London VS Kyiv: Comparing Two Capitals To Define, Which Is A Better Investment

London has been one of the most expensive capitals to rent a house or apartment to reside in, no matter short or long term. However, in 2021 and in several upcoming years, the margins of earnings compared to the cost of real estate objects (which is ROI) stay low, being on the lower spectrum of the 1-digit figure. At the same time, Kyiv is a high-pacing city, which overtakes the banner of one of the most attractive places on Earth for investments.

Quick features of real estate listings Ukraine

Ukraine carries a heavy legacy of the USSR (and will be until 2100, probably). It affects the features of the market, so you can’t just come here and copy-paste a working property investment strategy from one of the Western countries. Let’s briefly overview, what’s going on in real estate listings Ukraine:

1. High investment returns. According to the latest available data, the average monthly price growth of all residential property in Ukraine is around 10% in 2021. It makes it 120% a year. Impressive, huh? Secondary-market 2-bedroom apartments cost $860 on average in Ukraine (for 1 sq. m), showing about $1,780 price for 1 sq. m in Kyiv, the capital. At the same time, the rent of the same object is $10.2 per 1 sq.m. on average in Ukraine and $14.7 in Kyiv. For a 70-meter apt. in Kyiv, the annual ROI would be 9.91% before taxes (with a range coming up to 15% on separate occasions). For Ukraine, it’s calculated as 14.23%. In London, the annual average ROI is currently just 3.5%.
2. Bank financing of property purchases is expensive and unavailable to foreigners, so you should come to the local market with a full lump of investment money.
3. Renovations are almost always required. Despite the fact of increasing footage of new real estate, the market is still flooded with USSR-old objects in bad condition.
4. Landlord-friendly local market. A tenant in Ukraine has nearly no rights and never goes to court for whatever reason. If you would like to evict some bad tenant, nothing prevents you – even law – to throw them out on the street immediately with all their belongings and children.
5. Low adjacent costs of buying and owning. You don’t pay landlord tax in Ukraine when owning a property of 60 sq. m of total area and below. Also, to officialize the purchase of a property, you most often pay 2% of its cost only + agent commission, which is never greater than 5%.
6. Exclusive living premises are rare and may spring up the costs of renting them 3-5 times, which plays in your favor. Make an apartment look in the best trends of Europe (like sun-lit colorful space) and you’ll immediately jump on a significantly higher rental income stair.
7. Rules for foreign buyers and landlords are nearly the same as for locals and taxation is frankly low.

Profitability of real estate listings Ukraine

As you’ve read in 1) point above, the rental ROI in Kyiv is 9.9% at least (14.2% in Ukraine). That’s in addition to increasing costs of real estate as appreciation. That does not include your taxes since it’s a topic for a separate article and we’ve already covered it in several previous blog posts. Going for the lowest taxation, you pay slim to none – just about 0.6%-1% of the total gross earnings. This makes your yearly pure income at least 8.9%. By adding appreciation, your capital gain per year is over 100% in 2021-2022 (considering the previous 15 years in Ukraine, apartments for rent in Kyiv bring not lesser than +25% annual ROI + appreciation).

London is nothing like Kyiv real estate prices

In London, the average annual ROI is about 3.5%. Looking at the latest price index (for August 2021), we get London’s average cost of 1 object as £635,585 ($871,378). The annum profitability is $30,498/£22,245 (or $2,541/£1,853 a month). The same numbers for the UK in total are £337,371 ($462,530) to purchase and $1,349/£984 a month to earn on rent (before taxes).

Earnings in London vs in Kyiv

Now, for the sake of delivering the full picture, let’s calculate the profitability of the similar offers in both capitals, London and Kyiv.

By buying a single object in London for £635,585, you earn £22,245 a year. Spending the same cost to buy the same objects in Kyiv, you get several cheap apartments in Kyiv. Considering one object to be $124,600/£90,833, you can acquire 7 of them for 0.63 million pounds! Given the annual ROI in Kyiv, you get £62,947/£86,299 a year. That’s 3.88 times more than you would earn in London!

Conclusion on Kyiv property for sale

Math doesn’t lie. Kyiv real estate for sale and rent is able to bring investors about 3.9 times more income than it would in London. So if you’re an expert in rental premises and know the tricks and risks, simply apply them for Kyiv to gain more from doing the same.