plus non-food items having a gross lettable area (GLA) of at least 5,000 sq m. Stand-alone hypermarkets may include some kiosk or in-line units in front of the check-out areas.

Fashion (factory) outlet - Shop or group of shops, usually in an out-of-centre location, specialised in selling end-of-line and, occasionally, damaged goods at permanently discounted prices.

Retail park - An out of town retail development with multiple retailers operating typically from individual units in large area format.

High street - The most important shopping streets in town and city centres having the highest concentration of retailers.

Prime retail rent - The attainable average prime rent that could be expected for a retail unit of size in the range of 100-200 sq m located along the high street (i.e. prime high street rent) or in the prime retail scheme (i.e. prime shopping centre rent). The rent is given as a base rent, i.e. no service charge and tax is included. Frontage zoning is not adopted in Ukraine. notes Nick CottonFRICS Nataliya Mykolaychuk Marta Kostiuk MScRealEst Managing Director Director Director, DTZ Ukraine Retail Agency and Consultancy Research and Development Consultancy

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