How High Property Yields In Ukraine Make It A Hidden Gem For Investors

kiev ukraine skyline with clouds
The real estate market in Ukraine remains overlooked among investors in favor of other Western European markets. A recent price creep, however, indicates that the area may be one of the most up-and-coming markets in 2022.

Ukraine’s real estate sector remains overlooked among investors in favor of other markets in Western Europe. An increase in home prices, however, indicates a reversal of this trend.

The Ministry for Communities and Territories Development’s data showed a steady rise in the country’s average housing prices from 2017 to 2021.

In Kyiv, median home prices rose to almost UAH 29,000 per square meter in March 2021 from UAH 22,000 per square meter in June 2017. The growth rate represented an estimated 30% increase.

Construction costs in the capital and elsewhere in the country have also increased during the same period. The National Bank of Ukraine (NBU) cited renewed vigor in mortgage lending as one of the key reasons behind the rising demand for homes.

i love kiev building in ukraine

Residential properties in Ukraine have stayed at affordable prices while other markets in Western Europe have seen housing prices spike.

Why Ukraine Is A Hidden Gem For Investors

Even by historical standards, the NBU still views equal growth between home prices and household income.

In other words, residential properties in Ukraine have stayed at affordable prices. Current market rates show that $500,000 would be enough to buy real estate in the prime segment.

The affordability—coupled with double-digit price appreciation—particularly makes Kyiv an unexplored market among luxury property investors.

The NBU also predicted a contracted supply of new homes in the foreseeable future. The forecast shortage would further drive an increase in prices, due to a continually robust mortgage-lending activity.

Secondary home purchases account for most of the recent spike in mortgages. Mortgages for primary home purchases seem less popular among banks, which can be attributed to a lack of regulation in the primary housing market.

wood chalet in the countryside in ukraine

For investors, standalone houses are just one of the many bright spots in Ukraine’s property market.

Standalone houses, though, aren’t the only bright spots in Ukraine’s real estate market.

For example, an investor has seen a 19% yield as of March 2021 for a three-story penthouse in Kyiv’s city center. The investor paid $1,250 per square meter for the property.

In terms of commercial investments, the NBU attributed a persistently slow demand because of Covid-19’s impact.

Ukraine intends to spur more commercial real estate investments through a new investment policy: the Law on State Support of Investment Projects with Significant Investments.

Ultra-high-net-worth individuals (UHNWI) can expect Ukraine to cover up to 30% of an investment worth more than EUR 20 million (US $22.6 million).

Among eligible investments include properties for recreational, resort and tourism purposes. The law requires each project’s implementation to last within five years.

dock leading onto a pond surrounded by tall grass in ukraine

When buying a parcel of land for development, one must firest verify the allowable usage with the Land Cadastre.

Due Diligence On Buying Luxury Property In Ukraine

Due diligence remains the first step for luxury property buyers, especially for resale apartments and houses.

Ukraine introduced reforms in 2013 that have made it easier to verify a property’s liens and rights. Once a property is recorded in the state register, you’ll see several details:

  • Ownership rights
  • Mortgage information
  • Lease information (if applicable)
  • Tax pledges

Luxury property buyers must inquire with the relevant registration authority in Ukraine if a property became registered before 2010.

While a bilingual broker can take care of verifying records, it still helps to know the basic process of due diligence on real estate in Ukraine.

ukraine skyline and bridge crossing over water

Things to know: Luxury property buyers must inquire with the relevant registration authority in Ukraine if a property became registered before 2010.

Self-awareness also becomes useful in avoiding potential legal disputes with property acquisitions. The Register of Court Rulings allows you to submit an online form (Ukrainian version) and check existing cases related to the property.

If you’re buying a parcel of land for development, you must verify the allowable usage in the Land Cadastre.

There’s a small fee to extract information from the registers. Some service providers charge EUR 113 for online extracted information. You’ll pay approximately EUR 42 for translating the details.

In summary, Ukraine’s State Register stores data related to property rights. The Land Cadastre keeps geospatial information about real estate in the country.

Click here to find your local brokerage for your next luxury property purchase in Europe.

Author

Randolf Santos has covered different segments of the real estate industry since 2014. He worked at S&P Global Market Intelligence before joining Forbes Global Properties as a contributor. You can reach him at [email protected]

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