INVESTING IN UKRAINIAN REAL ESTATE

UKRAINIAN REAL ESTATE: Kyiv property market district-by-district guide for investors

Essential overview of where to live in Ukraine’s capital city and where to invest in property purchases

UNIAN
Tim Louzonis
Friday, 05 February 2016 00:27

In our real estate practice we are frequently approached by investors interested in Kyiv’s residential real estate market. These investors are usually seeking aggressive annual rental returns of 10% or more of a property’s purchase price. We advise them that such returns will require finding and renovating a ‘fixer-upper’ or buying and renovating a ‘shell and core’ (unrenovated apartment unit) in a new building. In Kyiv, properties that are already in a suitable condition for tenants and that would support 10%+ annual returns are practically unavailable on the market.

Deals are harder to come by in new buildings in prime locations in Kyiv, primarily because these buildings are in greater demand among local buyers (who tend to be less fixated on investment returns). While as the owner of a renovated apartment in a new building, you could demand a premium over rental prices in older buildings, this premium is usually insufficient to make up for the differential in your purchase price of an apartment plus renovation in a new building versus buying and fixing up a unit in an old building.

Let’s say you’d like to buy a property in one of Kyiv’s new buildings, renovate it and let it out for rental income. You might pay USD 2,500 per square meter for a 160 square meter apartment in one of Kyiv’s suburban luxury apartment complexes, and an additional USD 750 per square meter for a luxury renovation. Your total cost (excluding taxes and agency fees) would be about USD 520,000, meaning you’d need to charge about USD 4,333 per month in rent for a 10% annual return. This is for a property without the advantage of city center location. Let’s suppose that you have found what you believe is a good deal to purchase a residential property in Kyiv and you plan on letting out this apartment for rental income (after a renovation). How should you estimate the future rental income from this property? Here we come to the most basic of all value drivers in real estate: location. After location, the rental level for a given apartment size depends on its building and renovation type (usually ‘Euro remont’ or ‘Luxury’). Apartments in older buildings have various levels of construction quality and layout, tend to be clustered in Kyiv’s center, and often have higher ceilings (3.5 to 5 meters) than newer buildings. The construction quality and layout of new buildings tends to be better, but these buildings usually lack the ‘character’ of older buildings. While rental prices in Kyiv are often quoted in US dollars, these days payment to your landlord is generally paid in Ukraine’s hryvnia (UAH) currency.

Whether you plan to buy Kyiv property for rental income, or you are just looking to rent an apartment in a neighborhood that suits your lifestyle and budget, this article will help get you started with your property search in Kyiv. Here you’ll find a quick overview of Kyiv’s central raions (‘districts’) highlighting livability, infrastructure, and rent levels.

 

Shevchenko: Kyiv Old Town and the Diplomatic Quarter

Kyiv’s Shevchenko (or Shevchenkivs’kyi ) district is a mix of cultural and historical landmarks, and commerce. The eastern part of Shevchenko was once known as the ‘Upper City’ and is home to St. Andrew’s Church, St. Sophia’s Cathedral, St. Michael’s Monastery, Volodymyrska Hill, and Golden Gate. Kyiv has over 75 embassies, consulates, diplomatic missions and international organizations, and about half of these organizations are located close to Golden Gate (Zoloti Vorota metro station), making this Kyiv’s unofficial diplomatic quarter. Cultural institutions in Shevchenko include the National Opera Theater and the National University, which is bounded by Taras Shevchenko Park and the Fomin Botanical Garden. The district also includes many modern commercial and residential buildings, nearly all of Kyiv’s five-star hotels, and the greatest quantity of metro stations in the city. Whether you are looking to live downtown in a pre-revolutionary building with ‘character’, or in a modern luxurious high rise near upscale restaurants on relatively quiet streets, you can find it in Shevchenko. However, you should be prepared to pay a premium price to live in Kyiv’s Old Town.

If you are looking for somewhere to live in Shevchenko that is less pricey but close to the city center, there is L’vivs’ka Plosha (Lviv Square). This a popular hangout for the young and hip which is located near to Peizazhna Alley, a park and picnic area. L’vivs’ka Plosha is a potential candidate for urban redevelopment and sits atop the perennially unfinished Lvivska Brama metro station. If the metro station ever finally opens and the area redeveloped, rents and property values will rise accordingly, making this an interesting option for speculative real estate investment.

