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OVERVIEW OF HOTEL REAL ESTATE MARKET
UKRAINE
OVERVIEW OF COMMERCIAL
REAL ESTATE MARKET
UKRAINE 2009
The Economy of Ukraine A number of foreign companies decided to leave
Ukraine and focus on their native markets with
In 1H2008 the growth of companies’ profitability substantially lower risks, yet with respectively lower
in real and financial sectors and, of course, the return on their investment.
expansion of investment processes accompanied
positive dynamics of economy growth. According Nominal income of the population increased by
to the State Statistics Committee of Ukraine, the 40.1% and real income by 11.4% year on year.
total volume of foreign direct investment in Ukraine, Nominal wages grew by 18.6 % and real wages
as at January 1, 2009 reached $35.7 bn, being 20.9% decreased by 3% year on year. In the Kiev region,
more than the investment volume in the beginning real average wages increased by 0.6%. Related to
of 2008. the dollar the average fell by 21.7% to $259.8 in 2008.
Volume of Foreign Direct Investment in Ukraine, According to the State Statistics Committee of
Progressive Total from the Beginning of Investment ($m) Ukraine, exports increased by 35.9% and imports
by 41.1% and accounted for $67 bn and $85.5 bn
respectively in 2008. The largest export volumes
were directed to the Russian Federation, Turkey,
Italy, Poland, Belarus, USA, Germany. Among top
countries that imported goods to Ukraine there were
the Russian Federation, Germany, Turkmenistan,
China, Poland, Kazakhstan and Belarus.
Foreign Trade Figures, $ billion
Source: State Statistics Committee of Ukraine
The major investor countries in the Ukrainian
economy were: Cyprus ($76.8 m), Germany
($63.9 m), the Netherlands ($31.8 m), Austria
($24.5 m), Great Britain ($22.7 m).
In 2008, GDP growth was 2.1% (in the first half year
6.5%), and inflation was 22.3%. A decline in GDP
growth was caused by a sharp decline in industrial Source: State Statistics Committee of Ukraine
output (minus 3%), fall in demand for Ukrainian
metallurgical and chemical production. The state 2008 gave a 18.6% rise of the legal entities’ retail
budget for 2009 supposed GDP growth to be about turnover in goods, which expanded to UAH 44.9 bn.
0,4%, but International Monetary Found forecasted
this index to reach 3%. Kiev region enjoyed a 19.5% rise.
Basic Macroeconomic Indicators Key Ukraine Statistics
2007 2008 2009* 2010*
Population, mln. 46.7 46.4 45.9* 45.6*
GDP, mln. UAH 720,731 949,864 956,427* 1,117,992*
Exchange Rate
5.05 5.26 7.67
UAH/US$
Exchange Rate
6.91 7.70 10.31
UAH/€
NBU gold and foreign
32.5 31.5 24.9* 24.3*
currency reserves, $bn.
* consensus forecast of Ministry of Economics of Ukraine (July 2009)
Source: NBU
On July 31, 2009 the international rating agency,
* Forecast of IMF for 2010 Standard & Poor's, improved the sovereign rate
Source: State Statistics Committee of Ukraine
of Ukraine from negative assessment to positive
Being the result of world global economic crisis the and also reaffirmed the level CCC+/C for long
change of economy development tendencies in and short term ratings on commitments in foreign
2H2008 caused the slowdown of business activity. currency.
OVERVIEW OF COMMERCIAL
REAL ESTATE MARKET
UKRAINE 2009
OVERVIEW OF HOTEL REAL ESTATE MARKET
Brief Market Overview Supply
In 2008 1H2009 global hotel operators showed In 2007 Hyatt Regency Kiev, first 5 hotel in Kiev
a big interest in hotel market of Ukraine offering managed by international operators, was placed in
hotels management under their brands, and the operation. Before this during 2 years only one world
quantity of signed agreements with development brand, which is 4 Radisson SAS, was represented.
companies proved the high potential of this In the beginning of 2007 4 hotel Riviera operated
segment. It made basis to realize joint projects on by Yaroslaviv Val was put into operation. In 2008 the
hotel real estate development in the capital and in single 4 hotel Visak was commissioned, it has 42
regions. rooms and is situated in Obolonsky district of the city.
