S1 properties

Investments

 

In all real estate sectors there are great opportunities for investments in Ukraine. In several ways the real estate market resembles the developments in Russia but with a certain time lag. In the commercial sector there is a significant lack of quality office space, retail space, logistical centers, hotels etc. The residential sector has shown rapid price increases and a boom in new construction sites but the quality of construction is still relatively poor (quantity over quality).

 

Patience is vital in the process of obtaining the right documents

 

 

 

In general it can be stated that the economy is growing steadily and that the foreign direct investment is growing. In the real estate market we see more international organizations starting up their business in Ukraine such as international retail chains like Metro, Auchan and Ikea. The Orange revolution has clearly contributed to this boost but it should not be overlooked that the upward trend already started during the 2^nd term under former president Kuchma.

 

The focus of most real estate activities are in and around Kiev but the main cities of the regions like Donesk, Jalta, Odessa among others are also showing increased levels of (foreign) investment.

The increase of foreign investment into the property market is mainly due to the following factors:

• Large potential of Ukraine as a European oriented developing market with over 45 million consumers.
• Gradually lower returns and consolidated risk return ratios in the new EU member States such as Hungary, Czech Republic and Poland.
• Low returns and saturation in the West-European property markets.

 

The commercial real estate market in Kiev is growing fast though the real boom still has to come. Substantial numbers of projects are in planning phase. We are regularly receiving requests from clients to find buildings before renovation in areas around the city centre to purchase. The purpose is to turn the building into office space or a multi tenant residential buildings. Podol is a preferred location for such projects. If one drives through the streets of Podol which is very close to the city centre there are many sites for such projects visible. But before all details are worked out and the project can start patience becomes a virtue.

  

The residential market has been influenced by similar characteristics which have occurred earlier in Moscow:

 

• Everyone with money in this country invests in property. There is hardly a solid alternative. Though the banking system is proven to develop gradually, banks are often not trusted for long term deposits

 

Cottage settlements are high in demand though little supply

 

 

 

• The majority of people lives in poor conditions and has a strong wish for improvement
• The government is pushing to get a proper mortgage system in place. Special programs are set up for starters on the buying market. The developments are positive but the term and conditions of mortgages are still very tough to meet
• The centre of Kiev which is often used as a benchmark for price developments is fairly small. With a growing economy, limited choice and too little quality projects coming up the prices keep rising and so do the rental rates.

 

 

There is a great lack of modern logistic centres. The focus of developers is present but most of the projects are still in planning phase

 

 

 

There is a great variety of projects that one can invest in. Whether one participates in investing in residential, commercial, existing, newly build, under construction etc, the risk/return ratios are often in balance. To outperform the market and to minimize the downside risk level of your investment we advise you to use solid and trustworthy partners like S1.

 

For more information please contact our office at 278.2251

 

 

 

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