Con­struc­tion boom leads to buyer’s mar­ket in Kyiv

Kyiv Post - - Business - BY BERMET TALANT [email protected]

Con­struc­tion of new apart­ments in Kyiv is boom­ing — with 20,700 built in the first six months alone this year, equal to the en­tire to­tal for 2016, ac­c­cord­ing to City De­vel­op­ment So­lu­tions, a real es­tate con­sult­ing agency.

But the new sup­ply is out­strip­ping de­mand, with many units go­ing un­sold as res­i­dents still lack pur­chas­ing power or credit. City util­i­ties, more­over, aren't keep­ing pace with the new con­struc­tion as well.

At the mo­ment, Kyiv has 56,100 un­sold flats in 252 new res­i­den­tial com­plexes. If de­vel­op­ment con­tin­ues at the cur­rent pace, that num­ber will grow to 70,000.

What de­vel­op­ers build

Most of the new flats, or 84 per­cent built, are clas­si­fied as "low­er­wer bud­get seg­ment." The rest is di­vided be­tween busi­ness class, 14 per­cent, and pre­mium class, ss, 2 per­cent.

One-room flats lead in the econ­omy seg­ment.

Although the ma­jor­i­tyy of new res­i­den­tial com- plexes are built on the right bank of the Dnipro River, de­vel­op­ers are build­ing out the left bank too — es­pe­cially in Dar­nit­sky, Holosi­ivsky y Dniprovsky dis­tricts.

Ro­man Gerasim­chuk, a con­sul­tant at City De­vel­op­ment So­lu­tions, utions, said Kyiv de­vel­op­ers are hav­ing aving such a hard time find­ing avail­ableil­able land plots that they are build­ing ing on for­mer in­dus­trial zones. Com­fort mfort Town res­i­den­tial com­plex, ad­ver­tised ver­tised as “Lit­tle Europe in Kyiv,” is on the site of Vul­can, a for­mer rub­ber er prod­ucts plant.

But the main lim­i­ta­tion on is in­fra­struc­ture. Many new apart­ment build­ings stand with­outut proper util­i­ties. and

“To some ex­tent prob­lems with elec­tric­ity, gas, hot wa­ter, or heat­ing ex­ist in all new build houses. The city’s pipe net­works can’t han­dle the load,” Gerasim­chuk ex­plained.

He said Kyiv needs to up­grade its util­ity net­works and pipelines, build new metro lines and pub­lic ameni­ties to keep up.

The pri­vate sec­tor is fill­ing in the gaps.

A clus­ter of a dozen new apart­ment buildigns is con­sid­ered to be a hous­ing es­tate, with de­vel­op­ers of­fer­ing su­per­mar­kets, health clinics and on-site kinder­gartens.

Is it worth in­vest­ing?

Kyi­vans and even for­eign­ers still view prop­erty as an in­vest­ment for re­sale or lease. Be­sides low prices com­pared to many Euro­pean

capi- tals, Ukraine has no or very low prop­erty taxes. While the sit­u­a­tion de­prives lo­cal gov­ern­ments of much-needed rev­enue, it's a boon to own­ers of res­i­den­tial real es­tate. The buyer's mar­ket has spurred dis­counts, lead­ing to in­creased de­mand for small, in­ex­pen­siveine ac­com­mo­da­tion. But sincesin April it’s been harder to find suchsu deals, which have fallen by 60-70 per­cent. Yaroslava Chapko, di­rec­tor of City De­vel­op­ment So­lu­tions, says that 92 per­cent of on­line searches are for flats costi cost­ing $30,000 or less. De­man De­mand is heavy for two-room apart­men apart­ments up to 50 square me­ters - con­sider con­sid­ered to be the most liq­uid. In some­som sec­tors, it's a seller's mar­ket. The la lack of new pre­mium class res­i­den­tia res­i­den­tial prop­erty has driven up prices as high as 17 per­cent in the last year i in Pech­ersk district. The pr price per square me­ter in the econ­omy class is Hr 14,000–24,000 com­pared to Hr 62,000 per square me­ter in the pre­mium seg­ment.

“This dis­crep­ancy in the vol­ume of sup­ply of new build apart­ments of econ­omy and pre­mium seg­ments will con­tinue grow­ing,” Gerasim­chuk said.

The strong de­mand for cheap prop­erty of­ten leads to sit­u­a­tions where the cus­tomers must in­vest in in­te­rior ren­o­va­tions them­selves.

An­a­lysts cal­cu­late that it would take 13.7 years to re­turn the in­vest­ment from rent­ing an econ­omy class flat bought for $20,000 and 16 years from rent­ing a busi­ness class flat. The av­er­age an­nual re­turn on in­vest­ment from prop­erty re­sale is es­ti­mated 9.4 per­cent.

Ne New res­i­den­tial apart­ment com­plexes con­structed by In­ter­gal Bud stand on Kyiv’s left bank on May 17. (Oleg Pe­tra­siuk)

Newspapers in English

Newspapers from Ukraine

© PressReader. All rights reserved.