Record number of international hotel networks For the moment 112 hotel enterprises operate in
declared entering of Ukrainian market in 2008, the capital and include 5,524. Moreover, hotels
because of: positioned in premium segment are not completely
in line with present day international requirements.
constant increasing demand for premium Only 27 hotels has Ukrainian or international
hotel rooms; certificates.
inability of functioning hotels to satisfy this;
The supply in Kiev is several times bigger than in
limited assortment of hotel services; other biggest cities in Ukraine, nevertheless it’s really
progressive integration of Ukraine in both the
European and World community; Visak Hotel
increasing of political and networking event
quantity;
state assistance to units taking part in EURO
2012 preparation program. These tendencies
characterize also 2009.
Signing the agreement for management with an
international operator during the building period
helps Ukrainian developers to improve unit liquidity,
as it proves the stable financing, allows to use
effective marketing tools to promote the unit, to get
the access to the central booking system and help
in hotel rooms selling.
Since August 2008 the crisis impact lowered the
barriers for entering the Ukrainian hotel real estate
market for investors oriented to middle and long
term future. Appearance of proposals to sell units low comparing to other European capitals. There
for adequate prices and low level of possibility are 3 hotel rooms per 1000 citizens in Kiev whereas in
hotel market saturation of the capital and biggest the cities of Western Europe there are 14 18 rooms.
regional cities till 2012 were the positive features of Increasing of market saturation level by premium
the period. segment will be possible only in 2012 2015 on
conditions that all announced units will be put into
Lack of free lots in the down town for premium hotel operation in time.
projects realization is the factor restraining the hotel
segment development in Kiev. Within the frameworks of Euro 2012 preparations
Kiev City State Administration approved Scheme of
OVERVIEW OF COMMERCIAL
REAL ESTATE MARKET
UKRAINE 2009
Hotels Commissioned in 2008 2011
Quantity
# Name Address Category
of rooms
2008
1 Visak 17 Obolonskaya Nabarezhnaya St. 4 42
2009
2 InterContinental 2 A B. Zhytomirskaya St. 5 270
3 Slavyansky dvor 87 A Sorokarichya Zhovtnya Ave 3 24
4 Hotel 8 A Brest Lytovskoe Highway 3 60
2010 2011
5 Fairmont 1 A Naberezhno Khreschatitskaya St. 5 257
6 Obolon 9 Obolonskaya Nabarezhnaya St. 4 42
7 Hotel 34 Konstantinovskaya St. 4 42
Source: DEOL Partners
The Hotel Rooms Structure in Kiev, 2008 2009,
% of Total Room Quantity
hotels placement in Kiev till 2020. On the first level
(till 2012) 55 hotels are expected to be built.
Proceeding from UEFA standards total new hotels
area should be about 750,000 m2. In case of the
Scheme completion till 2012 Kiev will be provided
with 12 hotel places per 1000 citizens considering
that 4 m people will inhabit the city.
Breakdown of Hotels by Category and Quantity of Rooms
Quantity of Hotels Quantity of Rooms
Source: DEOL Partners
Demand
Demand for rooms in 4 5 hotels in Kiev depends
only on business activity, because their current
target group are corporate clients and businessmen.
Therefore the highest level of demand is observed
on working days, but it decreases substantially on
weekends. Hereby, the average year workload was
Source: DEOL Partners on the level of 70 72% in 2008 and 50 55% in 2009.
