DTZ in the Regions December 2014

Established London, 1784 Established , 1994

Kyiv Population 2,870,000 inhabitants

Major existing multi-tenant retail centres in Kyiv Major pipeline multi-tenant retail centres in Kyiv until 2016-2017

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

1. Dream Town 2009 / 2011 (in phases) 90,860 19. Respublika 2015 135,000

2. Ocean Plaza* 2012 72,200 20. Lavina Mall 2015 124,000

3. Sky Mall* 2007 / 2010 (in phases) 66,000 21. Blockbuster Mall 2015 120,000

4. Gulliver 2013 45,500 23. Retroville 2015 82,760

5. Prospekt 2014 41,400 24. KyivMall 2016-2017 75,400

6. Marmelade 2013 40,000 25. Hartz 2016-2017 57,018

7. Karavan Megastore 2004 / 2005/ 2008 37,700 26. Ideal 2016 / 2017 (in phases) 51,000 (in phases) 27. River Mall 2016-2017 49,070 8. Art Mall 2013 36,740 28. Lukyanivka Mall 2015-2016 47,050 9. Bilshovyk 2007 / 2008 36,200 29. TSUM 2016 (reconstruction) 22,500 10. Atmosfera 2014 30,000 30. Podil Mall 2015 13,825 11. Promenada Centre 2004 / 2007 30,000

12. RayON 2012 23,000

13. Domosfera 2009 21,600

14. Magellan 2004 21,000

15. Ukrayina Department 2003 (reconstruction) 20,800 Store

16. Globus 2002 / 2003 (in phases) 18,600

17. Manufaktura outlet village 2013 18,200

18. Aladdin 2004 / 2005 (in phases) 10,500

22. Epicentre 2014 / 2015 (in phases) 105,000

31. Darynok 2001 42,000 * extension planned Supply & Demand Rents

Total modern retail stock in Kyiv amounted to around 1,529,440 sq m During the period from October 2011 to June 2013 inclusive, average (GLA) in December 2014, or 533 sq m (GLA) per 1,000 inhabitants. monthly rents in quality retail schemes in Kyiv remained generally stable at USD 70-90 per sq m for premises of 100-300 sq m, reaching highs In January-September 2014, approximately 89,890 sq m (GLA) of of USD 160-200 per sq m per month in the most sought-after prime modern retail space was delivered in Kyiv. Major schemes opened properties. Due to increasing supply in the sector, in July-December during during the period included the shopping and entertainment 2013 prime rents in the shopping malls in the Ukrainian capital were centres ‘Prospekt’ and ‘Atmosfera’, the DIY-store ‘Leroy Merlin’ and the subject to some downward correction. High street retail rents in Kyiv small-format retail centre ‘Appetite’, all located in the non-central areas remained generally stable during 2013. of Ukraine’s capital. The challenging situation in Ukraine, the resultant decrease in An additional 120,300 sq m (GLA) was added to the total retail stock in purchasing power of the population and retail turnover, as well as Kyiv during the fourth quarter of 2014. The first phase of the retail and devaluation of the hryvnya led to strong downward pressure on the leisure centre ‘Epicentre’ in Obolon is the major retail scheme delivered rents across all categories of retail space in Kyiv and Ukraine on the in the city during the period. whole during 2014.

The modern retail stock in Kyiv has been dominated by multi-tenant In order to retain quality retailers in their retail properties, many retail centres and shopping malls of varying quality, which presently landlords have negotiated occupational costs individually with each account for approximately 70% of total stock in the sector. Cumulative retailer. Some of the landlords provided temporary discounts gross leasable area of multi-tenant shopping centres in the Ukrainian in the range of 20-50% of the contractual rents (depending on the capital amounted to approximately 1,063,000 sq m (GLA), with 35% of tenant and its lease terms). Other landlords are known to have agreed this figure formed by first generation and/or poor quality schemes with to fix the rental payment in the amount equivalent to the exchange some redevelopment potential. at 12-14 UAH/USD, or defined the upper value of the Ukrainian hryvnya against the US dollar. At the same time, during 2014 base rental rates Big box retail developments account for around 29% of total retail stock remained generally stable in relation to the prime properties in Kyiv. in Kyiv. The first factory outlet, ‘Manufaktura outlet village’, was opened in the Greater Kyiv area in 2013, whilst retail parks are yet to appear. As of December 2014, prime shopping centre rents in Kyiv were registered at USD 80-120 per sq m per month, whilst high street rents A majority of pipeline retail stock scheduled for opening in Kyiv by 2017 decreased to USD 45-90 per sq m in the city. are regional and super-regional shopping malls. DTZ anticipates that, other things being equal, base rental rates As of December 2014, DTZ estimates that presently approximately during the first half of 2015 will remain stable in relation to the prime 807,400 sq m (GLA) of new ‘modern’ retail space is in active stage of properties. At the same time, rental rates in poorly conceived retail planning or construction in Kyiv. If these properties were commissioned schemes in Kyiv will be subject to further downward pressure. This is in accordance with the announced plans, by the end of 2017 current due to the economic and political uncertainty in Ukraine, the hryvnya retail stock in the Ukrainian capital may increase by 53%. devaluation, as well as the comparatively low retailers’ demand and lack of critical mass of actual new market entries combined with significant During 2015 new supply on the retail property sector in Kyiv may retail stock in pipeline. amount to around 505,400 sq m (GLA), an increase of total stock by 33%. Major retail developments scheduled for delivery in the The longer term sustainability of current rental rates in Kyiv will depend city next year include ‘Respublika’, ‘Blockbuster Mall’, ‘Lavina Mall’ on the actual commissioning and quality of new sizeable pipeline and ‘Retroville’. Taking into account the scale and location of these retail schemes scheduled for completion in 2015 and beyond, as well properties, against the background of the presently challenging as general macroeconomic conditions and currency fluctuations in economic conditions in Ukraine, delivery of some of them may be Ukraine. postponed to later periods. Kyiv

