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:

1. Consumer prices are 62% lower in Kyiv
2. Restaurant prices are 71% lower in Kyiv
3. Groceries are 64% lower in Kyiv
4. 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:

1. Tel Aviv, center: 5%*1,012,970=$50,648.50 a year.
2. Tel Aviv, out of center: 5%*691,390=$34,569.50 a year.
3. 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.
4. 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.

Conclusion

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.