Real Estate markets Annual report 2019 Annual report 2019 Content

Macroeconomic 3

Kyiv Office market 7

Kyiv Retail market 13

Primary Residential market in Kyiv and Kyiv region 20

Kyiv Logistics market 24

Kyiv Hospitality market 28 Macroeconomics 2019 report Annual 310 320 330 340 350 360 370 380 390 400 nentoa dollar international country a GDP of Ukraine 2019 PPP by (IMF) UAH Committee),bln GDP of Ukraine 2019 (State Statistic GDP 0421 0621 082019 2018 2017 2016 2015 2014 0421 0621 082019 2018 2017 2016 2015 2014 370 4,2 by ucaigpwrprt (PPP) parity power purchasing dollar National currency rate to international GDP,bln int. USD in 340 +3.2% 5,8 ie erconverted year given a Real GDP has 353 6,8 h aeprhsn oe vrGDP over power purchasing same the Nominal GDP 369 8,1 390 9,1 — to h oa aktvalue market total the nentoa olr sn ucaigpwrprt rates. parity power purchasing using dollars international 374 9,8 3 675 3974,6 0,0 2,0 4,0 6,0 8,0 10,0 12,0 GDP Growth 2019 (IMF), % GDP byPPP2019 (IMF) Less Less than 100 5 More than More than 1 000 100 300 as Less Less than 3% 00 3- ..dollar U.S. a 6% of -1 000 -300 -500 l ia goods final all has in and (Property Type)(Property h ntdStates. United the evcsproduced services An in Annual report 2019 Macroeconomics (Property Type) Average salary in Ukraine 2019 (State Av. wage growth Ukraine vs Top EU countries Statistic Committee) (Eurostat, State Statistic Committee)

14000 600 Lithuania 491 USD 40%

12000 500 Ukraine 16%

10000 Romania 400 12%

8000 Bulgaria 12% H

300 A

6000 U Hungary 11%

200

4000

264 Czech Republic (Czechia) 9%

2 1

100 2000 Latvia 8%

0 0 Slovakia 8% Estonia 7% Slovenia 7% Poland 6% +16% in UAH/+27% in USD

Total households incomes across Europe, bln Average salaries in European cities 2019 EUR (Numbeo) Chișinău $320 More than 300 Skopje $423 100-200 Minsk $456 Belgrad $492 50-100 Varrna $578 20-50 Saint-Petersburg $660 10-20

Less than 10 Lodz $675

Kiev $717

Buharest $740

Sofia $772

Budapest $780 Annual report 2019 Macroeconomics (Property Type)

Retail turnover in Ukraine/Kiev (State Retail turnover growth in Europe 2019 Statistic Committee), bln USD (Eurostat, State Statistic Committee), %

45,2 8,85 More 10%

5-10%

2-5%

0-2%

Less than 0%

2017 2018 2019 2017 2018 2019

USD +32%/+36% UAH +10.5%/+15.1%

Inflation in Ukraine 2019 (State Statistic Exchange rate USD/UAH (NBU) Committee),%

25,5

4,1

2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 2020

5.7 points less 8.5% lower then in 2018 Annual report 2019 Macroeconomics Economic sentiment indicator in Ukraine Foreign direct investments in Ukraine (State (IES, State Statistic Committee) Statistic Committee), mln USD

113,4

3 070,0 2 355,0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2017 2018 2019 2013 2014 2015 2016 2017 2018 2019

10.8 points more than in 2018 +30% then in 2018

Construction Index Ukraine/Kiev (State Export&Import volumes (State Statistic

Statistic Committee) Committee), bln USD

1

6

,

,

6

3

2

2

1

1

4

0

8

6

7

0

60 50

2014 2015 2016 2017 2018 2019 Export Import 15/25 points more than in 2018 +6% each indicator

Unemployment in Ukraine (State Statistic Industrial production Index (State Statistic Committee), % Committee)

8,4 91,7

2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019

0.7% lower than in 2018 3.6 points lower Annual report 2019 Macroeconomics IT Export volume and structure (Tech Ecosystem Guide 220 th. IT specialist To Ukraine), bln USD R&D, consultin 1 place in Europe in IT Export g, analytics etc 7 place in the world by quality 30% of freelancers 8,4 11 place in Top-50 World Develop Developers 4,5 5 ment 2,7 3 3,6 70% 24 place in A.T. Kearney Global Services Location