Globus Shopping Centre

Location and Home to over 100 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’ is perfectly situated to attract visitors 12 hours per day, 7 days per week. In 2015 re-conception of the project is planned.

DTZ’s DTZ is presently working with London&Regional and Dutch-based architects T-Concept in the formulation and involvement implementation of plans for the upgrade and repositioning of the scheme. The works are planned to commence in 2015.

Landlord London & Regional

Architect Local architects / T-Concept

Delivery 2004/2005 (in phases)

GBA 39,500 sq m

GLA 18,600 sq m

Levels 5

Anchors Billa, Brocard, Mothercare, MAC, oodji, Monton, Carlo Pazolini, McDonald’s, others Aladdin Shopping and Entertainment Centre

Location and Located within one of the most populated residential neighborhoods of Kyiv, in immediate proximity to the metro station description ‘Poznyaky’. ‘Aladdin’ was delivered in phases during 2004-2005 with a major renovation undertaken in 2014.

DTZ’s DTZ is involved in the project as an exclusive leasing agent on behalf of the landlord. involvement

Landlord Meyer Bergman

Architect Chapman Taylor

Delivery 2004/2005 (refurbishment in 2014)

GBA 16,500 sq m

GLA 10,200 sq m

Levels 4

Anchors Mothercare, Intertop, Love Republic, Naf Naf, Brocard, Watsons, Adidas, Liniya Kino (3 screens), others Kyiv

Troitskyi Mixed-use complex

Location and Project is located within Kyiv’s Central Business District, in immediate proximity to ‘Olympiyskyi’ stadium and the metro description station. Project envisages development of a supermarket and/or fashion gallery within a mixed-use complex comprising hotel, business centre, retail centre and restaurants / cafes.

DTZ’s DTZ is involved in the project as a leasing agent on behalf of the landlord. Involvement

Landlord Yudzhyn / Smart Holding

Delivery Q3-Q4 2015

GBA 63,850 sq m (the whole complex)

GLA 4,000 sq m (retail part)

Levels 2 (including mezzanine) High Street Retail Khreshchatyk Street

Location and Retail premises, located in the heart of Kyiv, at 34 Khreschatyk Street. 2 façade entrances, 7 large show windows on the description ground and second floor levels.

DTZ’s DTZ is involved in the project as an exclusive leasing agent on behalf of the landlord. Involvement

Owner Legal entity

Intended use Footwear and clothes stores, or restaurant

GLA 1,446.4 sq m, which can be divided in two stores with separate entrances with areas of around 700 sq m each.

Levels 3 Odesa Population 1,013,000 inhabitants

Major multi-tenant retail schemes Odesa: existing and in pipeline until 2016-2017

Project Delivery Status Size (sq m) Developer Major brands / anchors Auchan, Comfy, JYSK, M&S, Inditex Group 1. Riviera Argo Real Estate brands, LPP brands, LC Waikiki, New Yorker, 2009 Operating 65,000 Shopping City Opportunities Fund Sportmaster, Odessa Kino (cinema), Leopark (kid’s play), City Bowling, others Under Auchan, DIY supermarket, retail gallery, 2. Les Vignes 2016-2017 48,000 Immochan construction strip mall Silpo, Comfy, retail gallery, Sport Life fitness Under 3. Yessa 2015-2016 38,000 BUDHOUSE GROUP centre, Lucky Strike (bowling), Multiplex construction (cinema), kid’s play, others Silpo, Foxtrot, Comfy, LPP brands, L’etoile, 33,000 (phase 1) / oodji, INCITY, Piazza Italia, Intertop, Sport 4. City Centre I 2012 / 2014 Operating Venford 20,000 (phase 2) Life fitness centre, Planeta Kino (cinema), Ihroland (kid’s play), others 5. City Center Tavria V, Comfy, INCITY, oodji, Colin’s, Gloria 2014 Operating 20,120 Venford Kotovskyi Jeans, Antoshka, Planeta Kino, others Furshet, Comfy, Antoshka, JYSK, Bomond, 6. Srednefontanskiy 2007 Operating 19,530 local developer Monton, Cinema Citi, Ihroland, others Supply & Demand

With a total population over 1 million inhabitants, Odesa 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 480,370 sq m in December 2014, or 474 sq m (GLA) of modern retail stock per 1,000 inhabitants.

