2021-10-02

Invest In Property In Kyiv

3 Reasons To Invest In Property In Kyiv And Available Ways Of Doing It In 2021

Kyiv real estate market is strong in 2021. The same strong, as expected, it will enter 2022. As the lockdown waves show, Kyiv doesn’t follow trends of the most influential economies of the world – when another lockdown happens, the prices for square meters here grow, not fall.

Even with many idle periods for the past 15 years of annual publically available statistics for the capital’s real estate prices, the general surplus to the real estate price from 2006 to 2021 is +430%. It makes an average yearly increase equal to an amazing +28.7%! That is a very alluring number for any sane investor, who is thinking for 1 or 2 decades in the future. As it becomes immediately obvious for a seasoned investor, even without deep digging into the numbers in other countries of a developed and developing world (excluding chasing-ups), it is 3-5 times bigger than any country shows! Below, we are looking at the last news from the National Bank of Ukraine (local Central Bank), which recently published its economic overview and predictions.

Overview of the reasons why Kyiv is an appealing investment place

The main factor in the economic recovery is the growth of domestic demand and citizens’ expenses – general expenditures for regular consumption increased by 17.4% compared to the same period of 2020. Ukraine’s GDP growth in the second quarter of 2021 was 5.7%. This is due to the stable domestic demand, an increase in investment activity, as well as a low comparison base of the previous year.

Strong consumer demand was supported by high rates of wage growth due to the revival of economic activity after the series of smaller crises, an increase in the minimum wage (January 2021), a revision of wages in the healthcare and education industries, and extra payments to local doctors. There is also a slight increase in pensions in 2021 and a recalculation of pensions for working pensioners.

The low comparison base also played an important role: last year’s second quarter saw the most stringent quarantine restrictions in effect. The National Bank sees the continuation of economic recovery in the third and fourth quarters, even despite the recently announced ‘national-wide yellow zone of quarantine’ that would last until December 31, 2021.

The improvement of the situation in the labor market is added by the further revival of general investment activity (internal and from abroad). There is a favorable external environment of a global economic recovery thanks to widespread vaccination, massive incentives, and growing optimism, which Ukraine also shares. The NBU sees rapid reinvigoration of the situations in retail, transport, agriculture, and some other industries.

Consecutively, the NBU’s prediction for the economic performance by the end of the year expressed in GDP growth is +4.1% annual.

These factors push the prices for apartments and houses for sale in Ukraine further up, where they expect to continue with a strong ascending trend in 2022. Thus, even after taxation, in most sectors of Kyiv’s real estate, the annual income is still bigger than 15% annual.

Below, we are considering available options of investments for foreigners and locals.

Option 1 of investing. Kyiv Ukraine apartments

Buying an apartment directly is far the best option in Kyiv and other cities with over 1 million citizens today. Unlike other European cities, there are slim to none options of detached residential homes in the capital of Ukraine available for regular citizens and reasonable investors – they are concentrated outside Kyiv, encircling the city with residential satellites that grow like mushrooms after rain. Thus, nearly 100% of offers in Kyiv are apartments in many-story buildings. While it was quite possible to buy 4 years ago something decent among 2-bedroom apts. for $40,000, in October 2021, the same would cost twice as much.

Thus, you gain in the direct cost of the owned real estate. But if you additionally let this place for rent, this might bring you around $15.2 per 1 square meter of the area of 2-bedroom apts. ($12.8 for 1 sq. m. in a 1-bedroom place and around $26.3 for the same in 3 and 3+ bedroom options). That is $988 of before-tax monthly income from renting a 2-bedroom place (considering 65 sq. m. (700 sq. f.) of average footage) – that’s roughly 15% annual ROI before taxes.

Option 2. Rent apartment Kyiv in the form of a managed rented place

There are options of co-ownership of various hotels, apart-hotels, and furnished apartments in Kyiv, which offer flowing or firmly established yearly income options. As a rule, taking part in such business pools is possible by buying at least 1 apartment. Then it is run by professional managers, who take care of the entire process: managing dwellers and vacation rate levels, paying for fixes, upgrades, and utility bills, making advertising, paying taxes, and handling other chores.

However, thanks to such a “turnkey” approach, you get a significantly humbler income, which could be three-four times lower than in the previous options, like, 3%-5% annual ROI.

