2007 Outlook for Property in Ukraine

The Ukrainian real estate market is definitely worthy of consideration for international property investors seeking longer term investment assets; and 2007 will be a good year for market entry.  Although the best bargains to be had in the capital city of Kiev are long sold, there are plenty of alternative markets to explore.

Our 2007 outlook for property in Ukraine is divided up into four target angles for an investor to consider – you have the travel and tourism market, the residential market and both office and retail sectors on the commercial side of things to consider for the best chances of securing attractive rental yields as well as locking in to long term capital growth.

Travel and Tourism Demand for Property in Ukraine

The beautiful and largely unspoilt Crimean Peninsula in Southern Ukraine has been a hotspot for Ukrainian and Russian travel and tourism focus for generations and today its popularity is increasing among a wider international audience. 

The peninsula is home to stunning beaches, amazing historic architecture, it has a temperate climate and it already has an active property market.  Locations such as Yalta are particularly popular and the town has seen property prices rising consistently and strongly for the past few years but still prices are largely affordable. 

An investor can consider buying to let to the tourism market with property management companies in abundance offering a well priced service – alternatives include renovating stock for resale to the growing numbers of affluent Ukrainians and Russians seeking holiday homes in this part of Ukraine. 

Yields from well located property stock let over the short term during the summer season are good.  As the popularity of the destination rises and, according to the World Travel and Tourism Council more visitors will be arriving annually between 2007 and 2016, it is highly likely that real estate held long term will return an investor an attractive increase on original investment.

Those seeking lesser explored locations with growing tourism potential could look east and consider port towns such as Mariupol or Berdyansk where there is demand locally in the spring, summer and autumn and increasing Russian focus.  Both towns have an abundance of attractions from health spas to historical architecture as well as being sea fronted and offering typical seaside charm.  Investments made in these locations will require a lower outlay initially but a longer investment commitment.

The Residential Property Market in Ukraine

In Kiev there is currently a surfeit of demand and a shortage of supply of quality property stock and this has caused prices to rise dramatically and rental rates chargeable to go through the roof.  Land prices have risen threefold in certain parts of the city in just 18 months and there are more skyscraper projects being considered now as a result.  The latest to be announced is the Mirax Plaza, a 44 storey multi purpose development consisting of 381 apartments, a business centre, a recreation zone and restaurant.

In the short term we believe the Kiev market to be overpriced but many local agents and experts believe that prices are going to continue to rise with no indications currently suggesting a crash or even stagnation of prices in the near future.  For this reason Kiev could well be a good market to consider for residential investment especially for buying to let or buying off plan in the latest developments for resale upon completion to an awaiting market which favours brand new property stock.  But an investor really needs to get a feel for the market on a month by month basis before making a move.

A great alternative for residential property investment is Odessa – it is enjoying significant infrastructure investment and foreign direct investment is inward flowing in many sectors.  The city offers sea services to the likes of Istanbul and it is also becoming a favourite location for holiday makers seeking an accessible destination with massive charm.  The local population is increasing as the appeal of the city increases and job opportunities are created, and Odessa could be one of the markets for a slightly shorter term turnaround of an investor’s commitment with short to medium term gains likely to be attractive.

The Commercial Property Market in Ukraine – Retail and Office

Grade A office space in central Kiev is in short supply – which is why developers are now rapidly seeking permission for the construction of alternative space just outside of the main city centre areas…while market demand is awaiting this supply to reach completion there’s plenty of opportunity for larger investors to acquire lower grade space in need of investment and improvement or to buy into existing stock or invest in forthcoming development projects.  Basically as the economic fortunes of Ukraine develop and the government continues its focus on attracting sustainable foreign direct investment into the business environment, so demand for quality office space particularly in Kiev will continue to surge.

The other commercial property sector to look at is definitely retail – there is a serious undersupply per head of retail space when you compare the whole of the Ukraine to any European nation for example, and international retailers have realised this as have local developers and they are all now trying to cash in on the consistent double digit growth in retail spending that is being witnessed in the Ukraine annually.  Three new mega-malls are under construction with the majority of development focus centred on Kiev, Odessa and Lviv giving an investor a broad range of opportunities to explore in Ukraine.

Ukraine is going through a period of rapid growth, development and expansion, its economic fortunes are flourishing and inward investment is strong…all indications are for a continuation of the rise in fortunes of the nation and as a result it is highly likely that well thought out and located property investments made today will reap an investor strong returns over the medium to long term.

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.