The modern retail stock in Odesa has been dominated by multi-tenant retail centres and shopping malls, which presently account for approximately 67% of total stock in the sector. Big box retail developments account for the remaining 33% of total retail stock in the city. There are no retail parks or fashion outlets in Odesa, but some retail parks are scheduled for delivery in the medium to long term in the city.

The 65,000 sq m (GLA) retail and leisure centre ‘Riviera Shopping City’ remains the largest and most notable retail scheme in Odesa, which was developed by the LSE-listed company Argo Real Estate Opportunities Fund during 2009. The scheme is anchored by Auchan, while its gallery benefits from the presence of majority of quality retail brands operating in the city (and brought some of them), including JYSK, Inditex Group, Marks&Spencer, New Yorker, LPP (House, Cropp Town, Reserved) and LC Waikiki.

As of December 2014, there was approximately 133,200 sq m (GLA) retail space planned for delivery until late 2017.

Out of this pipeline stock in the sector, DTZ projects that during 2015 new supply in the retail property sector in Odesa may amount to around 51,000 sq m (GLA) formed by ‘Yessa’ and ‘Equator’ in the northern Kotovskyi neighbourhood, as well as the central retail centre ‘Kadorr’.

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

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

Rents

In Odesa 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.

As of December 2014, prime high street retail rents in Odesa amount to $50-75 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 Odesa, net monthly retail rents presently vary in the range of $30-60 per sq m for standard units of area 100-250 sq m. Odesa

Riviera Shopping City Shopping and Entertainment Centre

Location and After six years of successful operations, Riviera Shopping City is not only considered the largest shoppingand description entertainment centre in the southern region of Ukraine, combining more than 230 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. In 2014 the retail centre was granted a status of “The best shopping centre in Southern Ukraine 2013”.

DTZ’s DTZ was involved from initial concept development, as exclusive leasing agents and centre managers. involvement Presently DTZ acts as exclusive leasing agent on behalf of the landlord.

Landlord Argo Real Estate Opportunities Fund

Delivery 2009

GBA 85,000 sq m

GLA 65,000 sq m

Levels 2

Parking 2,500 car spaces

Anchors Auchan (food hypermarket), Comfy (electronic appliances store), Jysk, M&S, Inditex Group brands, LPP brands, LC Waikiki, New Yorker, Sportmaster (sports supermarket), Odessa Kino cinema, Leopark kid’s play, City Bowling Srednefontanskyi Shopping and Entertainment Centre

Location and description Located in the central Odesa, in walking proximity to the central railway station, and surrounded by multi-family housing.

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

Landlord local developer

Delivery 2007 (phase 1)

GBA 40,000 sq m

GLA 19,530 sq m (phase 1)

Levels 3

Anchors Furshet (food supermarket), Comfy (electronics supermarket), JYSK, Antoshka, Bomond, Monton, Cinema Citi (cinema), Ihroland (kid’s play) Population 755,260 inhabitants

Major multi-tenant retail schemes in Lviv: existing and in pipeline until 2016-2017

Name Delivery Status Size (sq m) Developer Major brands /anchors Auchan, Praktiker, Foxtrot, Inditex Group brands, 1. King Cross 2008 / 2010 LPP brands, Intertop, M&S, Mothercare, Planeta Operating 52,700 King Cross Group Leopolis (in phases) Kino with IMAX, Leopark (kid’s play), bowling, ice-rink, others 2. VICTORIA Under Food hypermarket, electronic appliances store, 2015-2016 50,630 Yeditepe / Fenix Capital Gardens construction cinema (7 screens), bowling, kid’s play, others Silpo, Comfy, LPP brands, Inditex Group brands, Multi Development / Under MTI brands, Melon Fashion Group brands, Mango, 3. Forum Lviv Q2 2015 35,000 BUDHOUSE GROUP / construction Budynok Ihrashok, Planeta Kino (6 screens), Galereja Centre Ihroland (kid’s play), others Supply & Demand Rents

