Boston, MA -- (SBWire) -- 06/25/2013 --There seems to be little good news for the Ukrainian commercial real estate sector over 2013 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 over a 24-month period 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.
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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. Our latest data collection, covering market performance over the second half of 2012 has inspired little confidence to the contrary, with risks largely weighted to the downside.
Key Points:
- Recent statements from the EU suggest that it is growing increasingly concerned about the deterioration in Ukraine's political situation and Brussels may be preparing to abandon the Association Agreement. We expect that Ukraine will continue to languish in political isolation over 2013.
- Persistent weakness in global steel demand, an overvalued currency and a weak investment climate will continue to weigh on Ukraine's growth prospects, and we forecast the economy to contract by 1.4% in 2013. While we anticipate a modest recovery in 2014, forecasting 1.0% real GDP growth, Ukraine will have to make substantial adjustments to its economy in order to achieve a sustainable, long-term growth trajectory
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New Market Report Now Available: Ukraine Real Estate Report Q3 2013
Fast Market Research recommends "Ukraine Real Estate Report Q3 2013" from Business Monitor International, now available