The Ukrainian property for sale market has recorded significant rises in all its segments. Prices of business, office and industrial areas have reached very high levels in the Central and Eastern Europe (CEE) region, driven by lack of supply and increasing demand.

International and local organizations are quickly expanding their activity in the country and, consequently, demand for office space is constantly growing, surpassing the most optimistic hopes, according to Nick Cotton, local director of DTZ Ukraine real estate adviser in Ukraine.

Leasing levels recorded an abrupt growth last year due to the low vacancy and lack of high-quality office space. "The auspicious business surroundings and an annual gross domestic product growth rate of around 8 percent are among the main propellers of rising demand for modern office areas," Alexandr Nosachenko, managing director of Colliers International - Ukraine, noted.

Gross absorption of office space in 2007 is estimated for 250 000 m2, reaching its largest level since 1998, according to Colliers. The average leasing price for class A offices, including VAT and maintenance fees, recorded a 40 per cent mark-up last year, peaking at $62 a m2. Monthly class B leasing grew from $35 a m2 at the end of 2006 to $50 a m2 at the end of 2007, Nosachenko mentioned.

These indexes are fairly high, compared to CEE and even Western European markets, according to Dmitro Selivanov, the director of Ukraine's arm of SHM Smith Hodgkinson machinery dealer. Office keep in Kyiv is quite low - only 0.4 m2 a person, which accounts for the high rents, he added.

The Ukrainian property market faces a similar situation. Average rent per month of a retail unit with an area of 100 to 300 m2 varies between 110 and 240 dollars a m2 for more attractive projects and between 50 and 70 dollars for less attractive ones, Nosachenko says.

Commercial room in some of the most popular Kyiv shops, Karavan, Globus and Mandarin Plaza, is leased at 200 to 300 dollars per m2, excluding VAT, according to Liliya Shulgina, top manager in DEOL Partners, one of the leaders on the Ukraine property market.

The considerable growth in construction costs has driven up leasing of warehouse developments, according to Colliers. However, this effect is almost thoroughly offset by the significant supply of new stock in the industrial segment. As a result, the annual leasing growth rate of logistic space is below 10 per cent. The only exception to this is establishments in central regions, which struck a 20 per cent growth due to high demand and lack of new supply. Construction and demand in this segment were stimulated by the market entry of foreign retail chains, Shulgina comments.