Investment levels in Ukraine hit a 10-year high

Over the last three years, Ukraine’s economy has been recovering and investment has started to return. No doubt, the country, and its capital, in particular, deserve more attention from international players. And here is why.

According to the World Bank, the inflow of foreign direct investment into Ukraine in 2018 grew by 3 percent compared to 2017. The annual report of the National Bank of Ukraine says the net inflows of foreign direct investments in Ukraine reached $2.4 billion. More than half of it was allocated to the real economy. In comparison, Ukraine surpasses Croatia, Georgia, Bulgaria, and the Baltics.

And one of the most dynamic markets today is construction and real estate.

According to Cushman & Wakefield, in 2018 Ukraine’s commercial real estate market recorded $335 million of investment. In terms of the number of deals done, the market reached a 10-year high. An annual M&A report by KPMG says that at least 23 deals were concluded in the field, which is one- third of all deals in Ukraine.

Among the most active players on the market is the investment fund Dragon Capital that acts in cooperation with the international bank Goldman Sachs. According to Colliers International, since 2016 the fund has acquired assets worth about $400 million.

During 2018 Dragon Capital acquired two shopping malls – one in Lviv, another in Vinnitsa; three business centers in Kyiv and Zaporizhya, as well as a А-class logistics complex in a Kyiv suburb.

The number of deals today struck with international players can be explained by the fact that they prefer the acquisition of real estate assets to investing in new development. They want to mitigate the country’s risks and ensure stable and high yields. According to Cushman & Wakefield, yields in the office segment are 12 percent, in retail 12.25 percent, and 12.75 percent in logistics.

But in spite of that, this year Ukraine welcomed Canada’s Brookfield & Partners, which headed a consortium of investors involved in the first stage of Innovation District IT Park in Lviv, which has a gross area of 10 ha. According to the developer of the project, its cost is $160 million.

The number of deals and new investors in the country now represents an actual investment environment. This is a good indicator for private investors to rediscover Ukraine, despite the existing and well-known risks. This year became prominent for a lot of developers and banks, who could sell their assets and collect returns on their investments. Probably for the first time in many years local experts admit that investors expect a growing market.


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