Lviv is an important economic, cultural, academic and transportation In Lviv high street retail rents were historically higher than average centre of Ukraine with total official population of around rents in multi-tenant retail centres, mostly due to the urban 760 thousand inhabitants. Lviv is the largest city in Western Ukraine structure of the city with many tourist attractions in its central and, its historic and architectural heritage makes it a popular tourist part, developed nature of street retailing, shopping habits of local destination. The city has also developed as an important IT and inhabitants and high tourist flows. business process outsourcing centre in Ukraine. However, after the commencement of the leasing campaign in Total modern retail stock in Lviv was estimated at over 269,000 sq m the retail and leisure centre ‘Forum Lviv’, which is presently under in December 2014, or 356 sq m of modern retail stock per construction in the central area of Lviv, the correlation between 1,000 inhabitants. prime high street and shopping mall rents in the city significantly converged. The modern retail stock in Lviv has been dominated by multi-tenant retail centres and shopping malls, which account for almost 68% of As of December 2014, prime high street retail rents in Lviv amount to total stock in the sector. Big box retail developments, comprised of $30-70 per sq m per month, with the highest rents typically achieved the DIY-stores Epicentre (2 hypermarkets) and Nova Liniya, and two for quality retail premises located along Tarasa Shevchenka and outlets Metro Cash&Carry, account for the remaining 32% of total Svobody Avenues, and on Rynok Square. retail stock. There are no retail parks or fashion outlets in Lviv. In the best multi-tenant retail centres in Lviv, such as ‘Forum Lviv’, The central fashion centre ‘Roksolana’ was the only retail scheme prime net monthly retail rents presently vary in the range delivered in Lviv during 2014. of $35-60 per sq m for standard units of 100-250 sq m.

As of December 2014, there was around 87,000 sq m (GLA) modern retail space planned for delivery in Lviv in 2015, an increase on current stock by around 32%.

The shopping and entertainment centre ‘Forum Lviv’ is a major retail development scheduled for delivery in Lviv in Q2 2015. The property is presently under construction in the central part of the city by the international firm Multi Development, which developed many award-winning shopping centres in and , in partnership with the Ukrainian developer ‘BUDHOUSE Group’ and Lviv-based ‘Galereja Centre’. As of December 2014, ‘Forum Lviv’ is pre-let by 80% to high-quality occupiers. Despite challenging economic conditions in Ukraine, the opening of ‘Forum Lviv’ will bring many renowned retailers and leisure operators to Lviv, including Mango, Melon Fashion Group brands and Ihroland kid’s play, as well as Comfy, Silpo, Planeta Kino cinema, Zara, Reserved and Budynok Igrashok.

In addition, the year 2015 may see the opening of the shopping centre ‘VICTORIA Gardens’, construction of which was suspended for several years and is now resumed. Though the scheme benefits from the advantageous location in immediate proximity to densely populated residential neighbourhood, its general concept, tenant mix and further approach to property management remain uncertain.

High street retailing is developed in Lviv due to the urban structure of the city and high tourist flows in its central part. However, a very limited number of fashion brands operate in street retail format in the historic centre of Lviv.

Though not being a priority destination for expansion, Lviv has been increasingly considered a first-tier city to enter for majority of retailers in Ukraine, particularly in view of the city’s economic base, and the changed perception of Eastern Ukraine in terms of retail attractiveness.

DTZ believes that the highest potential for retailers in Lviv exists in ‘low’, ‘lower middle’ and ‘middle’ price segments. Lviv Forum Lviv Shopping and Entertainment Centre

Location and ‘Forum Lviv’ can be considered a significant success case for a whole complex of services by several DTZ departments. description The 70 000 sq m shopping and entertainment centre, located in central Lviv, is scheduled to open in Q2 2015. 115 leading Ukrainian and international brands will lease space in this scheme.

DTZ’s Following the brokering of a JV agreement on behalf of local developer Galereja Centre and Multi Development, involvement an international developer with wide experience in development of shopping centres throughout Europe, DTZ was appointed as a co-exclusive leasing agent for this centrally located scheme. In early 2013 DTZ brokered the entry of a third partner into the JV – BUDHOUSE GROUP.

Landlord Multi Ukraine / BUDHOUSE GROUP / Galereja Centre

Delivery Q2 2015

GBA 70,000 sq m

GLA 35,000 sq m

Levels 3

Parking 600 car spaces

Anchors Silpo, Comfy (electronics supermarket), Inditex Group brands, LPP brands, Terranova, Calliope, Mango, Budynok Ihrashok (children goods store), Planeta Kino (cinema), Ihroland (kid’s play), others Kharkiv Population 1,445,000 inhabitants

Major multi-tenant retail schemes in Kharkiv: existing and in pipeline until 2016-2017

