Activity of a large companies constrained by the lack of suitable land sites with the necessary communication and legal status for their use. Most of this is a rural or agricultural, and changes with a view to further build warehouses is a difficult and long-time process.

Especially according with well-known land moratorium. Few international companies will not engage in “hidden” transactions that could damage the their brand and image and lead to a legal proceedings. And the construction of new warehouses in Kiev city is limited by high land prices and low offer.

Increasing demand for warehouse facilities leads to an increase in rental rates. During the 2006 rental rates are increased by 15% and amounted to approximately USD 8-12 and up to USD 25 for 1 sq.m. without operating costs.

The building cost of warehouse space, according to the Real Estate Solutions at the USD 300-500 for 1 sq.m, Build & Live Development reports about USD 500-650 for 1 sq.m.. Specialized premises (freeze spaces, pharmacies, etc.) costs up to USD 1000 for 1 sq.m. And PB period for quality warehouse property is estimating at 7-8 years level.

Warehouse grade market share

А class – 5%

В class – 10%

С class – 40%

D class – 45%.

There is big demand for quality spaces. One of the reason is that almost all A class warehouses are build-to-suit project. So market demand for free space still high.

In 2007, the demand for warehouse will continue to increase and the new supply would not be able to meet. This will lead to an increase in rental rates until 2008.

Some planned projects

In 2007, Intereuropa company (Slovenia) plans to set up a logistics center in Ukraine in Kiev suburbia located on 24 ha. They are going to invest EUR 15.6 ml

In 2008, near Brovary will be built logistics hub. It will be places on 250 ha. Total investment amount of the project announced about USD 300 ml.

About their plans to develop new projects say Asnova Holding, FIM Group, Kuehne&Nagel, Komora-S, MLP

The source: Ukraine Real Estate Market