Spring has had a very favourable effect on the real estate market in Ukraine: the number of transactions is growing, the cost of a «square meter» of housing is close to last year’s value, and the level of domestic demand is really high. What is the reason for this? And at what price can you buy an apartment in Kyiv now? Nina Tarasenko, a broker-consultant, a member of ACNU (Association of Realtors of Ukraine), and co-owner of DodomU, told REALTING everything about this.

«If a year ago people were looking for apartments in Kyiv for up to $50,000, now we are talking about $80,000»

— Tell us about the situation in the Ukrainian property market? 

— The air-raid alarms are less frequent in Kyiv now, everything is blossoming and the city has been transformed. People are calming down more and more and, as a rule, deciding not to put their lives on hold. More and more people are coming back to Ukraine, some for business, some to visit relatives who have stayed here, and some because they just want to go home, — says Nina Tarasenko. — All this has an impact on the property market. Prices on the secondary market are rising for the second month in a row and have almost reached the level of early 2022. 

On the whole, the market is already formed and continues to live by its own laws. It is easy to understand how the prices for flats have increased: the demand of customers reacts sensitively to all market processes, and if a year ago people were looking for comfortable class flats in Kyiv at the maximum cost of up to $50,000, in half a year this level grew up to $60,000, and now it is about $70,000 and $80,000. However, people are not looking for flats in old buildings or prefabs, but in buildings completed in 2000 or later. So-called new buildings with finishing work are also popular. As a rule, buyers do not want to wait or do finishing work themselves, but to move into a finished apartment immediately.

This process is partly influenced by pent-up demand: people who were afraid to buy property six months or a year ago have now taken the plunge. The fact that the electricity situation has finally been resolved has also played a role. Just recently, Kyiv lived without electricity for 2-3 days, and that was really hard. Few people think about it, but almost nothing works without electricity in the modern world, including no water and no heating in homes, no mobile phone service at all. Imagine all this happening in winter, when the temperature outside is below zero and the homes have to be heated somehow. Generators were most often used to save the day, they were used to heat the apartments and keep all the offices running. 

But despite the situation, the property market still worked. We managed to make deals to buy and sell apartments, but mostly with loyal clients, who had worked with us before. With the arrival of spring, the power supply stabilized and March generally became a peak month in terms of the number of transactions.

The bottom line is that prices are already almost back to pre-war levels, and there is every indication that in the next six months or a year, the cost of housing will be higher than it was in 2022. I think in the near future we will see $100,000 or $150,000 for the comfort segment. I’d like to stress that we’re talking about the level of demand from buyers, because there are quite enough proposals in the market for higher prices.

As for the premium segment, it is much quieter. Spot deals are happening, and buyers are interested in really expensive properties in Kyiv, but there is no super activity. Just the other day I was showing clients a couple of million-dollar properties in the nearest suburbs of Kyiv. And Ukrainians from Dnieper or Kharkiv are interested in such properties.

— What is the real price of transactions in the end? For what price can I buy an apartment in Kyiv now?

— In Kyiv, you will not find the cost per square meter of housing below $1000 — $1100 now, in the suburbs it will be at least $800 per square meter. If we’re talking about more or less new apartments with finishings, the cost per square meter will be around $ 1500, and the apartment in the center now costs from $2000 per square meter (depending on the finishing, year of construction of the house, and location). There are proposals for $12,000 per square meter in the new residential complexes in the Pechersk and Shevchenko districts of Kyiv. But I have not had such deals recently. Among the properties I have sold this year, the maximum price per square meter was approximately $3,600.

As a result, an average two-bedroom apartment of about 50 square meters will cost about $50-55,000. For the same money you can buy a one-room apartment in good condition, but in the suburbs of Kyiv.

But you have to understand that, as I said, apartment prices in Kyiv are rising rapidly, but a lot depends on the situation on the front. We have announced a lot of housing loan programs from the banks, but not all of them have been fully launched yet. If all goes well, consumer demand will pick up even more, leading to a further increase in housing prices.

 

In February 2022, this apartment could be sold for $1,730/sq.m., then there were offers of no more than $1,000/sq.m. Today people are ready to pay $1600/sq.m. and I’m sure it will sell in that range in the near future

«It is the secondary market that is in great demand»

— Why are buyers now preferring the secondary market to the primary market? Are new developments no longer in demand?

— We cannot say that new buildings are no longer in demand. In 2022, we saw a large-scale relocation of people and companies from the eastern and southern regions of Ukraine to the central and western regions. Of course, this caused a surge in demand for real estate in the western parts of the country (Ivano-Frankivsk, Lviv, Khmelnytsky, and Transcarpathian regions). This demand also affected the activity of developers in the central and western regions, they started to build more and significantly increased the prices for new buildings. And this trend has generally continued: if we compare the price of a square meter of new construction here with last year’s figures, we see an almost twofold increase. 

It cannot be said, however, that such a jump in prices was caused by high demand alone. We should not forget the global trends of rising building material costs and rising labour costs — whatever you might say, the cost of building is rising.

On the other hand, buyers of apartments in Kyiv are now more likely to choose the secondary market. There are several reasons for this: 

  • People buy apartments not as an investment, but for themselves to live,
  • They do not want to wait for «better times», they want to live now,
  • Most construction projects are still on hold. Officially, about 50% of all construction sites in Ukraine have announced the resumption of construction, but in reality, my feeling is that no more than 20% are actually continuing construction. After all, many of the construction sites existed because of investments, and now the builders can only rely on receivables from shareholders, but these monthly installments are either not available or not enough. As a result, there are simply not enough funds to build quickly, and it becomes a vicious circle: developers cannot build because of low demand and a lack of new buyers, and those who want to buy a new building with a large deposit or 100 percent payment are few and far between because construction is too slow.

In summary, when people have money to buy property, their focus shifts to the secondary market. We are talking about the Kyiv property market. In the western part of Ukraine, demand in the primary market is quite high. There are usually no vacant apartments at the time of commissioning. And people buy apartments there as an investment.

— Is there an investment demand for property in Kyiv now?

— Yes, but not as active as it was a year and a half ago. Foreign investors have virtually disappeared from the market, everyone is waiting for the war to end, and until then they are not ready to return to the Ukrainian market.

Some of the investment property is being bought by Ukrainians themselves who, for various reasons, have accumulated «excess» hryvnia in their accounts. As a rule, these are businessmen with tens of millions of hryvnias in their accounts, which is very difficult to do anything. There are strict NBU (National Bank of Ukraine) restrictions on withdrawals, conversion into foreign currency, and withdrawals abroad, and confidence in bank deposits is not high. Therefore, one of the easiest ways to protect your money from devaluation and other financial risks is to buy a property that you can use (rent) today and sell later at a better price. Even though it is a risky investment, after all, everyone knows that any house can be destroyed. 

Another category of Ukrainians who suddenly have «surplus» hryvnia are the families of dead military personnel who have received compensation. People understand that they need to do something with the money they have been paid, and buying property is one of the easiest and most reliable options for them. 

As far as renting is concerned, there is quite a demand for it today, especially in the comfort class. It is quite difficult to find a good apartment at a reasonable price. This is another added advantage of the secondary market: apartments are rented and generate income almost immediately. 

To sum up, I can say that the Ukrainian property market has a huge potential for growth, so I am sure that the situation will improve and we will see new projects and new market players, as well as a new approach to the pricing of housing.

This studio apartment was rented in April 2023 for $526 per month in just one day on the market! Before the war, it cost $800 a month. And in 2022 its rental price was $260 a month.