Size Project Delivery Status Developer Major brands /anchors (sq m) Food hypermarket, electronic appliances store, EASTGATE 1. Cosmo Mall 2017 Planned 73,000 sports supermarket, retail gallery, leisure area, DEVELOPMENT eateries Operating Hypermarket ‘Krayina’, LPP brands, Argo 2011/2012/2015 2. Magellan (phase 3 – under 62,500 Kray Property brands, Adidas / Reebok, Megasport, INCITY, (in phases) construction) Mango, leisure (planned) Food hypermarket, electronic appliances store, EASTGATE 3. Levada Mall 2017 Planned 60,000 sports supermarket, retail gallery, leisure area, DEVELOPMENT eateries Hypermarket ‘Karavan’, furniture store Karavan Group 2006/2007/2008 ‘Karavan-Mebli’, Eldorado, MD Group brands, 4. Karavan Operating 57,050 / CDA Real (in phases) LPP brands, MTI brands, M&S, SMYK, Budynok Estate Ihrashok, Mothercare, Ihroland, ice-rink, others Hypermarket ‘Fozzy’, Comfy, Inditex Group brands, Argo brands, Megasport, Intertop, 5. Dafi 2008 Operating 56,070 Dafi Terranova, L’Etoile, Kronverk Cinema, Ice Hall, Chudo Park (kid’s play), others Food supermarket, electronic appliances store, Under BUDHOUSE sports supermarket, retail gallery, Sport Life 6. Nikolskyi 2015 52,000 construction GROUP fitness centre, Multiplex (6 screens), Chudo Park (kid’s play), Lucky Strike (bowling), eateries Silpo, Comfy, Megasport, Mexx, Planeta Kino 2006 / 2013 (in 7. French Boulevard Operating 38,000 Aksioma with IMAX, ice-rink, roller-drome, McDonald’s, phases) others 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, and the developing IT sector. within the boundaries of the administrative centre, and In terms of economic base, Kharkiv used to rely heavily lack of quality retail stock within shopping malls and retail on industrial sector, particularly machine building, and is centres in the city. presently in transition. Prime high street monthly rents in Kharkiv presently vary Total modern retail stock in Kharkiv was estimated at in the range of $35-55 per sq m, with the highest rents around 412,100 sq m in December 2014, or 285 sq m achieved for properties located on Rozy (GLA) of modern retail stock per 1,000 inhabitants, which and Konstytutsiyi Squares, and those having frontage to reflects the lowest retail saturation compared to other Sumska Street. major cities of Ukraine. In the prime multi-tenant retail centres in the city, net The modern retail stock in Kharkiv has been dominated monthly retail rents vary in the range of $35-45 per sq m by multi-tenant retail centres and shopping malls, which for standard units of area 100-250 sq m. 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.

In 2014, no new shopping centres were delivered in Kharkiv. As of December 2014, there was around 63,000 sq m (GLA) retail space under construction in the city, which is planned for delivery during 2015 and will increase current retail stock by 15%. More large-scale retail development projects are in medium to long-term pipeline in Kharkiv.

Major scheme planned for delivery in Kharkiv is the central retail and leisure centre ‘Nikolskyi’ by BUDHOUSE GROUP, which is presently under construction. Other pipeline retail projects in the city include ‘Levada Mall’ and ‘Cosmo Mall’ by the Kharkiv-based development company EASTGATE DEVELOPMENT, as well as ‘Forum Kharkiv’ and ‘Forum Artem’ concepted by the international firm Multi Development.

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

Occupiers generally consider occupation of quality retail space both in high street locations and quality multi-tenant retail developments in Kharkiv. However, many of them adopt a wait-and-see attitude in view of the city’s proximity to the Ukraine’s boarder with Russia, and the resultant operational risks due to the current geopolitical context.

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 hectares 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 description ‘Cosmo Mall’ will be located in a densely populated and rapidly growing residential area in Kharkiv, having perfect transport and visual accessibility. Developer EASTGATE DEVELOPMENT Architect Chapman Taylor Delivery Q2 2017 GBA 96,000 sq m GLA 73,000 sq m Levels 3 Parking 1,700 car spaces Anchors Food hypermarket, retail gallery, electronics supermarket, sports supermarket, cinema and other leisure operators Levada Mall Shopping and Entertainment Centre

Location and description ‘Levada Mall’ is located near the central part of Kharkiv.

Developer EASTGATE DEVELOPMENT

Architect Mir LLC

Delivery Q2 2017

GBA 85,000 sq m

GLA 60,000 sq m

Levels 3

Parking 1,350 car spaces

Anchors Food hypermarket, electronics supermarket, retail gallery, cinema, bowling, kid’s play, ice rink Dnipropetrovsk Population 989,200 inhabitants

Major multi-tenant retail schemes in Dnipropetrovsk: existing and in pipeline until 2016-2017