Index

2018

2017

2016

2015

2025* 2019*

Ukraine in Global Rankings 6 positions down

The same Corruption +0.4 points position perceptions index 126 rank Human Freedom Development Score Index 52.3 points 0.75 points Global Innovation Index 47 rank Doing Business 71 rank +4 positions up +5 positions up Annual report 2019 Macroeconomics 2019 was marked by large switch of the political elites and enormous strengthen of the UAH/USD exchange rate, boosted by foreign investments to the hryvna-based bonds. In 2019 Ukrainian economy preserved the growth by 3.2%, driven mostly by success of agricultural sector, construction volumes and trade. The average salary has grown by 16% and come close to the level of the neighbourhood countries from European Union. The retail turnover has remained growing, inflation rate was lower than in 2018 by 5.7 points, consumer expectations fluctuated during the year in correspondence to political uncertainty at the year start and exchange rate, but remained positive in general. FDI gained 30% as a result of 2019. Along with that, there was a decrease of industrial production caused by unadverse conditions on foreign markets and decrease of export incomes given to hryvna strengthening. Ukraine also remained among the leaders in IT outsource sector, gaining new reaches in the IT services export volume. The country position in world ratings has risen in majority of ratings: for example, Doing Business rank gained 5 positions given to simplification of business start, construction permits and foreign trade, and strengthen of contracts provision. The short-term forecast for the economy at the end of 2019 was positive with the next slight decrease along with cycle downward trend for the world economy in general. The State Budget of Ukraine for 2020 was based on the forecast of the GDP growth at 3.7% in 2020 with the inflation assumed at 5.5% and the official exchange rate of UAH 27 per $1. But from the start of 2020 the country as the whole other world has been facing COVID-19 pandemic, which has a dramatic influence on the economic future. The countries practice monetary and fiscal support to moderate economic loses, nevertheless, the projected economic recession would continued for 2020-2021 for the most of scenarios. Ukraine government has worsen the 2020 forecast as well: GDP fall by 3.9%, unemployment rate growth to 9.4%, and real salary decrease by 0.3%. The average annual exchange rate is projected by 29.5 UAH per USD, inflation rate – by 8.7%. The forecasts are positive – the economy recovery is expected at the end of 2020. EBRD has the same projections for the Ukrainian economy. This scenario looks optimistic, but it is supported by the high probability of further cooperation with IMF as the Land and Bank law was finally adopted and the country bank system is evaluated stronger than it was in 2008 and 2013. The high impact also will have a world economy trends. It basic scenarios also suppose the crisis, with the start of recovery at the and of the 2020 for the optimistic scenario, at the start of 2021 for the basic one and at the end of 2021 for the pessimistic forecast. Based on the China experience, the bulk of epxerts opinions suggest the high probability of basic scenario, but, no doubt, that the it is very difficult to make a certain projections as pandemic pathway and scale is still low-predictable. Outlook Given in 2019 Update given in 2020 GDP +3.7% GDP -3.9%

Inflation +5.5% Inflation +8.7%

Exchange rate UAH/USD 27 Exchange rate UAH/USD 29.5 Kiev Office Market Annual report 2019 Annual report 2019 Kiev Office Market Market supply dynamics, th.sq.m. New supply

2500 350 Name Area, sq.m. GLA

300 Sigma BC 19 200 Wave Tower BC 15 000 2000 UNIT.City B10 10 400 1759,4 250 Palo Alto 5 000 Zitadelle 3 800

1500 Azor BC 5 400 200 Forum City Garden BC 1 phase 5 200 Rich Port BC 9 000 OB at 22-24 Hoholivska St. 9 000

150 1000 Structure of market stock

85,6 100 Right Bank – 15% Podil – 15% 500

50 Left Bank – 15%

0 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Center outside Total market stock at the start of the year CBD – 20% CBD – 35% New proposal

Projects in the pipeline Name Class Address Area, sq.m. Year Unit City B st. Dorohozhytska 3,4,5,6,7 99 100 2020-2022 BC "Lukyanovsky" B st. Yuriy Illenko 2 \ 10 22 000 2020 BC Platform A st. Korolenkivska 3 19 500 2020-R BC Avenue 53 B Victory Avenue 53 18 500 2020 BC Eleven (3 phase) B st. Solomianska, 11 16 500 2020 Office Building B st. Harmatna, 9 12 400 2020-R BC Retroville B Pravdy Avenue 47 11 100 2020 Office Building B st. Degtyarivska \ str. Zoological 21 G. 11 000 2020 BC M8 A st. Moscow 8B 11 000 2020-R Office Building B st. Spaska, 26/14 9400 2020 BC Hilfort A st. Mikhailovskaya 12 8 600 2020 BC Forum Infinity B st. Saksaganskogo 53 \ 80 8 500 2020-R BC Forum City Garden (2 phase) B st. Amurska, 6 8 500 2020 Zoryaniy B st. Moscow 31 \ 33 7 800 2020-R BC Forum Park Tower B st. Park-Syretska, 7A 7 500 2020 BC K \ MOST A st. Zoological 5 500 2020 BC Arsenal K14 B st. Moscow 8 3 800 2020-R Magnett A st. V. Vasylkivska, 137/139 43 000 2021 Office Building A st. Korolenkivska 4/6 80 000 2020-2021 Andriivsky Business Space A st. Andriivska, 19 9 600 2021-R ITT Plaza A St. Korolenkivska,16/22 77 000 2022 Annual report 2019 Kiev Office Market Main transactions Name Market sector Property Type Area, sq.m. SoftServe IT and telecommunications Avenue 53 Expansion 12 700 Confidentially Others Confidentially Expansion 10 700 Energoatom Production, industry and energy st. Gogolovskaya, 22-24 Moving and extending 9 000 EPAM Systems IT and telecommunications Europasage Moving and extending 7 100 Confidentially Banks and financial institutions Confidentially Moving 6 400 Phillip Morris Production, industry and energy Podil Plaza Renegoniation 4 500 DTEK Academy Production, industry and energy Unit.City Moving and extending 4 400 Platform Coworking office with full service st. Borych Tik, 35 Expansion 3 900 Coworkings and offices with full Cooperative Mind Paladis Expansion 3 900 service Borjomi FMCG IQ Moving 3 700 PWC Others Eurasia Renewal 3 500 Acino Pharma Production, industry and energy Irva Renewal/expansion 2 100 Take-up dynamics (th.sq.m.) and demand structure (%) IT and Telecommunications 200 Manufacturing and 180 170 150 related caompanies 110 Professional services 90 (incl. coworkings) Banks and other financial services Others

2014 2015 2016 2017 2018 2019 Whosale and retail

Podil Vacancy 5% Left Bank 50 Rents $20-28 Vacancy 14% 45 Right Bank Rents $12-18 40 Vacancy 10% 35 Rents $15-28 30 25 20 15 10 5 0 АВС Center outside CBD CBD Vacancy 5% Vacancy 4% Rents $15-30 Rents $20-45

