Real estate market in Ukraine during the War time in 2023. Latest news
Real estate is one of those niches that suffered the most from the war. This market can be divided into two parts. There is real estate as construction, as development; and there is real estate as an investment – you buy it to rent it out.
Lease property market in Ukraine
If we are talking specifically about the rental market, then now in cities that are further from the war zone, prices have increased. For example, in Vinnitsa, Khmelnitsky and further to the west of Ukraine, where many migrants arrived. Those investors who had apartments as a rental investment in their portfolio were able to increase returns because demand increased. For example, we saw that in the first days of the war it was generally difficult to find apartments for rent.
In Kyiv, the price of rent has fallen by 20-50% since the beginning of the war, also for obvious reasons. But, despite this, everyone who has real estate in Ukraine and uses this tool as an investment, on the whole, feels the market quite well now and is satisfied with their investment.
Real estate in Ukraine: not all developers handed over their projects
Now many developers have suspended construction. Part of the developers did not hand over their projects, and only those who had a financial reserve completed the new buildings that had begun before the war.
Our development company had a project for four Town House in Vinnitsa, where before the war we managed to build only the first floor. When the war started, we paused for literally a month. During this time, quite a lot of internally displaced persons moved to the city. That is why we continued building.
We completed everything and now there are ready-made objects, but, unfortunately, there are difficulties with the sale. We use various platforms: both our sales and realtors, and we connect bonus systems. People come, but the only thing we hear is: “A magnificent object, but we will wait and see how things will go on in the country in order to make some decisions.” Of course, people are afraid to buy their own housing, because it is not clear what the situation will be like in the future. Those who can leave choose to buy property abroad.
There are people who still buy real estate in Ukraine, although there are quite a few of them. According to Opendatabot, last year the real estate market fell by about three times. For 9 months of 2022, notaries certified 224 thousand real estate contracts. This is 2.7 times less than the year before – for the corresponding period of 2021, notaries recorded 598 thousand contracts.
Price trends in the real estate industry in Ukraine
Prices have risen, but not critically much. There is a rise in the cost of building materials from abroad due to rising fuel prices and because of the dollar. However, products produced on the domestic market, such as bricks or foam blocks, remained in approximately the same price range. Perhaps the prices have risen quite a bit due to inflation.
How Ukrainian developers feel in 2023
Now the majority of developers are completing the construction of those objects that they took before the war, and do not work with new ones. There are developers who work with the state, they are already starting to rebuild something.
We had big plans for 2022 and then 2023. We wanted to build a cottage town, but the circumstances made their own adjustments.
“I know for sure that after the war the demand for real estate will be great. Everything that we have now built and that is just standing will be a good investment after the war. The one who can endure and the one who can wait wins.”
How should investors and entrepreneurs behave in 2023?
It is necessary to divide investments into categories. For example, there are investors who invest at the stage of excavation. When the property is completed, they sell it. They make money on what they invested in a square meter when it was cheaper, and then resold it already at the stage of completion. This is a risky story, because here you need to choose the right developer and have absolute trust in him. You need to be sure that the developer who started this construction will definitely complete it.
If we are talking about investing in real estate for further leasing, then, of course, it is worth doing it. But I emphasize that you should buy housing in the western regions, where there are many internally displaced persons.
I communicate with people who have their own apartments and they rent them out. It is easy to rent an apartment with a quality repair. For example, in Vinnitsa before the war, a good apartment at an adequate market price was “taken away” in a week – a maximum of two.
The functioning of the Ukrainian real estate market after the war
After the end of the war, we will definitely see the revival of this market, it will develop very quickly.
Recently, the government introduced a number of measures to stimulate the market, such as reducing the tax for developers and providing incentives to potential buyers. These measures have led to an increase in the availability of financing for potential buyers and an increase in the number of transactions taking place in the market.
The market is expected to benefit from the influx of foreign investment. This is due to the strategic geographical location of the country, which makes it attractive to foreign investors. The government is actively encouraging foreign investment in the country, which is expected to further develop the market in the near future.
In general, the stability of the situation in the country, the availability of financing and the development of infrastructure are likely to be significant factors in determining the future of the real estate market in Ukraine.
Advices to Ukrainian real estate investors
Given the current market situation, investors should be careful when investing in the Ukrainian real estate market. Investors should take the time to do thorough research. You should focus on low-risk investments such as buying property rather than investing in new property development.
Investors should also pay close attention to the availability of funding as this can have a significant impact on the number of transactions taking place in the market. Investors should take the time to study the government’s plans for infrastructure development in the country, as this could have a significant impact on the future of the market.
I would like to emphasize that developers must finish building their facilities in any case. Now the market may be cleared. Companies that built on loans and human contributions may suspend their construction. I have already seen this personally. This is not good for their reputation in the future. Those developers who are now able to survive and complete their projects will be in demand and have a great business reputation in the future. In development, this is quite an important factor.
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