Size Name Delivery Status Developer Major brands /anchors (sq m) Hypermarket ‘Karavan’, furniture store ‘Karavan-Mebli’, Karavan Oldi, Eldorado, Comfy, Sportmaster, Brocard, Adidas, 2008 / 2009 / 1. Karavan Operating 76,200 Group / CDA Intertop, Plato, Centro, oodgi, O’STIN, Mothercare, 2014 (in phases) Real Estate Budynok Ihrashok, Multiplex (7 screens), Ihroland (kid’s play), ice-rink, others Varus, Comfy, Inditex Group brands, MTI brands, 2. Most City Centre 2006 Operating 25,300 Alef Estate LPP brands, Mango, ‘Most-Kino’ (5 screens), ice-rink, Ihroland (kid’s play), eateries, others Varus, Comfy, Antoshka, Centro, Plato, Megasport, 3. Appolo 2009 Operating 20,000 UMK Gloria Jeans, ProStor, oodji, Fit4You (fitness centre), care and repair services centre, others Velmart, Eldorado, Megasport, O’STIN, Colin’s, 4. Dafi 2005 Operating 15,543 Dafi Kinostantsia (4 screens), Chudo Park (kid’s play), others 2007 / 2014 ‘Fozzy’ hypermarket, Kari, Master Zoo, VD One, 5. Babylon (opened after Operating 14,000 Logos-Invest Luxoptyka, Fissman reconception) Akselrod 6. Passage 2011 Operating 13,000 GAP, M&S, MTI brands, Centro, Plato, eateries, others Estate Amstor, Comfy, Jysk, CentrObuv, Gloria Jeans, Watsons, 7. Nasha Pravda 2013 Operating 12,950 Alef Estate food court, others Dnipropetrovsk is considered a first-tier city to enter for a Supply & Demand majority of retailers, which are either operating or considering expansion to Ukraine. Occupier demand remains relatively strong Total modern retail stock in Dnipropetrovsk, the third largest city for quality retail space both in high street locations and multi- in Ukraine, was estimated at around 409,130 sq m (GLA) tenant retail centres of the city. in December 2014, or 414 sq m of modern retail stock per 1,000 inhabitants. In DTZ’s opinion, the high attractiveness of Dnipropetrovsk is related to a combination of such factors as large population, The modern retail stock in Dnipropetrovsk has been dominated relatively stable and diversified economic base, availability of by multi-tenant retail centres and shopping malls, which account critical mass of the retail schemes of decent quality in the city and for approximately 76% of total stock in the sector. Big box retail developed high street retailing. developments account for the remaining 24% of total retail stock in the city. In Dnipropetrovsk there are no retail parks and fashion DTZ believes that the highest potential for retailers in outlets. Dnipropetrovsk exists in ‘low’, ‘lower middle’ and ‘premium’ price segments. In the first quarter of 2014, the company CDA Real Estate (part of DCH) opened for visitors the extension of the retail and leisure centre ‘Karavan’; the two earlier phases of the property were delivered in 2008-2009. In addition, the retail centre Rents ‘Babylon’, which was commissioned in 2007 and later closed for In Dnipropetrovsk high street retail rents historically tended to reconception, was opened in July 2014 on the eastern bank of the exceed average rents in multi-tenant retail centres, mostly due to Dnipro River. There were no other major retail schemes delivered the developed nature of street retailing along Karl Marx Avenue in Dnipropetrovsk during 2014. within the boundaries of the administrative centre, shopping habits of local inhabitants and lack of quality retail schemes in the As of December 2014, no multi-tenant retail centres were under in the city. However, delivery of the retail centre ‘Passage’ in 2011 construction or scheduled for delivery in 2015-2016 altered this correlation, as prime high street and shopping mall in Dnipropetrovsk. rents in the city converged.

Nevertheless, construction of several major shopping malls of Prime high street monthly rents in Dnipropetrovsk presently vary cumulative area around 234,000 sq m (GLA) was commenced in the range of $45-65 per sq m, with the highest rents achieved in Dnipropetrovsk prior to the financial crisis 2008/2009 for properties along Karl Marx Avenue and Lenin Square. and suspended due to unfavourable conditions for property development in the country. However, if general dynamics in Similar prime net monthly retail rents, in the range of Ukraine improves, these projects may be resumed increasing total $40-70 per sq m, have been registered in the retail centres in the retail stock in the city by 57%. city for standard units of area 100-250 sq m. Zaporizhzhya Population 766,000 inhabitants

Major multi-tenant retail schemes in Zaporizhzhya: existing and in pipeline until 2016-2017

Size Project Delivery Status Developer Major brands /anchors (sq m) 1. Fabrika-2 2016-2017 Planned 57,000 BUDHOUSE GROUP Food supermarket, retail gallery, leisure, food court 2. Port City 2016-2017 Planned 53,000 Vesta Trade / Continium Tam Tam, DIY store, retail gallery, leisure, food court Auchan, Comfy, Plato, oodji, INCITY, Colin’s, Carlo 2007 / 2011 3. City Mall Operating 21,420 Arricano Development Pazzolini, Top Secret, Respect, Brocard, befree, Love (in phases) Republic, Mothercare, kid’s play, food court, others Silpo, oodji, Ost-West, Megasport, Brocard, Centro, 4. Ukrayina 2004 Operating 16,000 local developer Mosaic, Berghoff, Pizza Celentano, others Amstor, Megasport, Centro, INCITY, Deseo, O’STIN, Avrora Development / LTB, Colin’s, Watsons, Antoshka, Budynok Ihrashok, 5. Avrora 2013 Operating 13,150 Group of companies Chicco, Multiplex (3 screens), kid’s play, food court, ‘Olimp’ others Supply & Demand