7%

2014 2015 2016 2017 2018 2019 Annual report 2019 Kiev Office Market Demand trends: Building age 33% 67% Flexibility and possibility to 82% 18% Class A building 25% 75% expand leased area Energy-efficient certification 10% 90%

Parking 91% 9% Repair vacations 83% 17% High-speed Internet 91% 9% connection Facility management 93% 7% Acess to company commercial 75% 25% infrustrure inside or 24/7 access to premises 97% 3% close to BC Important Not important Important Not important Key factors choosing office:

Building type and class Costs and rent 25% conditions 36%

Location 39% Medical center 5% 95% Park 10% 90% Sport gym 67% 33% Availability of shuttle buses 56% 44% Delivery service 25% 75% Post office 20% 80% Close to metro station 56% 44% Cafes and restaurants 91% 9% Bank 36% 64% Close to CBD 7% 93% ATM 74% 26% Developed transport Laudry 2% 98% 94% 6% infrustructure Drug store 41% 59% Supermarket 92% 8% Important Not important Annual report 2019 Kiev Office Market

11

27 38 16 5083

8473 36 63 45 47 66 78 22 6 12 71 87 20 93 61 42 32 53 52 92 13 25 79 33 82 10 23 1 86 60 19 41 5 68 7791 39 37 34 75 55 58 17 43 21 30747656 57 88 40 89 70 62 64 35 4 90 80 44 72 81 85 18 286965 59 9 46 2466 8 15 54 29

26 49 31 48 51 3 14

7 Annual report 2019 Kiev Office Market Business centers Area, sq.m. Business centers Area, sq.m. 1 Silver Center 9500 55Mandarin Plaza 13800 2 Foruma Park Plaza 33000 56Eurasia 27900 3Kempa center 12000 57Gulliver 64000 4BC at 45 Lypkivskogo str. 14200 58Horizon Tower 15000 5Cubic center 8000 59IQ 38000 6Femmash 5700 60Leonardo 32200 7Europa 15000 61Millenium 6500 8Crystal 10000 62Parus 47000 9Bc at 14 Koltsova blvd. 5000 63Podil Plaza 19800 10Irva 8000 64Senator 47600 11Symbol 9800 65Totronto 36000 12Mikom-Palace 10000 66Horizon Park 34300 13FIM Center at Magnitigorska str. 8000 67Illinskiy 37000 BC at Vasylkivska str./Hlushkova 14400 68Europa Plaza 36000 14str. 69Olimpiysky 11700 15BC at 119 Lobanovskogo ave 6000 70Farenheit 10600 16SP Hall 24100 71Artem 10000 17Praha 8700 72Eleven 9500 18Oleksandrivskyi 5000 73Domino 9000 19Livoberezhnyi 6000 74Karat 6000 20Nyvky City 35000 75Botanic Tower 7000 21Lahoda 18000 76Saksagansky 13500 22Palladinskyi 7000 77Khreschatyk Plaza 6600 23Premium-Centre 38000 78Dnipro Plaza 7000 24Palladium 16000 79Cosmopolit 5500 25Sigma 20700 80Merx 15400 26Forum Victoria Park 21400 81Tsarkyi 14400 27Forum Kinetic 8800 82Renissance 15000 28Protasiv Business Park 22700 83Rialto 15500 29201-203 Kharkivske ave 26000 84 Astarta 62700 30Prime 9500 85 Dominion business park 35000 31Stend 16930 86 Marmelad 30000 32BC at 119-121 Peremony ave 5000 87 Horizon Podol 27000 33Vector 6000 88 Karnegi center 23900 34101 Tower 45000 89 Capital hall 10000 35BC at 6 Dontsa str. 15000 90 Iceberg 13800 36Flora Park 9000 91 Maidan Plaza 8000 37BC at 24 Polyova str. 5600 92 Palo Alto 4900 38Petrivka 5000 93 Palladis 5600 39Intellect 2500 40Chayky Plaza 5500 41Grand Step 13000 Other map indicators 42Bears Center 11500 Metro line 1 43Forum Satellite 19500 Metro line 2 44Silver Breeze 31300 Metro line 3 45Forum West Side 24500 Low population density 46BC at 56 Lobanovskogo ave 13700 47UNIT.City 30000 48BC at 1L Mykoly Bazhana ave 66200 High population density 49Forum City Garden 40000 50Wave Tower 16000 51Azor 5340 52Avenue 53 18500 53BC at 4 Garmatna str. 12900 54BC Omega 5490 Annual report 2019 Kiev Office Market Key market trends:

Kiev office market in 2019 remained to be identified as ‘’Landlords market’’, as there was a shortage of quality office spaces and relatively robust demand. Primary vacancy was in the range of 6-9% during 2019 and reached 7.6% at the year-end. Prime rents reached $ 35-45 per square meter per month (excluding VAT, service and utilities). At the same time, the affordable rental rates for Class B and C office space were $ 15-25 per square meter per month and $ 10-15 per square meter per month in accordance. There is a big amount of new projects in the pipelines of 2020, 2021 and 2022. Given to increasing lack of qualitative land in the preferable city locations there is a strong trend to redevelopment of brown lands, industrial spaces and reconstruction of existing facilities. Nevertheless, there is still a lack of larger units. The biggest demand for them is formed by IT, High Tech and Telecommunication sector representing 44% of the total take-up in 2019. This market situation is reflected in the increasing trend of preleases in projects under-construction. As the Kiev office market looked quite positive in 2019 and start of 2020, it is expected that it will withstand a shock and economic downturn caused by COVID-19 with moderate losses. In 2019, co-working services have continued to gain popularity on the market comprising up to 10-15% of demand. It is not too large share so far, but taking into account this type of tenant absence just 5 years ago, the increase is significant. As for now, this segment mostly driven by demand from IT companies that often need flexible office space and widely practice remote work, but step by step other industries become interested too. Co-working development is world common trend. In 2017, there were just over 22,000 coworkings in the world, and 49,000 are expected to be in 2022 (these estimates at the end of 2019, before the pandemic). Global office market, and Kyiv market as part of it, is experiencing shift from using space to using services: infrastructure and services inside of business center become more and more important. Combined with today's market situation, this trend will only accelerate. Temporary remote working can show both employees and management that they can be effective at home. In the long term, such companies will reduce their space, leaving only certain services that won’t run out the office, mostly using office space periodically - for clients and team meetings. The office should become smaller but brighter and provide outstanding facilities, absent during work from home. Many other companies will be forced to lead business in the face of constant uncertainty, and quickly adjust business scale to adapt to new conditions. Struggling by decrease demand, surplus proposal, office real estate will be forced to change its concept to wider range of business services. It will lead to expansion of co-working principle of work and serving on the whole business centre, transforming them from those that we know today into integrated coworking structures. Outlook Given in 2019 Update for 2020 New proposal 200-250 th.sq.m. New proposal 100-150 th.sq.m.

Take up 180-200 th.sq.m. Take up 50-100 th.sq.m.

Vacancy 7-9% Vacancy 12-14%

Prime rents $35-45 Prime rents $30-40 Kiev Retail Market Annual Report 2019 Annual report 2019 Kiev Retail Market

Major retail schemes: Dynamics of supply, th.sq.m.: Neighboorhood Super Regional

1600 250

Regional 1400 1410

Community 200

1200 208

1000

150

800

100

600

400

50

200

0 0 Shopping mall 2014 2015 2016 2017 2018 2019 Retail hub Existing offer, thousand square meters m. Low population density New offer, thousand square meters m.

High population density

New supply in 2019:

Name GLA Description Smart Plaza Obolon 11 765 sq.m. Neighboorhood shopping center at Minska metro station Neighboorhood shopping center at Heroiv Dnipra metro Oasis 7 800 sq.m. station Blockbuster mall 100 000 sq.m. 1 phase of Superregional shopping mall at S. Bandery ave River mall 62 200 sq.m. Regional shopping mall on the Left Bank Reconception to outlet center of ex-regional shopping mall Karavan OUTLET 45 300 sq.m. at Luhova str. Cherry mall 12 000 sq.m. Neighboorhood shopping center in Sofiivska Borschagivka ParkSmall 5 000 sq.m. Neighboorhood shopping center in Kryukivschyna New specialized (furniture) shopping mall at Obukhivske Arax 10 000 sq.m. highway Annual report 2019 Kiev Retail Market Main projects in the pipeline:

Name GLA, sq.m. Location Year Ocean Mall 99 000 st. Antonovicha 2020 Lavina Mall (2 phase) 30 000 st. Berkovetska, 6D 2020 Retroville 116 000 Pravdy Ave 2020 Blockbuster Mall (2 phase) 55 000 ave. S. Banderi 2020 White Lines Shopping Mall 27 000 Holosiivskyi district 2020 New Ray 27 700 st. Dreiser, 21 2020 Rive Gauche (2 phase) 77 300 st. Zdolbunivska 2020 Retail Park Petrivka (2 phase) 7 100 ave. S. Banderi, 15 2021 April Mall (2 phase) 87 000 st. Les Kurbas 2021 Respublika 135 000 Okruzhna Road, 1a 2021 Lukianivka Mall 47 000 st. Degtyarevska, 7 / 7a 2021 Sky Mall (3 phase) 39 000 General Vatutin Ave., 21 2021 Lisova Mall 188 500 Desnianskyi district 2021 Hippodrome Mall 293 000 Holosiivskyi district 2021 Diapason of rent for different tenant types:

Children's entertainment center 5 10 Cinema 5 15 Supermarkets and grocery stores 10 20 Large clothing stores (600-1500 sq.m.) 5 25 Electronics Supermarkets 20 60 Restaurants and cafes 12 50 Fashion Gallery (100-200 sqm) 60 100 Small format shops and kiosks 80 350

Dynamics of prime rents:

95100 95 85 90 80 75 65

2016 2017 2018 2019 Prime shopping mall rents Prime high street rents Annual report 2019 Kiev Retail Market Vacancy, %: Dynamics of new market entrances:

10 31

7,5

6 5,8 19 19 5 16 17 4,4 12 9

2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019 New market entrances: The main retail groups: 2017 2018 2019 Direct presence Baldessarini Koton, The North Face, Bugatti Zara Home, SinSay CCC AllSaints, In Wear Matinique, H&M Cole Haan Jo Malone, Claudie Pierlot , LPP Group Choupette Penny Black Decathlon, Inditex Group Collezione Hugo Boss Big Star, Fynch-Hatton Ted Baker Franchi, Eroglu Holdings Falconeri Trollbeads ACBC Gerry Weber Daniel Hetcher Supreme Melon Fashion Group Goldenpoint Alpina Esprit Calzedonia Group Goldschmidt Laurel Balmain Hanro Trussardi Missha Hatley DeFacto Imperial Livly Lee Cooper Santoni, ARGO Miniso Liu Jo Okaidi Under Armour, KarKat Fashion Group Rawin H&M, Trans Ukraine Intersport Replay Kilian, Saucony Delta Sport MTI Scotch&Soda Marka Ukrayina Stradivarius Men BNS Trade Superdry MD Group Tous Little House TONYMOLY ULTRA group Vipa Vaide Helen Marlen Group Wycon Venoyfe Xetra Franchises Xiomi Annual report 2019 Kiev Retail Market Major retail schemes: 33 50 44 20 54 61 47 20 28 12 2 42 23 34 55 1 60 37 49 14 3 32

