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Real Estate Property Investment Series: Focus Ukraine 2007

Land and real estate prices in the Ukraine have been creeping up consistently in recent years with record growth recorded in the capital Kiev in the last two years alone. Basically the government are doing all they can to act as a bridge between Western and Eastern Europe and the Commonwealth of Independent States and they are also making it incredibly attractive for foreign investment to enter the Ukraine.

There are free trade zones in place, taxation incentives and decent legal protection for businesses and individuals who bring investment and jobs to the Ukraine and so the economy is doing especially well, GDP is creeping up and there is a new breed of middle class, middle income local citizens fuelling a period of property market expansion and for international property investors there are opportunities in both the residential and commercial real estate market sectors.

Residential Property Market Opportunity in Ukraine

Property investors can choose to target the growing travel and tourism market or they can look to local demand for rental and resale real estate if their interest is residential property in Ukraine.

In terms of the travel and tourism market there is established demand from Ukrainian and Russian visitors on the Crimean Peninsula – particularly in locations such as Yalta which has decent infrastructure already and attractive tourism facilities. The rental season is long in these sheltered Crimea resorts with the short term yields achievable very good indeed.

Although recent price increases have driven up the cost of buying investment property in the Crimea and reduced yield accordingly, land and real estate is still largely affordable and can return an investor decent immediate income and consistent long term appreciation.

According to the World Travel and Tourism Council the number of international visitors likely to begin exploring Ukraine will increase between 2007 and 2016 with the Crimean Peninsula a likely location for an increase in tourism traffic – alternative emerging locations for target include Berdyansk and Mariupol which are closer to the Ukraine’s borders with Russia.

In terms of local residential demand then Kiev is certainly t Invest in Ukraine he initial location that an investor will consider. Demand is surging ahead of supply and affordability is increasing but the rate at which property prices and rental rates chargeable have been increasing has led to suggestions that the market has already overshot realistic gains…there is certainly still money to be made in Kiev but a short term focus is not wise. The best alternative at the moment is Odessa which is an attractive city, it is also growing as a tourism centre, it has an established free trade zone attracting strong inward investment and as a result its population is being boosted by migration of locals from outer lying areas who seek jobs and accommodation.

Investors can buy to let or purchase run down stock for renovation and resale.

Commercial Property Market Opportunity in Ukraine

The two sectors of the commercial property market that offer an investor the best potential for growth and leasing yields are grade A office and retail.

Grade A office space is increasingly in demand and rising in demand in line with the amount of inward investment coming to the Ukraine. This demand is especially intense in central Kiev and is leading to an investor’s potential client base looking outside the city centre limits for alternatives. There are a number of projects in the planning stages and a few have broken ground so an investor can get in early – alternatives include buying up substandard stock and investing in its improvement before leasing it to the awaiting market.

In terms of retail – well, Ukraine has a shortage of retail space per capita when the nation is compared with any other European country and this has drawn strong focus already from many international companies seeking a market with huge room for expansion. The best bet for an investor is getting access to funds targeting this sector to alleviate massive capital outlay or simply buying single units in malls for leasing for example. It’s an expensive sector to get a foothold in but it is one likely to reap an investor substantial reward over the medium to long term.

All in all the best way to describe property investment potential in Ukraine in 2007 is massive opportunity for long term gains in a broad range of property sectors.

 

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