The primary housing market in Kiev is overloaded with over 76,000 brand new apartments that have been built since the beginning of 2011. This puts pressure on prices, which keep going down for both primary and secondary real estate in the Ukrainian capital. And right now apartments in Ukraine are rather cheap.
No buyers for new flats
A recent study conducted by analysts of the property website Address.ua in collaboration with ARPA Real Estate reveals that in the first half of 2017 over 20 thousand new residential units were released in Kiev. However, only 1,110 sales contracts of sale went through over the same period, Finance.ua reported.
It means that over 19,000 newly released units remained unsold in the first 6 months of 2017. The number of unsold flats since the beginning of 2011 is astounding: Today there are over 76.5 thousand brand-new residential units for sale on the market.
At the same time, a severe decline in sales rates has been recorded in the country since April 2017. Therefore, it is expected that the marketplace in the capital of Ukraine will become filled with more and more newly-built unsold flats.
Apartment prices crisis
Experts believe that it will take at least 3 years (at the current sales rates) to sell all the 21 thousand new flats built in 2017. Not to mention more than 30,000 idle flats in new buildings that remain unsold to this day.
There is also the factor of speculative demand: 30-35% of the apartments were purchased at early stages of development at reduced prices and are now put on the market by owners, who never intended to move in. This means the supply exceeds the demand by over 10 times.
Yaroslava Chapko, MA Group Executive, feels that there is a constant struggle between developers and buyers: “On one hand, there are these standardized blocks of flats that promise ‘good life’, on the other – customers who have less and less money”. Chapko believes that it is the buyer who will eventually begin to set the marketplace trends. As of now, most developers continue to build new apartments, unconcerned of the market demand.
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The explanation for this is simple, money laundering product of the sale of drugs and mafia rents. When you continue to build buildings without anyone buying them, you need to invest the dirty money in so-called decorous activities in order to “clean” it. They do not really need to sell them, just justify the investment.
tunapma,
You are in Panama, so your view of the world is somewhat distorted. Ukraine is far from South America and its problems with mafia or drugs. You don’t even understand the real estate market in Kiev. For instance, do you know that new apartments are sold unfinished, i.e. empty concrete shells? No floor coverings, no wall paint, no built ins. It’s like doing a subdivision and selling blocks of land: low upkeep costs, but no ability to rent out the flats. And of course, all these projects were conceived pre-2014, which changed the economic landscape.
In Ukraine’s case the developing boom was created by two factors. That a western backed regime change would integration into the EU and open up Ukraine to the European market, ant two the influx of debt based capital flooding in from the IMF.
is there a good english realtor to help buy a home in Kiev or Moscow?
Aaron,
There should be some good realtors who offer service to English speaking clients. One man I know bought and still owns a unit in Kiev. New apartments are sold by developers directly. Second hand properties are sold though real estate agents.
Elena – I am not a fan of these new apartments – & yes I have been to Kiev. They remind me of Soviet-era housing (ugly huge square buildings). I would much rather take a floor in an old building downtown and rebuild it – but I don’t see many of those, even on the Kiev RE websites. Can you recommend any RE websites in Kiev that might be a better resource for that kind of apartment?
Timoteo,
Personally, I am not in “how to buy real estate in Ukraine” theme 🙂 You probably need to go there and do your own research. One of my girlfriends owns 3 apartments in the historical centre of Kiev, which used to be over USD$100,000 each, but now lost over 50% of their value, she rents them out. I think it may be possible to find what you are looking for, as some people simply have to sell and can’t (won’t) wait for prices to bounce back.