The stable popularity of real estate among investors in Ukraine is confirmed by outstanding results over the past year. In 2021, housing prices in Kyiv increased up to 30%, and in the regions — from 10% to 30% in dollar terms. According to Julia Kuznetsova, Head of Consulting at NAI Ukraine, «residential real estate remains the most understandable instrument for investment, despite certain steps to simplify investments in other assets, such as stocks, bonds or cryptocurrency, and fluctuations in the stock market. There is a constant price growth, and the cost per square meter of housing in Kiev varies within $1.2-1.3 thousand». In the secondary market there is also a price increase of up to 10%.
This opinion is shared by the managing director of Colliers Ukraine, Alexander Nosachenko: «Institutional investors today consider real estate as the best option for capital preservation, especially in the segment of commercial real estate, which is conservative and stable compared to other sectors of the economy.
At the same time, investors of different levels and goals are investing in real estate. For beginners or small investors, purchases of office space in class B and C business centers are popular. For example, purchasing cubicle systems or multiple cubicles to rent out. This is distinguished by the simplicity and clarity of the investment, as the servicing company of the business center takes care of routine maintenance issues of the premises, which makes the investment as comfortable as possible. The average investment of such investors is about $100 thousand.
Large investors, in their turn, focus on larger objects. For example, in the segment of warehouse premises — the larger the area, the lower the entry threshold for investment. The area of more than 100 thousand square meters can start from $20 per 1 square meter, and with the area of 1.5-2 thousand square meters the price will be about $300 per 1 square meter. m. The average cost per 1 sq. m is about $100.
Business centers are also popular, and large investors are ready to buy them in their entirety for the amount from $10 to $30 million.
According to Denis Drozdov, a specialist in selling assets of insolvent banks and an investment broker, small investors often prefer to start with small purchases, such as office space in business centers. For example, a few cubicles that can be rented out. This is a relatively easy way of investing, as the maintenance company takes care of the routine maintenance of the premises, which reduces the worry of the investment.
maintenance of the premises, which reduces worries and risks for the investor. Office cubicle systems and converted apartments on the first floors in busy neighborhoods are also in demand. Drozdov notes that recently there have been a lot of requests from IT employees from Kharkiv, Lviv and other regions who want to buy such real estate at auction. However, in Kyiv, premises on the basement floor or first floor in poor condition are usually in demand.
After buying such real estate, investors usually ask the maintenance company to organize repairs and then deal with all the issues of rent. This allows to receive passive income from such investments. The average investment of such investors is from $100 thousand.
The warehouse segment is also in demand. The larger the warehouse area, the more affordable the investment becomes. For example, in a large warehouse complex of more than 100 thousand square meters the price can start from $20 per 1 square meter. m. If the area is 1.5-2 thousand square meters, the price per 1 square meter will be about $300. m. The average price per 1 sq. m is about $100.
The warehouse segment is also in demand. The larger the warehouse area, the more affordable the investment becomes. For example, in a large warehouse complex of more than 100 thousand square meters, the price can start from $20 per 1 square meter. m. If the area is 1.5-2 thousand square meters, the price per 1 square meter will be about $300. m. The average price per 1 sq. m is about $100.
Business centers also attract the attention of large investors, and they are ready to buy them in their entirety for amounts from $10 to $30 million.
As for the profitability of real estate investments, Dmitry Churin, director of the analytical department of Eavex Capital Investment Company, points out that the purchase of residential real estate for rent can bring a yield of about 8% per annum. In addition, we can expect an average increase in the price of residential real estate at the level of 20% to 40% over the next five years due to general inflation.
However, it should be remembered that investing in properties under construction may come with risks such as delayed commissioning or builder-related issues. Therefore, it is important to carefully assess all the risks and choose a reliable developer when it comes to investing in real estate under construction.
Investing in real estate remains an attractive way to grow capital in Ukraine. Regardless of the level of the investor and the chosen real estate segment, this type of investment offers a variety of opportunities to generate returns and preserve capital. However, as with any investment, it is important to conduct detailed analysis and make informed decisions to achieve the desired results.