58 51 21 7 4 31 17 10 29 18 8 15 62 53 10 24 35 64 63 16 40 22 389 3 4126 30 46 52 7 59 5 25 56 27 43 45 57 1 11 2 9 11 6 5 48

8 4 6 36

12 19 13

39 Annual report 2019 Kiev Retail Market Major retail schemes:

Shopping malls Pipeline Livoberezhnyi 1 GorodOK 35 1 Ocean mall 2 InSilver 36Magellan 2 Retroville 34Room 37Makros Blockbuster mall 4Academ City 38Mandarin Plaza 3 5Aladdin 39Manufactura outlet village 4 Respublika 6Apettite 40Marmelade 5 April City 7Aprel 41Metrograd 6 Hippodrome mall 8Arax 42Metropolis 7 Lesnaya mall 9Arena City 43New Way 8 Pobedy mall Arkadia in Borschahivska 44Oasis Vyrlytsa mall 10Street 45Ocean Plaza 9 11Arkadia in Osokorki 46Olimpiyskyi 10 Lukyanivka Mall 12Art Mall 47Ornament 11 White 13Atmosphere 48Piramida 12 New Ray 14Blockbuster 49Plazma 15Cosmopolit 50Polyarnyi Stand alone 16Darnytsya 51Promenada Centre Hypermarket/Supermarkets 17Darynok 52Promenada Park Megamarket 18Doma Center 53Prospekt Epicenter 19Domosfera 54RayON Auchan 20Dream Town Retail Park Petrovka 55 Metro Cash&Carry 21Dytyachyi Svit 56Rive Gauche Novus 22Europort 57River Mall 23Global.Ua 58Shokolad Leroy Merlin 24Globus 59Silver Breeze 25Good life 60Sky Mall Other map indicators 26Gulliver 61Smart Plaza Obolon Metro line 1 Interval Plaza 27 62Smart Plaza Polytech Metro line 2 28Karavan Outlet 63TSUM Metro line 3 29Komod 64Ukrayina Low population density 30Kvadrat – Hnata Yury 31Kvadrat – Lukyanivka 32Kvadrat on Perova 33Kvadrat-Balzaka High population density 34Lavina mall Annual report 2019 Kiev Retail Market Retail market in 2019 preserved high activity: there were several new objects, including new super regional shopping mall Blockbuster mall and significant retail scheme on the left bank – River mall. Total new supply totalled more than 208 th. sq.m. Despite there were a small amount of new market entrances, the existing retail chains kept expanding, thereby the average market vacancy remained low – less than 5%. At the same time, the rents have slightly increased gaining 5% in comparison to 2018. The initial forecast for 2019 was optimistic too: growth of retail turnover, positive customer expectations, new brands and more than 400 th. sq.m. of new proposal. And the present circumstances force to review the projections. Retail sector is the first that usually suffers from the economic downgrades, its damage given by COVID-19 pandemic even worse as it also effected by prolonged downtime in most premises and functions. However, after the quarantine is over, long-term isolation will encourage the society to communicate more, to seek public visits, and realize pent-up demand for a number of goods and services, and therefore, the interest in the shopping mall as a leisure format will not decrease. At the same time, panic moods, lower incomes and reduced savings will make the consumer more economical and meticulous, which can be reflected in turnover and attendance decrease. Large and up-to-date objects are unlikely to experience a fundamental change in attendance and occupancy, but the most retail projects will have to struggle reaching pre-crisis performance. Retailers already forced to rethink development plans and optimize their existing presence in the malls. This fact strengthen competition, which has already grown with the introduction of new modern objects and increasing of consumer demands. It is obvious that there will be stores closing, vacancy growth, intense renegotiation process and the rents fall as a result. The new proposal is most likely will also be postponed suffered by lack of financing, and obstacles to reach the appropriate for opening level of occupancy. The good news is that the retail real estate is the one that recovers the most quickly, thereby, there forecast for the last year quarter and for 2021 is more optimistic. So, now the owners of commercial real estate and developers of the objects in the pipeline are forced to develop and offer to tenants an anti-crisis program that updates the concept, maximizes the competitive advantages or create the new ones to win in the tomorrow competition for the consumer. This is the only way to achieve or retain commercial expediency.

Outlook Given in 2019 Update for 2020

New proposal 400-450 th.sq.m. New proposal 50-100 th.sq.m.

Take up 300-350 th.sq.m. Take up 30-90 th.sq.m.

