Sport Life Group

“Expenses on construction of fitness premises would pay off in 3-5 years”

July 27, 2017

Promotion of healthy lifestyles encourages investors to invest in construction of sports complexes and SPA-centres. A property expert, manager and owner of fitness clubs network proves such investment is more profitable than investments in shopping centres, entertainment complexes and precious metals.

The participants of the retail property segment note a decrease in demand of solvent population. Although the market shows a growth of shopping capacity: for example, about 156.7 thousand sq. m. were put into operation in Kyiv last year. This is the highest index in the history. This record is connected first of all with the entrance of shopping centres into the market the construction of which was postponed for several years.

This means an investment in the purchase of premises for shopping facilities has a number of challenges. First, about 30% of space could be vacant. Second, the lease holders can terminate agreements and search of new and preparation of premises to meet their requirements takes at least 2-3 months. So, an owner shall have to look for special ways to attract and keep clients: lower rent rate, fix exchange rate or receive payment in hryvnia. Some offset costs for repair or are ready to get a percentage of turnover from a lease holder. This often brings business return to nothing or threatens with losses.

Against the background of high risks associated with the purchase of square metres for shopping facilities the investments in opening of fitness centres are more attractive.

Viktor Oborskyi, head of strategic consulting department in UTG:

— Today there are numerous examples when unclaimed spaces in shopping centres are rented for fitness clubs. Cost effectiveness could be different for building owners and depends upon many factors: space, rent rate, expenses for interior finishing. By the way, an issue of finishing is particularly relevant for a lease holder. He wants to get a ready turn-key object. But in any case if there are premises unclaimed for a long time, it’s better to give them for fitness centre. It would attract 500 persons a day on the average. As a rule, people with average or above the average income.

Nowadays the fitness industry shows a strong growth potential even under conditions of economic instability.

Anhelina Derevleva, marketing and sales director in the residential complex RiverStone:

— Fitness centre, gym, rooms for group classes at the territory of residential complex or within walking distance is one of the competitive advantages. The same could be said about business centres where fitness clubs have already become an obligatory condition. However, to understand whether it’s profitable to open a fitness centre you should understand location, conception, marketing and business plan. These tasks are often in power of network operators of fitness industry. It’s they who are ready to provide a wide range of services at reasonable prices and stay afloat even during difficult times.

Dmytro Yekimov, founder of the group of companies Sport Life:

— Opening of fitness club pays off in Europe in two-three years, in Ukraine — in five-six. This is difficult business, but it would always be in-demand, and most importantly — bears fruit at minimum risks. This can’t be said about other segments which are attractive for investment at first sight. Sport Life is the operator of fitness services, and service is less exposed to fluctuation in exchange rates, more focused on hryvnia. It not as much depends upon dollar equivalent in its activity as opposed to retailers.

There are many favourable factors for fitness industry development in Ukraine now. The main is an interest of potential clients. Today it is fashionable to go to fitness clubs, do sports and be careful of health. In addition, an entry threshold in this business is low, it’s also not difficult to find premises of almost any space at reasonable prices. According to the experts on condition of long-term contracts and minimum investments in repair and adaptation of premises and when they are rented by network operator, expenses on construction of these premises would pay off already in 3-5 years. This means a benefit from such cooperation for development business is clear.