London VS Kyiv: Comparing Two Capitals To Define, Which Is A Better Investment
London has been one of the most expensive capitals to rent a house or apartment to reside in, no matter short or long term. However, in 2021 and in several upcoming years, the margins of earnings compared to the cost of real estate objects (which is ROI) stay low, being on the lower spectrum of the 1-digit figure. At the same time, Kyiv is a high-pacing city, which overtakes the banner of one of the most attractive places on Earth for investments.
Quick features of real estate listings Ukraine
Ukraine carries a heavy legacy of the USSR (and will be until 2100, probably). It affects the features of the market, so you can’t just come here and copy-paste a working property investment strategy from one of the Western countries. Let’s briefly overview, what’s going on in real estate listings Ukraine:
- High investment returns. According to the latest available data, the average monthly price growth of all residential property in Ukraine is around 10% in 2021. It makes it 120% a year. Impressive, huh? Secondary-market 2-bedroom apartments cost $860 on average in Ukraine (for 1 sq. m), showing about $1,780 price for 1 sq. m in Kyiv, the capital. At the same time, the rent of the same object is $10.2 per 1 sq.m. on average in Ukraine and $14.7 in Kyiv. For a 70-meter apt. in Kyiv, the annual ROI would be 9.91% before taxes (with a range coming up to 15% on separate occasions). For Ukraine, it’s calculated as 14.23%. In London, the annual average ROI is currently just 3.5%.
- Bank financing of property purchases is expensive and unavailable to foreigners, so you should come to the local market with a full lump of investment money.
- Renovations are almost always required. Despite the fact of increasing footage of new real estate, the market is still flooded with USSR-old objects in bad condition.
- Landlord-friendly local market. A tenant in Ukraine has nearly no rights and never goes to court for whatever reason. If you would like to evict some bad tenant, nothing prevents you – even law – to throw them out on the street immediately with all their belongings and children.
- Low adjacent costs of buying and owning. You don’t pay landlord tax in Ukraine when owning a property of 60 sq. m of total area and below. Also, to officialize the purchase of a property, you most often pay 2% of its cost only + agent commission, which is never greater than 5%.
- Exclusive living premises are rare and may spring up the costs of renting them 3-5 times, which plays in your favor. Make an apartment look in the best trends of Europe (like sun-lit colorful space) and you’ll immediately jump on a significantly higher rental income stair.
- Rules for foreign buyers and landlords are nearly the same as for locals and taxation is frankly low.
Profitability of real estate listings Ukraine
As you’ve read in 1) point above, the rental ROI in Kyiv is 9.9% at least (14.2% in Ukraine). That’s in addition to increasing costs of real estate as appreciation. That does not include your taxes since it’s a topic for a separate article and we’ve already covered it in several previous blog posts. Going for the lowest taxation, you pay slim to none – just about 0.6%-1% of the total gross earnings. This makes your yearly pure income at least 8.9%. By adding appreciation, your capital gain per year is over 100% in 2021-2022 (considering the previous 15 years in Ukraine, apartments for rent in Kyiv bring not lesser than +25% annual ROI + appreciation).
London is nothing like Kyiv real estate prices
In London, the average annual ROI is about 3.5%. Looking at the latest price index (for August 2021), we get London’s average cost of 1 object as £635,585 ($871,378). The annum profitability is $30,498/£22,245 (or $2,541/£1,853 a month). The same numbers for the UK in total are £337,371 ($462,530) to purchase and $1,349/£984 a month to earn on rent (before taxes).
Earnings in London vs in Kyiv
Now, for the sake of delivering the full picture, let’s calculate the profitability of the similar offers in both capitals, London and Kyiv.
By buying a single object in London for £635,585, you earn £22,245 a year. Spending the same cost to buy the same objects in Kyiv, you get several cheap apartments in Kyiv. Considering one object to be $124,600/£90,833, you can acquire 7 of them for 0.63 million pounds! Given the annual ROI in Kyiv, you get £62,947/£86,299 a year. That’s 3.88 times more than you would earn in London!
Conclusion on Kyiv property for sale
Math doesn’t lie. Kyiv real estate for sale and rent is able to bring investors about 3.9 times more income than it would in London. So if you’re an expert in rental premises and know the tricks and risks, simply apply them for Kyiv to gain more from doing the same.
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More about DGY
DGY is a real estate investment and property management company. Our experts have an impressive experience in turning businessmen into smart real estate investors. We collect limitless opportunities throughout the world’s best real estate markets and help our clients implement the best deals. We take care of all due diligence and customize documentation while your income grows. We also provide you with property management services so you can forget about the tiresome maintenance of several objects and entrust this process to professionals.
Investment advice and recommendations
DGY is an investment company that takes care of every client and helps them become successful investors. With the help of an investment experience and a well-thought plan, we will help you examine the market, choose a strategy specifically for you or your business, and calculate future costs to start making money with real estate investment.
In order to invest in real estate, you should consider how you will run your management in Ukraine. DGY will help you eliminate all possible pitfalls at an early stage as a personal project manager will be assigned to your case. They will assist you in choosing the project according to all required objectives.
DGY Investments takes care not only of purchasing property but also renovating an existing one. With the help of a thorough plan and estimating, we will thoroughly prepare a property for sale. Our professionals evaluate an investment property and create a strategy that includes the costs for renovation, possible taxes, fluctuations on the market, etc. Therefore, our clients are able to resell the renovated properties in Ukraine with more than 15-20% profit from the initial price.
Before our clients decide to deal with real estate investing, they consult with our experts concerning details such as the necessary documents needed to purchase a property and successfully run all the processes connected to it.
Therefore, if you are eager to invest in Ukraine, it’s essential to have all the paperwork done correctly, and that’s the moment when our team of experts takes care of this step. DGY Investments helps investors buy real estate property, manage the paperwork, start preparing relevant documents for purchasing realty in Ukraine, and close the deal successfully.
Real estate investment opportunities in Ukraine
When an investor decides to invest in real estate in Ukraine, the most affordable way to attain stable passive income is through buying residential real estate. Investors can expect to receive a regular monthly payment from their tenants at a fixed monthly amount, unaffected by inflation or other unforeseen circumstances. The amount of rental income will vary depending on the size, type of property and location. For example, buying an apartment in Ukraine’s capital Kyiv is beneficial to investors due to offering a large working population, central location and affordable prices. Hence, the minimum price of renting a decent one-bedroom apartment in Shevchenkivskyi District will be around $1000 per month in 2021, followed by Pecherskyi District with a cost of $850 per month. Besides, investing in real estate in Ukraine annually brings clever investors up to 15% of yield, attracting many business people every year.
Properties for investments in Ukraine
Ukraine has a giant sector for real estate investing. Businessmen who come there all over the world often choose between investing in residential and commercial properties. The main advantage of buying property in Ukraine is the affordability of prices on the houses and apartments. For instance, if you invest in real estate in a historical district, a luxurious apartment will cost you around $85k only.
How to invest in Ukrainian Real Estate
In order to invest in Ukrainian real estate, you should take into account a list of crucial factors. The first one is to choose what kind of realty you are going to invest in: residential or commercial. It is vital as it should comply with Ukrainian real estate law. The second tip is to identify the purpose of purchase in order to make a strategy for the property. For instance, you may purchase the property for your own use or buy it for lease. The next step is to calculate the taxes and what kinds of taxes are payable during the purchase, owning, or selling. Also, to invest in real estate properly, you should keep in mind currency control rules in Ukraine to sell a property and get a higher profit.