Tel Aviv vs Kyiv: Comparing The Cost Of Living And Investing In The Two Capitals
If you’re in the midst of the process of deciding, where to invest, this article could be helpful. In it, we’re looking at the cost of living in the countries of Israel and Ukraine, specifically, in their capitals, Tel Aviv and Kyiv. We also consider, what prices do the capitals have on real estate to calculate the potential profits.
Let’s begin with finding out is Tel Aviv expensive. To make it simple, we submit all numbers in USD.
Cost of living in Israel’s Tel Aviv
According to the Cost Of Living Index (as of September 2021), at a scale from 1 to 100 points, Tel Aviv has 92.85 points while Kyiv has 34.91. The closer to 100 – the more expensive it is to live in the city. Just for reference: New York is taken as 100 and other cities have such points:
- Prague: 51.32
- Sydney: 82.64
- London: 86.28
- Berlin: 69.70.
The monthly rent of a 1-bedroom apartment in the city center of Tel Aviv is $1,605, outside the center is $1,224. Same for a 3-bedroom place are $2,825 and $2,056. The price for 1 square meter of real estate to buy it is $14,471 in the center and $9,877 outside. An average mortgage rate in a bank is 3.68% (20-year fixed).
To have a meal in an inexpensive restaurant for 1 person, you’d spend $21.88. In a mid-range one – $46.89.
Cost of living in Kyiv, Ukraine
Now, the same numbers for the cost of living in Ukraine, Kyiv:
- The monthly rent of a 1-bedroom apartment in the city center is $607, outside the center is $371. The same for a 3-bedroom place are $1,172 and $652.
- The price for 1 square meter of real estate to buy it is $2,285 in the center and $1,076 outside.
- An average mortgage rate in a bank is 14.35% (20-year fixed).
- To have a meal in an inexpensive restaurant for 1 person, you’d spend $6.95. In a mid-range one –$15.02.
Ukraine average income vs Israel average income
A real monthly salary that’s gotten by one average employee (after income tax and other taxes) in Tel Aviv is $3,034. In Ukraine – $658 (-78%). The mortgage interest rate in Kyiv is 290% more expensive than in Tel Aviv. To buy an average 70-sq. m apartment for the real monthly salary after tax, one needs to spend:
- In Kyiv: 243 months for one in a city center and 115 months outside the city center
- In Tel Aviv: 334 months for one in a city center and 228 months outside the city center.
That does not consider the cost of bank financing.
Generally, if you have to maintain the same level of life in Tel Aviv as you would have for $2,000 in Kyiv, you’d need to have $5,375 (+269%). Although this number is very much affected by the cost of renting and buying real estate, there are other articles of monthly expenses, which are not that dramatically higher:
- Consumer prices are 62% lower in Kyiv
- Restaurant prices are 71% lower in Kyiv
- Groceries are 64% lower in Kyiv
- Local purchasing power is also lower in Kyiv by 42%.
Tel Aviv vs. Kyiv: investment opportunities
Now let’s see what are the possibilities for real estate investments in both capitals. For the comparison, we’re taking the same prices as we’ve looked at above, for a 70-meter apartment in a center and outside of it. In Tel Aviv, it costs as of September 2021 $1,012,970 and $691,390 respectively. In Kyiv, the same are $159,950 and $75,320.
Depending on the location and condition of an apartment, it is possible to earn from 2.5% to 5% annual rental ROI in Tel Aviv. The same for Kyiv is 9.9% on average (although there is a wide list of objects, which could deliver up to 15% or even 20%). Let’s now calculate even the best outcome for Tel Aviv (5% annum income) and more realistic 9.9% for Kyiv. The numbers are:
- Tel Aviv, center: 5%*1,012,970=$50,648.50 a year.
- Tel Aviv, out of center: 5%*691,390=$34,569.50 a year.
- Kyiv, center: 9.9%*159,950*(number of apartments you buy for Tel Aviv’s price of the ones in the center, which is 6)=$95,010.30 a year.
- Kyiv, out of center: 9.9%*75,320*(number of apartments you buy for Tel Aviv’s price of the ones outside the center, which is 9)=$67,110.12 a year.
Certainly, if you take other estimations of profitability, like, 2.7% for Tel Aviv and 20% for Kyiv, the difference will be dramatically bigger. But even if we stick with a pessimistic comparison, Kyiv is more profitable than Tel Aviv by 1.88 times for objects in the center and by 1.94 times for ones outside the city center.
The cost of living in both capitals is tremendously different. By all estimations, the cost of living in Ukraine is about 60%-70% cheaper than in Tel Aviv. Kyiv gives significantly higher ROI for the same level of investment, which is at least 88%-94% more appealing. Although real-life fluctuations will pertain, for nearly twice better ROI, you should enter the market of Ukraine, not Israel.
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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.
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.
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.
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 $85k 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.