 

Pricey Pechersk: Government offices, parks and green space

Pechersk is one of Kyiv’s central districts and is home to Ukraine’s parliament and the beautiful Mariyinskyi Park. The district is bordered by Khreshchatyk Street, Velyka Vasylkivska Street (formerly Chervonoarmiiska), and the Naberezhne (riverside) and Naddnipryans’ke Highways just below the city’s main Botanical Gardens. Pechersk has some of the city’s most prestigious and pricey neighborhoods, including Pecherski Lipki (close to government institutions) and Tsarskoe Selo, an upmarket residential district with old and modern detached homes and several embassies. The southern part of Pechersk has a large new business-class complex called Novopecherski Lipki and other modern complexes, particularly along Zverynetska Street, which offer views of, and proximity to, the Central Botanical Gardens. One of Kyiv’s top private schools, Pechersk School International, is in Pechersk, and the British International School also has a campus in this district. In addition to several luxury boutiques, you’ll find two of Kyiv’s most upscale shopping malls here: Gulliver Trade Center and Mandarin Plaza. Aside from several pricey neighborhoods, other parts of Pechersk tend to be fairly unremarkable and urban, but housing here is not cheap due to demand for apartments close to Kyiv’s city center.

 

Hip and historical Podil: pedestrian-friendly arts focus

Historical Podil is located close to the Dnipro River. The district includes one of Kyiv’s oldest neighborhoods that was once known as ‘Lower City’. Here you’ll find many beautiful pre-revolutionary buildings, art galleries, trendy cafes and restaurants. On weekends, Andriyivskiy Uzviz (‘Andrew’s Descent’) is teeming with tourists, who come to visit Saint Andrew’s Church, Mikhail Bulgakov’s house, and the souvenir market that lines this winding and picturesque street. Podil is an up-and-coming neighborhood that is popular with a young and hip crowd who are drawn by Podil’s fun atmosphere that emanates outward from Kontraktova Plosha - especially along Sagaydachnoho Street. Close by is the recently renovated Poshtova Plosha that overlooks the Dnipro River and the Kyiv River Port, where you can embark on a riverboat cruise, enjoy a view of Kyiv’s illuminated bridges at night, or take a short walk to the funicular that connects Podil with Shevchenko district. Between Kontraktova and Poshtova Squares is Kyiv-Mohyla Academy, one of Ukraine’s most prestigious and Western-oriented universities. Apartments in Podil are close to Kyiv’s city center (about a ten-minute drive during non-rush hour traffic) and are often less expensive than in other central districts. There are many relatively quiet streets here as long as you avoid the noisy tramlines, and in addition to the old buildings, there are some new low-rise and high-rise apartment complexes such as the premium Vozdvizhenka micro-region and mixed-use developments above Kontraktova Plosha.

 

Holosiiv: Parks, forests, lakes and new apartment complexes

Holosiiv district (‘Goloseev’ in Russian) is a large, mostly green district that stretches from downtown Kyiv where Velyka-Vasylkivska (formerly Chervonoarmiis’ka) meets L’va Tolstoho Street along a narrow urban strip that broadens and extends southwesterly along Prospekt 40-letiya Oktyabrya - a major north-south highway that intersects with Kyiv’s Ring Road (Kil’tseva Doroha). This northwestern urban corridor features several new residential complexes of mid-priced and premium-class housing (such as the Park Avenue complex). Many of these new complexes offer good transportation links to Kyiv’s center and are clustered along the Kyiv Metro blue line (only a 15-minute ride from the heart of downtown Kyiv). Plenty of shopping and entertainment options are nearby including Ocean Plaza, a large modern shopping mall with hundreds of shops, a hypermarket, movie theater, restaurants and the rooftop City Beach Club. Just to the southeast of these new housing developments you will find Holosiivskiy National Nature Park, a large nature reserve and recreation area boasting forest land with lakes and ponds. Indeed, Holosiiv’s huge, old growth forest (4,000 hectares) contains stately oak trees that are said to be 200 to 400 years old. Not far from Holosiivskiy Park is Park Feofania. Both of these parks are popular spots for walking, biking, picnicking and other outdoor recreation. On average, apartment rental prices in the north of Holosiiv, which is closest to downtown Kyiv, tend to be as high as those in Shevchenko and Perchersk districts. The exceptions are large luxury apartments in new buildings, which are generally in less demand.

 

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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