Vacancy 4-6% Vacancy 8-10%

Prime rents $100 Prime rents $80-85 Kiev Residential Market Annual Report 2019 Annual report 2019 Primary Residential Market

Dynamics of new construction, th. sq.m. Prime complexes construction in Kiev (Kiev and Kiev region Statistic Committees)

2 372,5 +20 2 196,8

+500 +17 1 861,0 +130

+35 1 460,0 +48 +23 1 114,0 +590 +60 980,3 +25 +100 +30

2018 2019 +350 Kyiv Greater Kyiv* Kyiv region

*Kyiv and suburbs incl. Kyivo-Svyatoshinskiy, Obukhivskiy, Vyshgorodskiy, Boryspilskiy, Brovarskiy, Vasilkiv districts

Number of completed apartment units in 2018 in some regions

Budapest – 24 800

Old Berlin – 16 706

Lithuania – 12 224

Warsaw&admin district – 28 852 Prague and region – 33 868

Kyiv and region – 39 000 Minsk – 10 900 Annual report 2019 Primary Residential Market

Housing trends: Dynamics of demand: number of housing sale contracts (Ministry of Justice) Average +17.4% 1% apartment 10% 14% area 28% 65 sq.m. 53% +22.5% The biggest 43% market share takes 32% 19% 1-bedroom apartments

Kiev Kiev region

19 923 12 240 22 956 13 920 29 094 17 555 31 389 35 352 21 230 41 499 26 024 Prime class 18 959 Business class 2014 2015 2016 2017 2018 2019 Comfort class Kiev Kiev region Economy class

Consumption trends:

Landplot and own Consider project all Private 2% locations dwelling 23% Both as primary cottage, and townhou Primary secondary se, Suburbs market Apartme duplex 8% Right bank markets 52% nt 38% 59% 48% 60% Left bank 10%

75% 78% Grocery 65% Kindergarten supermarket 45% (79%) 25% 22% (80%) 8% Sports and Medical center playgrounds (58%)

Price (70%)

Location

Planning

features

View

Ecological

Quality ofQuality

of complex of

construction Infrustructure

materials and materials Fitness center Shopping mall, characteristics (50%) cafés (45%) Annual report 2019 Primary Residential Market

Average in terms of classes, UAH/sq.m. Average prices across Kiev districts, UAH/sq.m. Obolonskiy Prime Business 21 800 Podolskiy Desnyanskiy -1% 25 941 +9% 20 629 +11% 75 650 38 000 Shevchenkivskiy 32 000 +7% Darnytskiy 21 835 Svyatoshinskyi +1% 25 349 +10%

Solomenskiy Comfort Economy 21 600 Dniprovskiy -2% 23 000 -2% 21 500 18 500 Pecherskiy Holossivskiy 47 500 26 450 -2.5% +15%

Petropavlivska Borschagivka 16000 Vyshneve 15500 10 min Sofiivska Borschagivka 15000 Irpin 14000 Bucha 13800 20 min Hostomel 13500 Boryspil 13500 25 min Kiev Vyshgorod 13500 15 min Brovary 13500 Gatne 13000 15 min Obukhiv 12500 30 min Tarasivska 12000

Bilohorodka 11000 25 min Svyatopetrivske 11000 Annual report 2019 Suburbs Residential Market Market structure and prices in location terms:

Vyshgorodskiy $700-750 per sq.m. Kyiv 15% $120-180 th. per object Brovarskiy $1000-1100 per sq.m. 8% +15% growth $350-500 th. per object +5% growth 12% Vyshgorodskiy Brovarskiy 11% $500-550 per sq.m. $100-150 th. per object 10% Kyivo-Svyat. +10% growth Obikhivskiy 11% $700-780 per sq.m. $150-200 th. per object +15% growth 20% Vasylkivskiy 11% Boryspilskiy $620-690 per sq.m. 8% $120-180 th. per object Borispylskiy +15% growth 13% Vasilkivskiy $500-600 per sq.m. 35% Kyivo-Svyatoshinskiy $100-120 th. per object Obukhivskiy 45% +17% growth $1000-1500 per sq.m. $350-500 th. per object +17% growth Demand Proposal

Proposal structure: Landplots Duplexes More Less 7% and than 500 than 100 others sq.m. sq.m. 16% 9% 17%

Cottages 250-500 45% sq.m. Townhouses 27% 100-250 32% sq.m. 47%

Asking prices for houses in Kyiv suburbs Asking rents for houses in Kyiv suburbs for spring- 2019-2020: summer 2020: 25000 770 768 766 Segment Description 765

20000 Сountry house, part of the house with separate

760 Less than entrance – 20-30 km from Kyiv. A minimum set 15000 $700/month of amenities and infrastructure.

755 21591 10000 House/townhouse/duplex up to 200 sq.m. in

750 $500- 17977 close to Kyiv suburbs with full set of amenities, 1500/month land plot 5000

745 Object in Kyiv or Obukhiv direction, 200-400 $1500- 0 740 sq.m. with design repair and all amenities, 2500/month 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 close to infrastructure, and recreation locations UAH per sq.m. USD per sq.m. Annual report 2019 Primary Residential Market

The activity on the residential market in 2019 was affected by political changes and hryvna strengthening – both promoted the shortage of sales, as the bulk of savings are bond to currency. The overall country’s amount of deals has decreased, but the figures of Kyiv and Kyiv region, as the leaders of the country, preserved moderate growth. The additional negative influence had the bankruptcy of the Urkbud that add some distrust to investment expectations. The demand structure has continued trends started in the previous years: the demand for economy class and old-fashioned concepts turned to comfort and business class and complex projects as Live.Work.Play mixed-use developments and large ‘’city inside city’ projects. The market slogan moved from ‘selling square meters’ to ‘selling lifestyle’. The prices has grown slightly all over segments mostly driven by costs growth. The overall new proposal remained growing, which allowed to predict the slightly misbalance on the market. Thereby, residential real estate market enters 2020 with a small strength margin. Affected by the COVID-19 pandemic, the demand most probably will remain decreasing driven by incomes drop and moods of panic and uncertainty. From the other hand, market might be warm up by deferred demand, that appears during exchange rate strength and waiting period during quarantine. The outlined demand trends are expected to continue, concentrating the bulk of sales among the most strong market players with modern and well-developed concepts of living. Despite demand decrease, the prices most likely won’t go down, given to risen costs and bond to currency. The first quarter of 2020 already has showed 5% increase of prices all over the segments. Nevertheless, the developers margins will be constrained by the rising costs of construction from the one side, and low demand from the other, which may lead to elimination of weak players and postponing the delivery terms. The gradual market recovery should begin in 2021 with the overall economic reactivation and improving of consumer sentiments.

