High yield commercial real estate in Ukraine: What Affordable War Risk Insurance means for Foreign Investors

The Ukrainian investment landscape is reaching a critical inflection point. While the world watches the geopolitical shifts, savvy institutional and private investors are looking at the ground-level data. The latest signal? A 9,924 square meter retail centre in Mykolaiv is being auctioned in February at a starting price of UAH 103.3 million (approx. $2.5M - $2.7M). 

Why Mykolaiv? Why Now?

Historically a maritime and industrial centre with a population of half a million, Mykolaiv is a cornerstone of Ukraine’s export economy. Acquiring a cash flow asset at a starting price of roughly $260 per square meter offers an entry point that is impossible to find in other European markets.

The Game Changer: War Insurance at 4-6%

For four years, the primary barrier for foreign capital in Ukraine has been "War Risk." However, the financial infrastructure has finally caught up with the opportunity.

New insurance products—backed by international financial institutions and local providers—are now offering coverage for physical damage due to acts of war at premiums ranging from 4% to 6% subject to location:

• Yield Protection: Affordable insurance makes commercial assets in regional hubs like Mykolaiv a viable option for investors searching for distressed opportunities and special situations with potential high double digit yields.

• Exit Strategy: Assets with active insurance policies are significantly easier to divest to institutional buyers later, as the risk profile is clearly defined and protected.

• Post-war Capital Uplift: Entry prices at this level will not be available for long after a peace settlement, especially given Ukraine’s EU trajectory.

  
  

1. Poland vs. Ukraine: Comparison Table

This auction starting price represents a 90% discount over a shopping centre of similar size (~10,000 sqm) in a Polish regional city:

Feature	Mykolaiv, Ukraine (Auction)	Regional Poland (e.g., Lublin/Szczecin)
Purchase Price	~$2.7M (UAH 103M)	$18M – $25M
Price per sqm	~$270 / sqm	$1,800 – $2,500 / sqm
Yield	15% – 25% (Estimated post-war)	6.5% – 8.0%
Construction Cost	$600 – $900 / sqm	$1,200 – $1,600 / sqm
War Insurance	4.0% – 6.0%	N/A (Standard risk)

2. Yields for retail assets in Poland

While large "prime" malls in Warsaw trade at 5-6% yields, regional assets in Poland are currently seeing a "yield expansion" due to higher interest rates. These figures are nevertheless 2 or 3x lower than similar assets in Ukraine.

• Retail Parks in Regional Cities (2025/26): Transactions are typically closing at yields of 7.5% to 8.5%.

• Recent Comparable: Small-to-mid-sized shopping centres in cities like Gdańsk or Wrocław are trading at approximately €2,000 - €2,200 per sqm ($2,150+).

• Lublin/Rzeszów: Smaller "convenience centres" are seeing prices around PLN 8,000–10,000 per sqm (~$2,000–$2,500).

3. Construction Cost Estimates (2026) for comparable assets Poland vs Ukraine

Costs have stabilized but remains higher in Poland due to EU labour and ESG (Environmental, Social, and Governance) requirements.

• Ukraine: Building costs for commercial retail are estimated at $600–$900 per sqm. While material costs have risen by 10-15% recently, labor remains significantly more affordable than in the EU.

• Poland: Professional commercial construction (BREEAM/LEED certified) costs roughly $1,200–$1,600 per sqm. High demand for specialized labor and strict energy-efficiency mandates drive these costs.

Working with Local Partners

Navigating a SETAM open market auction as a foreign entity requires more than just capital—it requires local expertise, legal due diligence, re-tenanting and active management.

At Staunton Partners, we provide:

• Auction Representation: We navigate the complex auction system on your behalf.

• Technical Due Diligence: Our team have developed several large retail centres in Eastern Europe

• Insurance Advisory: Connecting you with the specific providers offering Lloyds Market underwriting to ensure your asset is protected from day one.

• Asset Management: Post-acquisition strategies to ensure the property reaches its highest and best use.

  
  

The Bottom Line

The auction scheduled for February 5, 2026 represents an entry into a market at the ground floor, protected by modern insurance mechanisms; de-risking is driving new interest in regional hubs and high yield commercial real estate in Ukraine.

Contact Staunton Partners today to discuss our due diligence report on the Mykolaiv retail centre auction and explore how we can secure your stake in Ukraine’s recovery.