Why hasn’t the Ocean Plaza shopping mall in Kyiv reopened?

24 June, 05:24 PM
Ocean Plaza shopping center has not been operating since the beginning of the Russian invasion of Ukraine (Photo:facebook Ocean Plaza)

Ocean Plaza shopping center has not been operating since the beginning of the Russian invasion of Ukraine (Photo:facebook Ocean Plaza)

The Ocean Plaza shopping mall in the capital city of Kyiv has been closed since the beginning of the war. And even after the mass return of Kyiv residents, only the Auchan hypermarket and neighboring stores are open in the mall.

This is not a typical picture. Almost all shopping malls have resumed work in Kyiv, even Retroville, which was hit by a Russian missile.

Even its tenants have no idea when the whole mall might reopen.

"The phones of the managers of the shopping mall are switched off,” a business director of a clothing and footwear retail chain told NV Business.

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“They only respond to emails and claim that Ocean Plaza will reopen. But they don't say when."

Perhaps the mall is not being reopened because of its owners, suggests the co-founder of the Association of Retailers of Ukraine, Andriy Zhuk. A few years ago, a controlling stake in the mall officially belonged to Russian owners – the family and partners of Arkady Rotenberg, an oligarch and ally of Russian dictator Vladimir Putin.

One of the best objects in Kyiv

The Ocean Plaza shopping mall, with a total area of 165,000 square meters, opened in December 2012. It belonged to the Russian group TPS Nedvizhimost, which was founded by Alexander Skorobogatko, Alexander Ponomarenko and Arkady Rotenberg. TPS bought Ocean Plaza in late 2012, paying $270 million to the UDP company owned by Vasyl Khmelnytsky and Andriy Ivanov, the KAN Development company owned by Igor Nikonov, and the structures of businessman Stepan Chernovetskyi.

Ocean Plaza is one of the best shopping malls in Kyiv, says Yuriy Boyko, founder of the NAI Ukraine consulting company.

"This is one of the most profitable objects in the city, with good prospects for development," the expert says.

All new chains that enter Ukraine try to open a store in Ocean Plaza, Boyko adds. The developer, Vagif Aliyev, is also trying to repeat its success, building his Ocean Mall shopping center next door.

The shopping mall through the Lybid Investment Union company belongs to Avangard-Vilarti LLC. Its ultimate owners are Swiss citizens Andrea Rishaal and Suzanne Vallabh, as well as Ukrainian businessman Vasyl Khmelnytsky, as follows from the state register. Although just a few years ago the list was different. Arkady Rotenberg was among the co-owners until April 2018, and his daughter Lilia until September 2019.

In December 2019, a 33.5% stake was bought by Vasyl Khmelnytsky. According to him, British businessmen Rodney Coffey and Colin Laird were the sellers.

In April, in an interview with Forbes Ukraine, Khmelnytsky said that he had sold the construction business to his partner Andriy Ivanov before the New Year, but formally remains the owner, because "he did not re-register all the assets." The deal also concerned Ocean Plaza.

"I have been in this business for 30 years and have already outgrown it. Now I'm more interested in innovation and creating ecosystems. Together with the construction business, I also sold these 33% of Ocean Plaza. Perhaps Andriy bought some more shares, but 51% definitely belongs to a Russian company. If the authorities decide that this facility needs to be nationalized, then it will be so," Khmelnytsky said.

The heads of two development companies with whom NV Business spoke, believe that the Ocean Plaza shopping mall may still belong to the family of Arkady Rotenberg.

The market comes alive

Kyiv shopping malls are gradually reopening and recording an increase in the number of their visitors. For example, according to the investment company Dragon Capital (which owns the NV magazine, Radio NV and the nv.ua portal), Kyiv's Aladdin, Piramida and Smart Plaza Obolon shopping malls, which it owns, have been seeing an upsurge in attendance since May. Now the company records 80-85% of the number of buyers from the pre-war level, with the trend being for further growth.

Entrepreneurs who were able to reopen their stores, provide them with staff, and agree on the supply of goods with deferred payment have good indicators, says Zhuk from the Association of Retailers of Ukraine.

"Preference was given to brands that are produced in Ukraine. They do not experience such difficulties with the supply of goods since they are made in factories inside the country," he says.

According to him, rental rates decreased by an average of 50% after the outbreak of hostilities. The situation in shopping malls will improve significantly if large chain stores, such as IKEA, H&M, Inditex and LPP groups, reopen their shops. They have been closed since Russia invaded Ukraine on Feb. 24.

Ocean Plaza, in the meantime, remains in business limbo.

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