Outlook Given in 2019 Update for 2020 New proposal +15-20% New proposal +2-5%

Demand +15-20% Demand -10-15%

Prices per sq.m.: Prices per sq.m.: Economy +5-7% Economy +5-7% Comfort +10-15% Comfort +5-10% Business +5-10% Business +2-5% Prime +2-5% Prime -5-10% Annual report 2019 Suburbs Residential Market

Along with that, we consider the ongoing growth on the suburbs residential market within 5-20 km around Kyiv. It has showed positive dynamics in 2019: the experts evaluate the demand growth by 10-15%, along with price strengthening and appearing modern housing concepts in both multi-family and cottages segments. Transport, commercial and social infrastructure from private providers have developed significantly all over past several years, influencing segment attractiveness. Multi-family housing leads market boost, comprising 70-80% of both proposal and demand. Nevertheless, the cottages segment also shows strong recovery. The market pattern has shift from the big-scale classic design objects with large territory, to area efficient and cost-wise options using modern construction technologies. The segment weight nowadays increase to 15% market share from 5% share in 2014- 2017. In 2019 all housing segments on the suburbs market has shown 10-20% price growth compared to almost stable prices in Kyiv. In 2020 it may add growth dynamics absorbing part of demand from Kyiv market given to decrease of purchase budgets. Cottages segment may also gain some additional popularity as it more safe in terms of investments given to fast construction terms comparing to multi-storey construction. Nevertheless, the take up may shift to smaller area and landplot options to save money. We expect stable expanding of new proposal and strong prices tending to growth during 2020. Demand will concentrate on projects with sufficient infrastructure, actual concept and design. The energy- efficiency and technologies which help to save money in construction and object management will be highlighted as never before in cottage segment.

Outlook Given in 2019 Update for 2020 New proposal +10-15% New proposal +5-10%

Demand +10-15% Demand +10-15%

Prices per sq.m.: +15-20% Prices per sq.m.: +10-15%

Purchase budget: +10-15% Purchase budget: -10-0% Kiev Logistics Market Annual Report 2019 Annual report 2019 Logistic Market

Proposal map:

8% of total stock 2% of total stock M01 0% vacancy 0% vacancy Moscow 34% of total stock P02 0% vacancy Ovruch M07 Warsaw

M06 Kyiv+Ring Zhytomyr Road 14% of total stock 0% vacancy 20% of total stock 4% vacancy M03 M05 Kharkiv Odessa 14% of total stock M04 2% vacancy Dnipro

3% of total stock 0% vacancy 5% of total stock 9% vacancy

Dynamics of total and new proposal, sq.m.: Projects in the pipeline:

1 940 000 40 000 1 923 620 Name Area, sq.m. Year Location

1 920 000

35 000 Unilogic Logistic Park 25 344 2019 Brovary

1 900 000 30 000 Mirage 3 9 000 2020 Hostomel

1 880 000 Amtel Properties (2 25 000 52 000 2020 Bilohorodka phase)

1 860 000

20 000 SAN Factory Podil 23 000 2020-2021 Kiev

1 840 000 Zammler Warehouse

4 60 000 2020-2021 Project

15 000 36 500

4 Complex

1 820 000

3 Terminal Kievschina 7 000 2020 Kiev 28 184 10 000

1 800 000 25 25 300 Terminal Richport 10 000 2020-2021 Kiev

5 000

1 780 000

1 760 000 0 2016 2017 2018 2019 Total market volume (sq.m.) New offer (sqm) Annual report 2019 Logistic Market

Dynamics of take-up and its structure, prime remts $ per sq.m./month:

250000 $7,0 $6,0 Others $6,0 $4,5 10% 200000 $5,0 $4,0 $4,5 $5,0 Manufacturing $4,0 5%

150000

$4,0

Retail&Distribution $3,0

100000 45%

$2,0 Logistic

50000

800 190 115 600 650 500 and $1,0 Transporta

tion

199 165 116 190 179 179

0 $0,0 40% 2014 2015 2016 2017 2018 2019

Less than 5000 sq.m. 5000-10 000 sq.m. More than 10 000 sq.m. 45% 30% 25%

The main transactions:

Object Tenant Type of tenant Area, sq.m

Komodor Logistics Park Building Supply Distribution 25,000 WestGateLogistics Good Wine Retail / Retail 9,800 Logistic Invest Centre BusinessGroup Logistic and Transportation 8,500 Warehouse complex STV group Distribution / FMCG 7,600 Esma NP Logistics Logistic and Transportation 6,800 Universal Logistic Park (Phase 3) Cosmo Retail / cosmetics 6,800 Warehousecomplex AN Logistics Logistic and Transportation 6,800 WestGateLogistics Logistics Plus Logistic and Transportation 4,500 TerminalKyivshchyna Insurance Company Local company Distribution / FMCG 4,500 Universal Logistic Park (Phase 3) Makita Retail / Non-merchandise 4,000 Warehousecomplex Ekol Logistic and Transportation 3,000 BF Terminal BF Group Manufacturing 9,200 Fozzy RLC Peremoha Retail / Retail 7,000 IN Logistic RLC Peremoha Logistic and Transportation 7,000 IN Logistic BF Terminal Logistic and Transportation 6,300 Supermarket KOLO Plazma Logistic Retail / Retail 6,000 Zammler BF Terminal Logistic and Transportation 4,600 Logistic Plus West Gate Logistic Logistic and Transportation 4,500 BDU Logistic Shchaslyve 2 Logistic and Transportation 4,100 Annual report 2019 Logistic Market