OVERVIEW OF COMMERCIAL
REAL ESTATE MARKET
UKRAINE 2009
HOTEL REAL ESTATE MARKET OBJECTS
12
38
39
10
29 404
42 11
34 36 13 1
8
24 2 30 20
3 23 32
6 7 28
4 17 15
18 22 31 41
26 9
35 1
25 5
14
21 27 16
37
33
19
Hotels: 5 4 3 2
> 200 rooms –
50 200 rooms
< 50 rooms –
OVERVIEW OF COMMERCIAL
REAL ESTATE MARKET
UKRAINE 2009
1 Premier Palace 12 Visak 23 Kreschatik 33 Oberig
2 InterContinental 13 Impresa 24 Prolisok 34 Verkon
3 Hyatt Regency Kyiv 14 Rus 25 Kooperator 35 7 Dney
4 Opera 15 Tourist 26 Druzhba 36 Andreevskaya
5 President Hotel 16 Slavutich 27 Salut 37 All Plus Together
6 Radisson SAS Hotel Kyiv 17 Ukriane 28 Adria 38 Borisphen
7 Depr 18 Lybid 29 Domus 39 Spartak
8 Riviera 19 Mir 30 Ghintama 40 Dneprovskiy
9 Natsionalniy 20 Bratislava 31 St. Petersburg Hotel 41 Comfort
10 Perlyna Dnipra 21 Sport 32 Kozatskiy 42 Kamelot
11 Podol Plaza 22 Express
Development Projects Under the International Operators Management
Rooms
Hotel operator Developer Brands Category Address Opened
fund
Hyatt Hotels Industrialnyi Soyuz
Hyatt 5 234 5 A Tarasovoy St. 2007
Corporation Donbassa
Fairmont Hotels 1 A Naberezhno
Yaroslaviv Val Fairmont 5 251 2009
& Resorts Khreschatitskaya St.
Rixos SKM Rixos 5 209 24/39 Proreznaya St. 2009
Accor Group ХХІ Century Sofitel 5 290 14 B Lyuteranskaya St. 2010
Hilton Hotels International
Hilton 5 420 28 30 Schevchenko Blv. 2011
Corporation Development centre
InterContinental 5 272 2 A B. Zhytomyrskaya St. 2009
InterContinental Yaroslaviv Val, Crowne Plaza 4 225 Korolenkovskaya St. 2011
Hotels Group ІТТ Plaza 192 79 Antonovycha St. 2011
Holiday Inn 3
209 79 Antonovycha St.
Starwood 21 Naberezhno
Sheraton 5 370 2012
Hotels & Resorts Melviks, DeVision Khreschatitskaya St.
Worldwide Le Meridien 5 200 Koncha Zaspa
IFD Capital, NEST, Radisson SAS 4 255 Yaroslavov Val St. 2005
Rezidor Hotel
Dubl W, Kyivzhytlo Radisson SAS 4 344 Borispol 2009
Group
investmenegement Regent Park 4 440 37 B. Vasylkovskaya
Accor Universal investment Ibis 3 28 30 Schevchenko Blv. 2010
Hospitality group Etap 2 25 hotels network in Ukraine
Wyndham Ukrainian hotels agreement to develop 15 hotels during
Ramada 3
Hotel Group (Astron Ukraine) 10 years
OVERVIEW OF COMMERCIAL
REAL ESTATE MARKET
UKRAINE 2009
The demand for hotel services decreased because In spite of crisis some hotel operators, especially
of cancelation of planned events and business trips economy class ones, tried to follow announced
reduction etc. development plan. Developing 3 hotel chain 7
days, Ukrainian operator Clubhouse Group Holdings
In middle term future the demand will shift from regards the possibility to buy land for hotels building
4 5 to 3 hotel projects and niche boutique and finished units which fits the requirements.
hotels.
By 2012 the Senator Apartments network operated
Prices by DEOL Partners is supposed to be enlarged in
the biggest regional centres: Kiev, Kharkiv, Lviv,
According to all European practice the prices for Odessa by means of buying buildings and their
hotel rooms are formed for 1 year and changes refurbishment.
occur rarely.
In Ukraine the prices in 2 3 hotels are in national Senator Apartments Executive Court
currency and in 4 5 hotels in euro. Taking into
consideration the devaluation of national currency
and the fact that dollar rose against euro, the
prices in dollar will decrease by 13% in all hotels in
Kiev, and by 11% in 4 5 hotels by the end of 2009
comparing to the costs before crisis.
