At the beginning of June 2021, Israel hosted a large-scale forum bringing together major players in the real estate market. The focus of the event was mainly on the local market, while investment projects in other countries were discussed less.
However, according to the PwC report “Real Estate 2020: Building the Future" these are the developing countries and fast-growing cities that will be the main growth points of the global real estate market in the coming years. Ukraine and its capital, as well as its key regional centers are a good example of those.
Steady Upward Trends
Ukraine, much like the rest of the world, sees a continuous increase in urban population. While in 1989 66.7% of Ukrainians lived in cities, by 2019 this figure went up to 71.1%. This trend persists in the country’s largest cities where most economic resources are concentrated: Kyiv, Dnipro, Lviv, Odesa, and Kharkiv. They also lead in the development of innovative industries with high-income populations.
All this increases the demand for real estate, resulting in prices going up every year. This is both for buying and renting. Thus, despite the difficulties associated with the pandemic, in 2020-2021, real estate prices in key regional centers of the country grew by 4-18% in hryvnia and up to 12% in dollar equivalent. As the country emerges from quarantine restrictions, the growth will only accelerate.
“Today, Israeli investors are already investing in foreign real estate: Romania, Bulgaria, and now Georgia attract them with affordable prices and fast returns. Ukraine's potential in Israel was talked about a lot on the sidelines of the event, and I know of local developers buying real estate in Kyiv as individuals, but they don’t seem to be ready to build here yet. That’s why Israeli-Ukrainian Alliance and its strategic partner Quattrhouse visited the Real Estate Summit to help them rediscover Ukraine as a promising and risk-free destination,” says Anna Zharova, CEO of IUAlliance.
Transparency and Overcoming Stereotypes
With the numbers like this, Ukraine’s real estate market should have long been a go-to for Israeli investors, but it is not the case yet. Among the key barriers to investing in local properties potential buyers cite too much red tape; risks of investing in a project that will not be completed; lack of transparency and corrupted developers. Although most of these might have been true about 10 years ago, the situation has drastically changed since then.
Ukraine’s real estate market have been seeing lots of positive changes in the recent years largely attributed to:
● introduction of new legal requirements for the disclosure of company beneficiaries
● open access to information about developers
● increased transaction transparency thanks to electronic document flow
All this allowed the market to get rid of unscrupulous players, and to help those remaining to do their work better. At the same time, the state seriously simplified the conditions for investors and put more effort in protecting their interests.
That said, it is still much better to work with the partners who are guaranteed to deliver best quality results. One such example is a full-service investment management consultancy Quattrhouse. Founded by Israelis, the agency has long worked exclusively with investors from this country, where, as they say, trust is valued more than money. Now, they have expanded to serve clients from other countries, but they still swear by the trust-first approach.
“With Ukrainian market, you don’t even have to be here to invest, everything can be done remotely, starting from picking a property and doing all the paperwork to us actually managing it on your behalf. This is the kind of situation where after starting to work with us our clients don’t have the urge to go on looking for better deals or services, because they immediately know that it is the way it should be done. That’s why we’re in long-term relations with most of our clients," says Diana Tskhakaia, managing partner of Quattrhouse.
Ukrainian Real Estate More Profitable Than Israeli?
Recent years’ figures confirm that investing in real estate in Ukraine can be even more efficient than in Israel: it takes way less time to return the investment and start making a profit. The average return on rental properties in Ukraine is 8-10%, and if sold, it can earn you upwards of 10 to 40% to its original price.
Another thing to take note of: in Ukraine, properties start to sell at earlier construction stages while the construction only takes an average of 1.5-2 years to finish. Such construction speeds, although unlikely in Europe and Israel, are made possible in Ukraine thanks to highly intense market and liberal legislation. When it comes to construction quality, there are no compromises made as both business or premium level properties meet all the international standards.
Growth of new property prices in 2020
Average return on rental properties
Average profit from selling the property
10-40% depending on the class and construction stage
10-20% depending on location and time of purchase
1% on purchase
No tax if it’s a first apartment, and then going up to 3.5%, 5%, 8%, and 10% (increasing in increments with each apartment you buy after the first one)
5 years and more
Low taxes are another thing to consider: when buying real estate, foreign investors will pay only 1%. In fact, everything is shaping up in favor of investors who will act fast and act now. Prices are not yet inflated, while the barriers are gone. All that remains is to find the right project and draw up a detailed business plan.
It's Time to Buy
An additional advantage of investing in Ukrainian real estate is an ability to do everything remotely. For this, however, you will need a reliable local partner.
Quattrhouse has been helping international investors successfully earn money on real estate in Ukraine for several years now. Depending on what the client’s needs are, their team can offer a range of formats and approaches to meet them. For example, let's take a look at two real cases for two properties located in the popular Podil district in Kyiv.
Apartment for daily rent
Apartment for office rent
Monthly Service Fee
Now, the market is going through a growth and recovery phase caused in part by a catch-up demand following the pandemic. At the same time, prices have not yet risen too high, and new constructions are popping up quite often. The country is moments away from opening up, and there’s plenty of profits up for grabs for those willing to look into local property investment opportunities right now.