У 2019 році розрив між пропозицією та попитом, особливо на великих складах, продовжував зростати, зберігаючи надзвичайно низьку вакансію. Основними рушіями попиту були роздрібна торгівля та електронна комерція, обсяг використання був збережений на стабільно високому рівні, а обсяг нових пропозицій залишався низьким. Це сприяло зростанню орендної ставки: сьогодні склади в Києві навіть дорожчі, ніж у деяких європейських країнах. Ця ситуація дала хороші перспективи для розширення нових розробок не лише у вбудованому в окремий сектор, але й у спекулятивному попиті. У 2020-2021 роках очікували рекордну за останні кілька років нову пропозицію. Пандемія COVID-19 додає невизначеності майбутньому ринку: її розвиток буде тісно залежати від стратегії основних орендарів. Оскільки електронна комерція, продовольча та медична дистрибуція, швидше за все, залишаються або навіть збільшують великі обсяги торгівлі, перспективи ринку є оптимістичними. Попит на об'єкти в межах міста бурхливий, що пояснюється розширенням служб доставки та скороченням витрат на доставку останньої милі. Це може призвести до дисбалансу попиту та пропозицій: у 2019 році він був сконцентрований у невідповідності районів, тоді як у 2020 році він перейде до проблем розташування - ми прогнозуємо критичну відсутність приміщень у межах міста, а інші об’єкти можуть боротися із зростанням вакансій. Ми можемо побачити нові формати комерційної нерухомості - розробки для змішаного використання, які поєднують як торгові, так і логістичні приміщення для задоволення потреб попиту. Розробники, швидше за все, чекатимуть закінчення карантину та реактивації ділової активності для визначення їх перспектив розвитку, таким чином, очікується, що основна частина нових пропозицій буде перенесена на 2021-2022 роки.

Outlook Given in 2019 Update for 2020

New proposal 70-100 th.sq.m. New proposal 30-50 th.sq.m.

Take up 150-180 th.sq.m. Take up 140-160 th.sq.m.

Vacancy 1-2% Vacancy 2-3%

Prime rents $5-6 Prime rents $5-6 Kiev Hospitality Market Annual Report 2019 Annual report 2019 Hospitality Market

Dynamics of tourists and passengers flows Main market indicators: number (KCSA, Airports web-sites):

5,5 20 200 60% 52% 180 5 18 48% 4,93 17,88 50% 160

4,5 16 39% 140 15,42 37% 40% 4 4,1 4 35% 120 14 30% 3,5 100 30%

12,41 12 3 80

20% 10 60

2,5

71 65

40

10%

2 8 53,6

20

45,2

116 128 144 157 171 183 37,2 2017 2018 2019 31,9

0 0% Tourists, mln people 2014 2015 2016 2017 2018 2019 Passengers flow in the airports, mln people ADR,Euro Rev Par, Euro Workload

Proposal dynamics and structure:

13500 170 166 165 165 5* 1-2* 13000 762 15% 11% 67 160 12500

155 151 12000 106 12536 12603 150 4* 30% 3* 11500 11774 145 44%

11000 140 2017 2018 2019

Total proposal, rooms New proposal, rooms Number of hotels Projects pipeline:

Object Address Operator N-r of rooms Commissioning date

Riviera Sagaidachnogo str. 67 2019 Monotel+Monohub B. Khmelnitskogo str. 500 sq.m. (32 capsules) 2019 Ibis Podedy ave AccorHotels 150 2020-2021 Adagio City Aparthotel Podedy ave AccorHotels 100 2020-2021 Swiss Hotel Living Luteranska str. AccorHotels 58 2021-2022 Sheraton Kyiv Marriott Hotels & Vasylkivska str. 208 2020-2021 Olimpiyskiy Resort Premier Hotels and Slavutich Enthusiasts str. 300 2021 Resort Annual report 2019 Hospitality Market

The hospitality market usually is closely related to economic and political conditions in the country, and national tourism development. Kyiv have gained a lot of popularity as touristic and business destination during last several years: it became a travel brand, the number of forums and business events increased, air transportation attracted new players. All it had a positive influence on the market: the occupancy stabilized, ADR’s showed moderate growth, and the new development field began to recovery: in 2020- 2022 it was expected the renewal of the construction of frozen projects or hotel reconstructions. COVID-19 pandemic adds a negative prospective for the market: as for today, 70-80% of hotels in Kiev are already closed or will be closed in the nearest future. The rest of them mostly provide services for expats who stay in Kiev during the quarantine, people who need observation after travelling abroad or temporarily locate medical workers. After the end of quarantine measures, it is expected that the international travelling will be significant decreased for some period of time, necessary for recovery of business activity, and more likely, the common spread of cross-borders trips will be partly switched to local tourism. The number of visitors will drop significantly, which lead to low occupancy and downgrade of ADRs level. The hotels operators force to develop new anti-crisis programs to fit new market conditions, as the development on new local markets, offering innovation services and new approach to the client. That is why, the prospective developments in Kyiv likely to be postponed to better market conditions, while the activity mainly be preserved in existing facilities improvements and new developments in regions interesting for domestic tourism.

Outlook Given in 2019 Update for 2020

New proposal 250-450 rooms New proposal - rooms

Visitors flows 4-5 mln people Visitors flows 2-3 mln people

Occupancy 55-60% Occupancy 30-35%

ADRs $185-190 ADRs $140-145