Zaporizhzhya with an official population over 766 thousand persons, located in the south-east of Ukraine, is one of the major industrial centers of Ukraine. Well supplied with electricity, Zaporizhzhya forms, together with the adjoining Donets Basin and the Nikopol manganese and Kryvyy Rih iron mines, one of Ukraine’s largest industrial complexes.

The retail property sector in Zaporizhzhya remains very fragmented and immature by western standards and compared to major regional centres in Ukraine. Markets and small-format retail centres, occupied by local retailers, remain popular shopping destinations among the city inhabitants.

Cumulative modern retail stock in Zaporizhzhya was estimated at around 175,400 sq m (GLA) in December 2014, or 229 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 44,500 sq m of ‘big box’ developments.

The modern retail stock in Zaporizhzhya has been dominated by multi-tenant retail centres, which account for approximately 75% of total stock in the sector. ‘Big box’ retail developments, comprised of Metro Cash&Carry, as well as the DIY-stores ‘Epicentre’ and ‘Nova Liniya’, account for the remaining 25% of total retail stock in the city.

In addition, a dozen of small-format retail centres operate in city centre and other areas of Zaporizhzhya, whilst their cumulative area is estimated at around 40,000 sq m (GLA).

As of December 2014, around 110,000 sq m (GLA) of modern retail space was planned for delivery in Zaporizhzhya until late 2017, an increase on current stock by around 63%. There were only two shopping malls in pipeline, being ‘Fabrika-2’ Avrora by ‘BUDHOUSE GROUP’ and ‘Port City’ by ‘Continium’. The Shopping and Entertainment Centre likelihood of delivery of these schemes by 2017 remains generally low, due to currently challenging economic situation in Ukraine and moderate demand of quality chain retailers in Zaporizhzhya. Location and ‘Avrora’ is located in the densely populated description neighborhood within the central part of DTZ believes however that, due to low market saturation, poor Zaporizhzhya, along Lenina Avenue, a quality of existing retail stock and weak current competition on major commuting route in the city. the retail market in Zaporizhzhya, the city has long-term potential for retailers and developers, particularly in ‘low’ and ‘middle DTZ’s DTZ is engaged as consultant in relation minus’ price segments. involvement to an ongoing internal re-organisation of the centre, as well as leasing agent.

Rents Developer Avrora Development Delivery 2013 Both in the high street retail locations and multi-tenant retail centres, retail rents are lower compared to those registered in GBA 28,000 sq m major regional centres of Ukraine. GLA 13,100 sq m The highest retail rents are achieved for properties located along Levels 6 Lenina Avenue, where rents typically are in the range of US$20-40 per sq m per month. Parking 206 car spaces

In the existing multi-tenant retail centres in the city, prime net Anchors Amstor (supermarket), Budynok Ihrashok monthly retail rents vary in the range of $15-25 per sq m for and Antoshka (kid’s supermarkets), standard units of area 100-250 sq m. Deseo by INCITY, oodji, O’STIN, Colin’s, Multiplex (3 screens) Chernihiv Population 295,000 inhabitants

Major multi-tenant retail schemes in Chernihiv: existing and in pipeline until 2016-2017

Size Project Delivery Status Developer Major brands /anchors (sq m) Silpo, Comfy, JYSK, Pierre Cardin, Brocard, Adidas, 1. Hollywood 2015 Under construction 43,000 Hollywood Capital Rebook, Watsons, New Yorker, Megasport, Kari, Colin's, drive-in cinema, kid’s play, others Sympatik (supermarket), Eldorado, Cosmo, 2. Mega Centre 2005 Operating 12,250 local developer Megasport, Centro, oodji, Tiffi, others 3. Royale 2010 Operating 9,100 local developer Silpo, Kinder City (kid’s play), local retailers Supply & Demand

Chernihiv with an official population around 295,000 inhabitants is the regional and administrative centre of Chernihiv oblast in Northern Ukraine.

In accordance with the Ukrainian National Competitiveness Report 2012, Chernihiv oblast was at the bottom of the national ranking by population and by contribution to the country’s GDP. However, the region’s economy benefits from its high development potential in the agrarian sector, as well as proximity to Ukraine’s border with the neighbouring countries.

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

Cumulative modern retail stock in Chernihiv was estimated at only around 52,250 sq m (GLA) in December 2014, or 177 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 30,900 sq m of ‘big box’ developments.

