Buying Ukraine Property

For every single country covered by AmberLamb we always aim to provide property investors with as much insight into the property investment prospects of a given nation as possible so that those considering a particular market can quickly gauge whether or not it’s worth investigating further as a location which could fulfill their specific investment objectives.  For those international real estate investors considering buying Ukraine property it’s been difficult in recent months to keep up with the analysis of events that may affect an investor’s decisions, but these are our latest thoughts on the property market in Ukraine and the economic factors that investors should consider and further review before making a commitment to buying Ukraine property.

The government of the Ukraine has released the country’s foreign direct investment inflow figures for the first quarter of 2006 and they make for very positive reading.  According to the figures the year on year increase from 2005 to 2006 went from 2.7% to 12.5% with FDI reaching almost the 1 billion US dollar mark by March 2006.  These figures and analysis of the factors drawing FDI, such as the acquisition of various Ukraine based banks by international financial institutions, has subsequently led to the announcement by Kiev based Dragon Capital Investment Bank that FDI inflows in Ukraine could top 4 billion US dollars by the end of the year. 

On the one hand this appears to be incredibly positive data that suggests that investor confidence in the Ukraine is riding high and further suggests that property investors can take courage from these figures.  However, in the case of Ukraine this substantial increase in foreign direct investment does not appear to be exactly indicative of a short term increase in confidence in the country’s economy nor does it appear to show that the Ukraine has achieved an investment breakthrough. 

According to the opinions of the director of Ukraine’s Institute for Privatization, Property and Investment Management, overseas investors are buying into the Ukraine rather than investing into it.  This fact together with the news that the Ukraine’s GDP growth has slowed down substantially since 2004 suggests that anyone looking for short term capital appreciation of real estate assets, high liquidity in the property market in Ukraine and even a blanket increase in demand for real estate should be reassessing their goals or looking elsewhere for property for sale.

It’s not all doom and gloom in the Ukraine however; according to our research those international investors buying Ukraine property are committing to the commercial property investment market at the moment, they are looking to hold assets for the long term, they’re not expecting much movement before the end of 2007 and they are excited about the long term economic prospects for the whole of the Ukraine.

Supporting these investors’ ambitions for investment property in Ukraine are a number of factors.  The Ukraine office of Savant, which is an international company specialising in project and cost management for the construction industry has witnessed a very strong increase in the numbers of international investors from both Western and Eastern Europe committing to the commercial real estate sector in Ukraine.  Furthermore companies such as Honda Motor Co. have conducted extensive economic research in Ukraine and are predicting that purchasing power in the Ukraine will increase so substantially over the next five years that the numbers of cars sold in the country will double in the same period.  They are so sure of their research that they have built a brand new sales subsidiary in Ukraine to gear up for the expected boom in the car market.

Currently in Ukraine there is extensive building work under construction in the commercial property industry.  The main industry sectors witnessing substantial growth according to the TEKT group, which is a Ukrainian based construction company, and Colliers International Ukraine are Grade A and B office space, Grade A warehousing and logistics centres and retail space.  The growth in the retail sector is one of particular interest to those thinking about buying Ukraine property for investment purposes because the retail industry is expecting a significant increase in sales from 2007 onwards as local disposable household incomes rise. 

If household incomes do rise as predicted then this will likely be as a result of the overall Ukrainian economy stabilising and strengthening and this will mean that the Ukraine becomes an exciting and emerging market in which all types of investors will want to invest.  The feeling in the construction industry is that the amount of construction underway in Ukraine, while substantial, will not actually be enough to meet the gradually increasing demand of international companies looking to enter the Ukraine market in various sectors of the economy.

In the meantime the overall feeling seems to be that those investors buying Ukraine property right now may be into making bleeding edge investments but are most likely positioning themselves for the positive economic future of the Ukraine. 

Special Reports: Property News for Ukraine

Ukraine Property Investment Potential
Ukraine's property market is in its infancy and this presents the property investor with both surprising challenges and strong potential

Ukraine Property Buying Guide
The real estate market in Ukraine offers great potential but is immature and a potential investor must proceed cautiously

Ukraine Real Estate Investor’s Guide
Property investment opportunities in Ukraine are plentiful but investment into the real estate sector should be considered long term.