Option 3. Ukraine real estate fund

While not quite widespread yet in Ukraine due to complicated legislation and fear of local people to invest in a financial instrument that they don’t know finely, real estate funds clearly exist. They offer to buy their shares while forwarding the collected money into the financing of various objects:

  • buying existing objects for renovation to rent or flip in the future
  • investing in objects on the stage of construction (when the price is usually the lowest but the risks are higher)
  • taking part in the turnkey managed offers (usually, in those, which promise a stable yearly income no matter what)
  • investing in shares of other funds
  • putting the money to the bank deposits (even though their current profitability is significantly worse than it was during 2005-2017, they offer a guaranteed yearly fixed income, which attracts many people and businesses in Ukraine).

Invest in apartment: conclusion on opportunities in Kyiv, Ukraine

You might already follow the golden rule of an investor: diversification. If not, we advise investing in all three instruments described in the article, creating a well-balanced portfolio. But even if you only pick number 1, your annual average income will still be high, consisting of two parts: income from rent and from appreciation.

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More about DGY

DGY is a real estate investment and property management company. Our experts have an impressive experience in turning businessmen into smart real estate investors. We collect limitless opportunities throughout the world’s best real estate markets and help our clients implement the best deals. We take care of all due diligence and customize documentation while your income grows. We also provide you with property management services so you can forget about the tiresome maintenance of several objects and entrust this process to professionals.

Investment advice and recommendations

DGY is an investment company that takes care of every client and helps them become successful investors. With the help of an investment experience and a well-thought plan, we will help you examine the market, choose a strategy specifically for you or your business, and calculate future costs to start making money with real estate investment.

Property management

In order to invest in real estate, you should consider how you will run your management in Ukraine. DGY will help you eliminate all possible pitfalls at an early stage as a personal project manager will be assigned to your case. They will assist you in choosing the project according to all required objectives.

Property Renovation

DGY Investments takes care not only of purchasing property but also renovating an existing one. With the help of a thorough plan and estimating, we will thoroughly prepare a property for sale. Our professionals evaluate an investment property and create a strategy that includes the costs for renovation, possible taxes, fluctuations on the market, etc. Therefore, our clients are able to resell the renovated properties in Ukraine with more than 15-20% profit from the initial price.

Paperwork

Before our clients decide to deal with real estate investing, they consult with our experts concerning details such as the necessary documents needed to purchase a property and successfully run all the processes connected to it.
Therefore, if you are eager to invest in Ukraine, it’s essential to have all the paperwork done correctly, and that’s the moment when our team of experts takes care of this step. DGY Investments helps investors buy real estate property, manage the paperwork, start preparing relevant documents for purchasing realty in Ukraine, and close the deal successfully.

Real estate investment opportunities in Ukraine

When an investor decides to invest in real estate in Ukraine, the most affordable way to attain stable passive income is through buying residential real estate. Investors can expect to receive a regular monthly payment from their tenants at a fixed monthly amount, unaffected by inflation or other unforeseen circumstances. The amount of rental income will vary depending on the size, type of property and location. For example, buying an apartment in Ukraine’s capital Kyiv is beneficial to investors due to offering a large working population, central location and affordable prices. Hence, the minimum price of renting a decent one-bedroom apartment in Shevchenkivskyi District will be around $1000 per month in 2021, followed by Pecherskyi District with a cost of $850 per month. Besides, investing in real estate in Ukraine annually brings clever investors up to 15% of yield, attracting many business people every year.

Properties for investments in Ukraine

Ukraine has a giant sector for real estate investing. Businessmen who come there all over the world often choose between investing in residential and commercial properties. The main advantage of buying property in Ukraine is the affordability of prices on the houses and apartments. For instance, if you invest in real estate in a historical district, a luxurious apartment will cost you around $80k only.

How to invest in Ukrainian Real Estate

In order to invest in Ukrainian real estate, you should take into account a list of crucial factors. The first one is to choose what kind of realty you are going to invest in: residential or commercial. It is vital as it should comply with Ukrainian real estate law. The second tip is to identify the purpose of purchase in order to make a strategy for the property. For instance, you may purchase the property for your own use or buy it for lease. The next step is to calculate the taxes and what kinds of taxes are payable during the purchase, owning, or selling. Also, to invest in real estate properly, you should keep in mind currency control rules in Ukraine to sell a property and get a higher profit.

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