You're reading: City Life: New malls for new brands

Shopaholics of the capital can rejoice. Shopping will be getting more varied, more accessible and – hopefully – cheaper as new fashion brands arrive this year, attracted by a greater availability of trading spaces.

Real estate reports are claiming that the years 2012-13 will bring a boom in commercial real estate ready for rent.

The diversity is expected to impact the rent prices positively, giving international retail networks a good reason to put Ukraine on their map.

The shopping mall boom effectively started in 2011, which brought 100,000 square meters of brand new shopping space to the capital, and around a dozen new brands with it. This year, real estate experts are expecting 200,000 square meters of new shopping space to be ready for shoppers.

Katya Orehova, a personal shopper and stylist in Kyiv, says her clients often mention brands they miss in Ukraine.

“We need more middle-market shops, like Banana Republic, BCBG and other American brands. Mass market is fine, but of course everyone is waiting for Zara Home and H&M to come,” Orehova says. She often organizes shopping tours for well-off Ukrainians to Western European cities, where “the variety is much better.”

Real estate experts say that besides an appalling investment climate, new Western brands have been restricted in coming to Ukraine by a poor choice of commercial space for rent. This, in turn, resulted in high rent prices.

 

The Aladdin shopping mall at 5a Gryshko Street in Kyiv is near the Poznyaky metro station. (Courtesy)

But things are looking up, according to Natalya Mykolaichuk, head of commercial estate department of DTZ. Five new shopping malls opened last year, which saw the arrival of brands like Christian Dior, New Look, New Yorker, GAP, Massimo Dutti and Oysho.

By the end of last year, the capital had 250 square meters of commercial space per 1,000 residents, according to a recent Ernst & Young report. This is still one of the lowest figures in Central and Eastern Europe.

This year, Ernst & Young expects six new shopping malls to open in the city, the biggest one being the Ocean Plaza on Horkoho Street, with a total of 72,000 square meters of trading space.

But what new brands will come, is still unclear. “The [shopping mall] owners are expecting too much,” Mykolaichuk says. “And potential tenants are picky now.”

Currently the city malls have vacancy rates close to zero, which means owners feel they can hike prices, says Hlib Vyshlinsky, the custom research director of GfK Ukraine. In 2011, the rent price was between $35 to $230, depending on location and other factors, with perfume and jewelry shops typically paying the highest rent.

Vyshlinsky predicts that the availability of new shopping space and arrival of new brands will stabilize rent and bring down prices.

Yet Mykolaichuk says a good location, not price, is the most important factor when they decide to enter a market.

A spokesman for H&M, a vast international fashion retailer, told Kyiv Post that the compnay is watching the market and will open a store when good location options are more available, but that it had “no specific plans” yet.

They might get just that in a revamped central department store TSUM that is scheduled to open in 2014 on Khreschatyk Street after a major rehaul by ESTA Holding, a company that belongs to the nation’s richest man Rinat Akhmetov.

Other options will also become available as the city has at least four shopping malls under construction that will not finish in time to open this year, according to Ernst&Young report.

Mykolaichuk of DTZ predicts that shopping malls will work hard to bring big brands to Kyiv as they are good as tenants and are a magnet for customers.

“To be a success, a mall needs to collect star brands,” she says.

See also Peacocks may leave Ukraine

Kyiv Post staff writer Olga Rudenko can be reached at [email protected].