Published on 08 December 2005 at 04:10 pm
Filed under: Europe:- Ukraine Property Guides » Ukraine Property Investment Potential
Since the Ukraine’s economy was officially accepted as a market economy in 2005 the pace of reform and growth in the country has upped a gear and property investor interest particularly in Kiev has grown substantially.
The property investment potential for investors in Ukraine is likely to be substantial and impressive over the long term and all the short term economic and political indicators point to sustainability.
Currently the real estate market in much of the country is in its absolute infancy and for this reason alone short term profits from capital growth are unrealistic as are strong rental yields. Outside of Kiev an investor is likely to be pioneering and targeting mainly the domestic market for rental income. As local purchasing power in Ukraine is relatively low at the moment large profits will be unlikely.
In Kiev however property investors are already reaping impressive yields and enjoying strong capital growth and it is in Kiev that current property investment potential exists in abundance. In the last five years Kiev has enjoyed a surprising economic upswing with privatization of many apartment buildings and retail outlets creating investment opportunity and resulting in a freer flowing economy, job openings, greater domestic wealth and a general competitive feeling that promotes potential profitability.
Before proceeding any further and examining the potential for profits and gains in Kiev it is essential to highlight some of the problems international property investors can face when buying property in Ukraine.
Corruption, lack of regulations, lack of controls and lack of respect for an individual’s rights as well as an insecure legal framework for enforcing personal property rights means that buying property in Ukraine is most certainly not without potential headaches, stresses and problems.
The most important advice that can be given to an investor is secure the services of an independent and qualified lawyer, create a good working relationship with a trusted real estate agent and be very careful that what you’re buying has been well built or properly renovated. If you heed this advice and make all decisions carefully and based upon factual evidence your investments and transactions stand the best chance of being successful.
There’s an abundance of historic and architecturally beautiful property available for sale in Kiev and indeed Ukraine as a whole. This type of property is often in need of extensive renovation and refurbishment and presents an investor with a unique opportunity to dedicate part of a portfolio to the recreation of some of the country’s finest architectural gems that in the longer term will be some of the country’s most attractive properties for resale or even rent. This is an area that an investor would need to commit substantial funds and a long period of time to but an area that is relatively unique in real estate investment terms and one that could return unrivalled levels of profitability.
Slightly less ambitious but altogether realistic opportunities include purchasing already renovated apartments for rental to the local or growing expat population in Kiev or buying brand new properties preconstruction and selling on or letting out upon completion. Investors buying already renovated property must ensure that any structural changes to the property have been done properly because there are well documented reports of impressive building work actually bringing down entire buildings in Kiev.
In terms of its property market the Ukraine is definitely emerging and therefore comes with all the usual problems associated with a fledgling and immature market. But emerging markets also bring unrivalled potential for substantial profits and often present the best investment opportunities for the longer term...in this way Ukraine is certainly no exception.
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