In 4Q2008 crisis impact influenced pricing on hotel
real estate market forming the following tendencies:
flexible special offers in premium hotels;
price reduction in economy class hotels.
Investments and development
In 2001 2009 seven international hotel networks
declared their entering of Ukrainian market: Accor
Group, Hilton Hotels Corporation, Fairmont Hotels
& Resorts, Starwood Hotels & Resorts, Marriott The factors of hotel real estate units’ investment
International, Kempinski Hotels, Wyndham Hotel attractiveness are:
Group.
placement in historical or business centre;
In 2008 Wyndham Hotels and Resorts sold the rights
to open new network, which will include fifteen
correctly developed conception based on
3 Ramada, to Astron Ukraine. Ukrainian Hotels,
the market research, analysis of demand
member of Astron Ukraine, made a contract with
quantity and structure;
Swiss managing company Sophos Hotels S.A.
about hotels projects preparations, their launching,
effectiveness and singularity of conceptual
marketing and operation. French hotel operator
and architectural solutions;
Accor and Universal Investment Group signed the
agreement according to which companies will
facade area with good visibility and attractive
,
build 25 2 hotels Etap in Ukraine till 2012. Being the
landscape;
owner of buildings and land, Universal Investment
Group declare to invest about 100 m euros in
development, finance and building of the hotels. high level of infrastructure development
around the object, access to the main
OVERVIEW OF COMMERCIAL
REAL ESTATE MARKET
UKRAINE 2009
transport corridors, junctions and to airports InterContinental
and railway stations as well;
availability, type and currency of agreement
on operation.
Forecast
The selling of hotel rooms to private persons on the
building level can become a new tendency on
the hotel real estate market in Kiev. This format of
contract allows for a reduction in the recoupment
period by 2 3 years, but it increases the risks because
of lack of hotel condominium development
practice in Ukraine.
In 2008 2009 the main customers on the hotel real
estate market became hotel operators, but not the regional development and building of Ukraine will
investment banks. This tendency can be observed simplify the procedure of entering the market for
in future in Ukraine also, but owners should make international hotel operators.
concessions regarding hotel project cost and taking
into consideration that business ownership is not the The main tendencies of Ukrainian hotel real estate
priority for hotel operators. development are:
The growth of prices should be expected in the developer’s interests will shift to projects of
segment of budget hotels (2 3 ) because tariffs boutique hotels and average price category
of public services for corporate bodies increased, hotels;
these expenses are a third of the room cost in this reconstruction of existent hotel fund, because
segment. of land shortage, investment volume
decreasing and short recoupment period;
To attract new guests, operators will develop and
propose special offers, thereby stimulating the entering the market by new hotel operators
loyalty of clients. and enlargement of existent networks.
Development companies will file amendments into
In the mid term future the growth of price for hotel
their strategies on hotel projects development. If
services will continue, because of supply shortage
they are not core, the companies will postpone
and dissatisfied demand for qualitative hotel
putting the units into the operation or cancel it.
services and their measured assortment as well.
The current strategy will foresee the concentration
on priority directions, elaboration of project
Growing competition, increased requirements of
documentation, market analysis and marketing
visitors, entering the market by international hotel
support to projects.
operators will cause the increasing of new projects
quality.