The ‘modern’ retail stock in Chernihiv has been presently dominated by ‘big box’ retail developments, represented by the DIY-stores ‘Epicentre’ and ‘Vienna’. Multi-tenant shopping centres account for around 41% of total stock in the city.

As of December 2014, there was around 43,000 sq m (GLA) modern retail space planned for delivery in Chernihiv in 2015, an increase on current total stock by around 82%.

The shopping and entertainment centre ‘Hollywood’ is the only Hollywood shopping mall scheduled for delivery in Chernihiv during 2015. The Shopping and Entertainment Centre property is presently under construction in the densely populated residential neighbourhood of the city, in the area well-accessible Location and ‘Hollywood’ is currently under by public and private transport. description construction near the central part of Chernihiv, at the crossroads of major In Chernihiv several more retail schemes are in pipeline in the transit routes from Belorussia to Ukraine. longer term, however the likelihood of their delivery by 2017 The biggest retail and leisure centre remains very low. within 150 km radius.

DTZ considers that, due to low market saturation, poor quality of DTZ’s DTZ is appointed as lead agent on the existing retail stock and weak current competition on the retail involvement project since October 2014 market in Chernihiv, in the longer term the city has potential for retailers and developers, particularly in ‘low’ and ‘middle minus’ Developer Hollywood Capital price segments. Architect local architects

Delivery Q2 2015 Rents GBA 53,800 sq m In Chernihiv high street retail rents are higher than average rents in multi-tenant retail centres, due to the absence of quality GLA 43,000 sq m modern retail schemes in the city, as well as its urban structure Levels 3 and shopping habits of local inhabitants. Parking 900 car spaces As of December 2014, prime high street retail rents in Chernihiv amount to $15-35 per sq m per month. Anchors Silpo (supermarket), Comfy (electronics supermarket), JYSK, Budynok Ihrashok In the few, mostly poor quality first-generation, multi-tenant retail (kid’s supermarket), Brocard, New Yorker, centres in the city prime net monthly retail rents vary in the range Adidas, Reebok, Megasport, Moyo, Kari, of $10-25 per sq m for standard units of area 100-250 sq m. Colin’s, others Ivano-Frankivsk Population 246,000 inhabitants

Major multi-tenant retail schemes in Ivano-Frankivsk: existing and in pipeline until 2016-2017

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 2016 15,500 local developer (45% completed) sports supermarket, cinema (5 screens), others Arsen, Eldorado, Foxtrot, Intertop, Adidas, BRW, 3. Arsen 2006 Operating 12,000 Intermarket 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 leading 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 December 2014, or 331 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 presently 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, numerous small-format retail schemes operate in the city centre unique core city centre location in and 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 December 2014, around 31,100 sq m (GLA) of 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, route. The property is surrounded i.e. the centrally located retail and leisure centre ‘Stanislav’, and ‘Equator’ by prime multi-family residential planned to be developed in the remote part of the city via extension of the buildings and located in front of existing ‘Velmart’. The likelihood of delivery of the latter scheme by 2017 the Memorial Park. remains very low. DTZ’s DTZ is involved in the project involvement as consultant on its concept DTZ reckons that, due to low market saturation, poor quality of existing retail revision and optimisation, as well stock and weak current competition on the retail market in Ivano-Frankivsk, in as leasing agent. the longer term the city has considerable potential for retailers and developers, particularly in ‘low’ and ‘middle minus’ price segments. Developer OJSC ‘Energetychni Tekhnologii’

Planned 2016 Rents delivery Project 45% completed In Ivano-Frankivsk high street retail rents are higher than average rents in status multi-tenant retail centres, due to the absence of quality modern retail schemes in the city, as well as urban structure of the city, shopping habits of GBA 20,100 sq m local inhabitants and considerable tourist flows in the city centre. GLA 15,500 sq m Prime high street retail rents in Ivano-Frankivsk amount to $15-35 per sq m per month. In the small-format multi-tenant retail centres, which are located in the No. of retail 2-4 downtown, asking base monthly rents vary in the range of $10-20 per sq m. and leisure floors In the few, mostly poor quality first-generation, multi-tenant retail centres in Parking 150 car spaces Ivano-Frankivsk, prime net monthly retail rents vary in the range of $10-25 per sq m for standard units of area 100-250 sq m. Anchors Food supermarket, electronic appliances store, sports supermarket, entertainment area (cinema, kid’s play, billiards), restaurants and food court 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, King Cross Leopolis, 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 units to 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 of or exceeding 5,000 sq m.

Small retail format — Retail scheme delivered to the market after 1990 or extensively upgraded, with a gross lettable area (GLA) of less than 5,000 sq m, 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 kiosks 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 100-250 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 notes notes Nick CottonFRICS Antonina Puchko Marta Kostiuk MScRealEst Managing Director Director Director DTZ Ukraine Retail Agency and Consultancy Research and Development Consultancy

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