New Market Research Report: Ukraine Real Estate Report Q4 2013

There seems to be little good news for the Ukrainian commercial real estate sector over H213 as growth stimuli are set to be limited, and weak sector fundamentals persist. Data readings confirm our expectations that Ukraine has entered a recession, the leasing market posted poor full-year 2012 results and increasing concerns over the country's political and macroeconomic future paint a bleak short-term picture.

With a focus on the principal cities of Kiev, Kharkov and Dnipropetrovsk the report covers rental market performance in terms of rates and yields and examines how best to maximise returns in the commercial real estate market, while minimising investment risk and exploring the impact of the Euro 2012 'hangover' on a market that was already losing momentum.

Full Report Details at
- http://www.fastmr.com/prod/673313_ukraine_real_estate_report_q4_2013.aspx?afid=301

On the back of stagnating exports, rising import bills, a crippled banking sector and our expectations for a hryvnia devaluation, the outlook for the Ukrainian economy, construction and real estate sector is dim. While the ongoing slowdown in global growth is largely to blame, domestic economic mismanagement by the government is also damaging growth prospects. A weakening global growth picture bodes ill for Ukraine's export-dependent economy and a faltering domestic demand picture underpins our lower growth estimates, with negative knock-on effects on the demand for real estate. Nevertheless, there are signs of a nascent recovery beginning to emerge including increasing business optimism from local developers, increased dynamism in the retail segment and improving occupancy rates.

Key Points:

* Signs of a robust recovery remain conspicuously absent in Ukraine, as weak external demand continues to drive considerable weakness in the economy. We have recently revised down our eurozone growth forecast to -0.5% in 2013, while leading economic indicators are pointing towards a deceleration in Chinese economic activity. The dominant steel export sector is suffering from both low prices and demand as regional construction remains in the doldrums, while imports have continued apace, supported by the fixed peg exchange rate and costly Russian gas supplies. We maintain our below consensus call for real GDP to contract by -1.4% in 2013, before recovering to growth by 1.0% in 2014.
* With weak government finances, poor domestic economy and an absence of private sector investment, we see little scope for a complete recovery in the construction industry value and forecast a weak 1.5% yo- y real growth in 2013. Thereafter, we expect the construction sector to grow by an average 3.3% y-o-y between 2014 and 2017.

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