Published on 17 October 2005 at 07:28 pm
Filed under: Europe:- Ukraine Property Guides » Ukraine Real Estate Investor’s Guide
Any investment made into the real estate sector in Ukraine should be considered long term; however the scope for profit and potential for investors is incredibly broad and the country is therefore worthy of careful consideration.
Fantastic investment opportunities exist in the residential, commercial and tourism sectors in Ukraine - particularly in Kiev and the Crimea - but restrictive legislation and emerging political and fiscal systems mean that the country is fairly high risk.
The Ukraine was formerly part of the Soviet Union and suffered sustained neglect and economic depression under Communist rule; complete independence came finally in 1991 with the dissolution of the USSR but Ukraine continued to struggle with the concept of true democracy and to suffer continued corruption until 2004 when Viktor Yushchenko was democratically elected.
Yushchenko has since sought to bring choice, free will and affluence to his people and his election was seen as a defining moment for the future of Ukraine. The election of Victor Yushchenko also brought increased overseas confidence to the Ukraine, and in terms of the financial fortunes of the country this has resulted in an increase in the levels of foreign investment being made particularly in the country’s capital of Kiev and along its stunning Black Sea coastline.
Therefore since Yushchenko’s election, economically things are beginning to look more positive for the Ukraine and the country boasted impressive GDP growth figures of 12% in 2004 which, when coupled with low inflation, increased overseas investment, growing investor confidence and an intensification of domestic demand points to a potentially positive future for the entire country which is being built on a solid framework of industrial output, the service industry and agriculture.
Concerns remain that the country is very susceptible to external shocks, it has inequality intrinsically structured into the taxation system and the changes necessary to reform the country completely are slow to happen - this is the reason why any investment made into the real estate sector in the Ukraine should be considered a long term bet as the best returns will only be made when the country has reformed sufficiently to attract sustained foreign direct investment and to be accepted internationally as a market economy and a country with solid political and economic systems free from corruption and inequality.
Having said that, those who invested into Kiev around eighteen months ago when the city was in the grip of a substantial renovation and modernization phase have seen capital growth in the region of 60% already on underlying investments made into the property sector. But local real estate experts admit that these levels of growth cannot be sustained long term but that the domestic and overseas interest in rental and even resale residential property in the popular capital city is and will remain strong.
The strength of demand from professionals, expatriates, tourists and students alike has led to substantial price rises particularly in the most fashionable districts of Kiev. As Kiev becomes ever more popular so the demand for accommodation will increase, furthermore domestic purchasing power is beginning to slowly improve opening up a long term resale prospect for property investors.
Those who wish to move away from the already established Kiev market have the whole of the rest of the Ukraine to explore! The country boasts beautiful countryside and rural communities untouched by the hands of time where one can step back a generation and truly escape from the modern world. Of intense interest currently is the coastline of the Crimea region (pictured) where affluent Russians once holidayed to enjoy the Mediterranean microclimate and where now substantial development of tourism accommodation and facilities is underway to attract both eastern and western Europeans and where it is predicted second homers and smaller investors seeking the latest sunshine emerging market will tap into an abundance of opportunity.
There’s no denying the fact that the Ukraine is geographically and architecturally an attractive prospect, furthermore its attraction will only lead to increases in visitor numbers and over the long term it may well become a strong second home destination. Domestically the people of the Ukraine are clamoring for opportunity and will form strong long-term real estate resale demand - therefore opportunity for a property investor in the Ukraine is intense but the immaturity of the country’s property market and its very recent inroads into democratic rule and economic advancement make it high risk.
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