Adoption of new state building norms for hotels,
according to European standards, by Ministry of
OVERVIEW OF COMMERCIAL
REAL ESTATE MARKET
UKRAINE 2009
ANNEX #4
KEY CHARACTERISTICS OF KIEV'S HOTELS
Prepared by DEOL Partners
# Hotel name Address Quantity of rooms
5 star hotels
1 Premier Palace 5 7/29 T. Shevchenko Blv. 289
2 InterContinental 2 A B. Zhitomirskaya St. 272
3 Hyatt Regency Kyiv 5 A. Tarasovoi St. 234
4 Opera 53 B. Khmelnitskogo St. 138
4 star hotels
5 President Hotel 12 Gospitalnaya St. 363
6 Radisson SAS Hotel Kyiv 22 Yaroslavov Val St. 255
7 Depr 1/2 Kreschatik St. 186
8 Riviera 15 Sagaidachnogo St. 80
9 Natsionalniy 5 Lipskaya St. 75
10 Perlyna Dnipra 10 A Naberejno Kreschatitskaya St. 62
11 Podol Plaza 7 A Konstantinovskaya St. 57
12 Visak 17 Obolonskaya Naberejnaya St. 42
13 Impressa 21 Sagaidachnogo St. 17
3 star hotels
14 Rus 4 Gospitalnaya St. 437
15 Tourist 2 Raisy Okipnoi St. 418
16 Slavutich 1 Entuziastov St. 400
17 Ukriane 4 Institutskaya St. 372
18 Lybid 1 Pobedy Ave 300
19 Mir 70 Goloseevskiy Ave 300
20 Bratislava 1 Malyshka St. 246
21 Sport 55 A Vasilkovskaya St. 172
22 Express 38/40 Shevchenko Blv. 143
23 Kreschatik 14 Kreschatik St. 128
24 Prolisok 139 Pobedy Ave 120
25 Kooperator 53/80 Saksaganskogo St. 113
OVERVIEW OF COMMERCIAL
REAL ESTATE MARKET
UKRAINE 2009
# Hotel name Address Quantity of rooms
26 Druzhba 5 Zheleznodorozhnaya St. 111
27 Salut 11 B Yanvarskogo Vosstaniya St. 66
28 Adria 2 Raisy Okipnoy St. 46
29 Domus 19 Yaroslavskaya St. 30
30 Ghintama 9 Trehsvyatitelskaya St. 23
2 star hotels
31 St. Petersburg Hotel 4/1 Shevchenka Blv. 106
32 Kozatskiy 1/3 Malyshko 105
33 Oberig 25/16 Krasnozvezdniy Ave 57
34 Verkon 63 Pobedy Ave 40
35 7 Dney 4 Geroev Kosmosa St. 36
36 Andreevskaya 24 Andreevskiy Spusk St. 35
37 All Plus Together 3 Krasnozvezdniy Ave 31
38 Borisphen 5 Park Druzhby Narodov 27
39 Spartak 105 Frunze St. 24
40 Dneprovskiy 10 A Naberejno Kreschatickaya St. 20
41 Comfort 4 Raisy Okipnoy St. 12
42 Kamelot 4 Melnikova St. 11
Local Knowledge with International
Experience in Ukraine
DEOL Partners is one of the leading companies in the Ukrainian real estate market. Our vision: to be the
most innovative and progressive real estate company, constantly on the lookout for new opportunities
and helping to open up the market’s most promising niches. As a result, our real estate projects become
stand out as leaders in their particular segments.
DEOL Partners manages the largest investment projects on the Ukrainian market and realizes
development of commercial real estate in partnership with leading international investors and
developers. Our latest projects include Kyiv Airport City, Mall of Ukraine, Leonardo Business Centre,
Senator Apartments and others.
Investment Management at DEOL Partners is tailored to match the specific requirements of the
Ukrainian market and focus the Company’s international expertise in asset and fund management. In
particular, DEOL Partners works in partnership with international investment funds Investrong, Atria
Capital and Active Property Invest (API) to bring added value and security to investors.
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DEOL Partners
This report is intended as general market overview and based upon information in our possession which we believe to be reliable. While every effort has been made to ensure
its accuracy, DEOL Partners takes no responsibility for any loss suffered by reason of the incorrectness of this report. The information presented in this report may not be
published in whole or in part, in any form, in any media without the prior written permission of DEOL Partners.
tel.: +38 (044) 200 77 00 Leonardo Business Center, 7th floor,
fax: +38 (044) 200 77 01 17/52 Bohdana Khmelnytskogo St.,
www.deol-partners.com Kiev 01030, Ukraine
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