UKRAINIAN REAL ESTATE

VIP Kyiv real estate guide

Ukrainian luxury property remains a sound investment but market research is essential

Prestige real estate developments offer interesting investment opportunities in all of Ukraine's major cities but thorough research is advised
Tim Louzonis
Wednesday, 30 March 2016 00:15

In English-speaking countries we usually use the term ‘luxury apartments’ to describe exclusive and expensive flats. Here in Kyiv as in other parts of the former Soviet Union, ‘elite housing’ is the preferred expression among locals with money (and those who wish they had more of it). No matter which phrase we choose, both terms are commonly used by developers to promise high quality design and materials, deluxe amenities, comfort, and a prestigious address to would-be buyers. But how many new and recently-built luxury apartment projects in Kyiv deliver on this promise? Whether you’re unfamiliar with Kyiv’s housing market and considering buying a luxury-class investment property, or just curious about how Kyiv’s other half lives, here are some things you should know about this market.

 

Elite Kyiv apartments: home team rules

Unlike prime properties in London or New York, Kyiv’s elite apartments are bought as investments overwhelmingly by local buyers. This historical tendency has determined the types of housing products that get developed, how they are marketed, and their sale prices. Architectural styles, design and building materials have tended to reflect local tastes rather than global best practices. It is true that notions of luxury and quality are rising and that local buyers in Ukraine are becoming more sophisticated. However, just a handful of elite developments in Kyiv utilize the services of foreign architects and global design firms. And despite their high sale prices, luxury apartments in Kyiv are often not well-marketed digitally. For example, many project websites can be primitive and don’t always have English versions. This may seem surprising in a country that is teeming with IT talent, but as we’ve written before, real estate is the most trusted asset class among Ukrainians at all income levels, and this is especially true for the affluent and well-off. So word of mouth, adverts in glossy journals, and billboards are sufficient to reach local buyers.

 

Buy a shell, build a home

If you are unfamiliar with buying property in Ukraine, you should know almost all new apartments - even in elite complexes - are sold completely unrenovated as ‘shell and core.’ So a buyer is completely responsible for organizing design, materials and craftsmen to renovate his new flat. This also means that as a resident in a new building, you could be treated to the sounds of your neighbour’s renovations for several months or even a few years. In Ukraine, it’s not unheard of for a neighbour’s renovation to be left incomplete due to lack of funds for a few years. It is also not uncommon to find unrenovated ‘shell and core’ apartments in buildings several years after many residents have moved in. The unrenovated apartments were purchased as investments and they can be easier to sell in this condition.

We know of one luxury development in Kyiv that offers buyers the option to buy an elite apartment with ‘full fit-out’ in partnership with a famous local designer. This same project also offers ‘white box’ apartments - a buyer would need to lay down floors, paint walls, add lighting fixtures, and organize the full renovation of the kitchen and bathrooms. However, these options are rarely offered by developers on Ukraine’s market.

Luxury apartment complexes in Kyiv tend to include all of the standard features and amenities that we would associate with such properties in emerging markets, such as high-speed elevators, 24-hour concierge service and security, small fitness and spa areas, child care services, water filtration systems, and parking garages. Many newer elite properties also have independent heating systems so residents are not dependent on Kyiv’s central heating system.  Most newer elite buildings now have adequate service elevators and entrances, but this is definitely worth checking when researching properties, especially if you are considering buying a unit in an older or less expensive building. While reserved parking spaces are often sold separately, not all elite buildings have sufficient parking for all building residents. Often these complexes have less than 1.5 spaces per unit, and for some complexes this figure is closer to 1.2 per unit.

 

Neighborhoods and infrastrustructure

Most of Kyiv’s new and newer luxury high rises and low rises are located in the city’s central districts of Pechersk, Shevchenko, Podil, and Holosiiv. Some of these developments offer views of the city’s larger parks such Mariyinsky Park, Fomin Botanical Garden and Holosiivskiy Park, while others feature views of the Dnipro River. While Kyiv does feature some new and recently-built luxury complexes in prestigious neighborhoods such as Pechersky Lipky, it is worth noting that not all elite buildings have elite surroundings and locations. Some luxury apartment complexes sit on small lots and/or face less prestigious properties, especially at lower levels, where your windows can offer views of rather ordinary-looking Soviet-era buildings and apartment blocks.

While Kyiv’s best neighborhoods like Pechersky Lipki and parts of Shevchenko raion are close to fine restaurants and entertainment venues, they are not especially close to large supermarkets. And few elite buildings are located near top international schools, which tend to be outside Kyiv’s city centre. And as any Londoner or New Yorker could also probably tell you, when you buy a luxury apartment in Kyiv, you could find yourself with ‘interesting’ neighbours when it comes to the provenance of their wealth.

 

Prices and purchasing

Despite prices being lower than their peak in 2007-2008, demand for elite housing in Kyiv remains high and apartments in many new developments tend to sell out relatively quickly. Compared with other housing segments in Kyiv, the elite segment certainly seems to be recovering faster. New luxury developments continue as sales prices remain well above construction costs, so it is no wonder that new projects seem to spring up like mushrooms after the rain. As we’ve noted in previous articles, Kyiv has a housing deficit - the city has less than half the average living space per person as the EU average.  New housing developments in Kyiv usually rely upon pre-commission sales, not pre-construction sales for project financing. Bank financing does not play a large role for developers or homebuyers. So there’s very little risk that Kyiv will experience an Asian-style housing bubble any time soon.

In addition to new developments, many opportunities to buy exist in the fragmented secondary market for luxury apartments in Kyiv. Here individual sellers rarely opt to work with brokers on an exclusive basis, and you can find a huge range of asking prices and conflicting information that can confound locals and long-time expats, let alone someone who is new to this market.  The trick is finding a motivated seller amidst all of the ‘noise’ on the market.

Because few developers of elite apartments in Kyiv offer full renovation by professional designers, the design of many renovated luxury apartments that are for sale on the secondary market may not appeal to foreign buyer tastes, and generally we recommend that a foreign buyer opt for a shell and core, which is often possible on the secondary market.

 

Looking ahead

Can a foreign buyer find investment-grade luxury apartments in Kyiv? For sure. However, the housing search, due diligence, and buying processes won’t be as straightforward as in the West or even as in many emerging markets - and you’ll find yourself sifting through a lot of information and misinformation and squishy price data before you find a worthwhile investment opportunity.

 

About the author: Tim Louzonis (This email address is being protected from spambots. You need JavaScript enabled to view it.) is a co-founder of AIM Realty Kiev, a real estate agency that specializes in real estate for foreign expats. Tim is a long-time expat with Ukrainian roots; he first came to Ukraine as an exchange student in 1993 and returned in 2008

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