Property in Ukraine is Booming

Thanks to the Ukraine’s strategic position, it’s recent record economic growth rates, the nation’s commitment to the improvement of legislative framework for businesses and the huge internal scope for economic expansion, foreign investor interest in the Ukraine remains intense. 

According to some like Jacek Kedzior who’s a partner at the Tax Advisory Unit at Ernst and Young in Ukraine, those who are considering market entry but who are not yet committed risk leaving it too late because both commercial and residential property in Ukraine is booming…

Why Invest in Ukraine?

Without question there are many reasons to invest in Ukraine; the nation is strategically located bridging the divide between the Commonwealth of Independent States, Eastern Europe and the European Union, it has a population of fifty million citizens eager and willing to work, to learn, to spend and to embrace capitalism, the country is independent, economically stable, labour resources are strong, economical and qualified and there is a housing deficit. 

Add to this a construction deficit, increasing residential and commercial property prices which are being driven up by demand, a population keen to rent but eager for interest rates to drop so they can buy, and a retail sector that US consulting company A.T. Kearny places in the top five in the world in terms of prospective growth and you have a country that is so hot right now for international property investor interest.

Retail Property Market Potential in Ukraine

Starting with the retail market – it was already underdeveloped for the size of the nation when consumer spending activity began surging ahead following on from five consecutive years of double digit economic expansion.  Leading European retailers such as Germany’s Metro Group and France’s Auchan Group seized upon the opportunity going begging in Ukraine and began establishing a presence largely centred around Kiev and in the past twelve months Metro has doubled its already impressive Ukraine profits proving that there is substantial room for expansion in this market still.

Indeed, today the chasm between demand and supply is ongoing and it has resulted in mega consumer and construction activity across the country.  Malls are going up, retail space is being developed and as quick as centres reach the final construction phases all but a few units are being snapped up by domestic and international retailers keen to have a presence with which to attract the hungry population!

Retail business across the Ukraine has been witnessing double digit growth rates for the past few consecutive years, three new mega malls are in the planning stages for construction by 2010 in Kiev, Odessa and Lviv with construction on the latter’s mall expected to break ground next year for completion in 2008.  The Leopolis mall as it will be called, will also incorporate a hypermarket, cinema, bowling alley and skating rink proving just how keen the Ukraine population is to enjoy its new found, slowly but surely increasing personal wealth.

Ukraine Residential Property Market Activity

Moving on to the residential market – a housing deficit and a construction sector restricted by high material costs and an environment not currently conducive for business expansion means that Ukrainians looking for properties have to spend more and more to buy and to rent. 

Demand exists but supply is limited with the vice president of the Union of Real Estate Specialists of Ukraine predicting that the demand is ten times greater than the supply in Kiev alone for example.  Naturally enough apartment prices in Kiev have gone through the roof with the median price now topping USD 1,500 per square meter for just an average apartment in the city with prices predicted to keep ramping up for at least the next three years - last month alone Kiev property specialists Kyiv Zhytlo-Invest announced that their own findings pointed to between an 8.6% and a 9.5% increase in property prices in the preceding two months in Kiev.

Property investors already priced out of Kiev are quickly entering other popular town and city markets across Ukraine where demand is also increasing all the time as more and more citizens move from the country to the cities to work. 

The Commercial Property Market in Ukraine

This is also the case in the commercial property market with cities such as Kharkiv or Odessa offering property investors greater opportunity to reap higher returns for example as established businesses look to expand and new international commercial interest in Ukraine looks to alternative areas of the nation where there still exists an opportunity to tap into the affordable and educated, hard working local labour force but where prices for commercial premises are still affordable.

In conclusion – property in Ukraine is booming and Ukraine is currently a country of great opportunity, but an investor keen to examine the market must look at the sustainability of demand and the sustainability of local affordability relating to any investment that they are about to make.

Special Reports: Property News for Ukraine

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

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