2021-11-28

Covid-19

​Real Estate Industry Is Now More Prepared To Mitigate Another Wave Of Covid-Related Crisis

November 1, 2021, is a black day for many residents of Ukraine. Not only the majority of regions of Ukraine have gone to the ‘red zone’ of quarantine but also it is since that day, all non-vaccinated citizens of Kyiv are forbidden from free movements in the Ukrainian capital. Unvaccinated people can’t use public transportation, malls, publically open venues (like cinemas), or governmental facilities. That dramatically affects business – many small and medium businesses all over the country will have to again consider going bankrupt.

The situation also has an impact on the market of real estate investments in Ukraine. But we can’t call it significant. So, what has changed since the very first wave of lockdowns in Ukraine in 2020? Can Ukraine real estate industry withstand another crisis?

An increasing number of vaccinated people

As of the moment, 10.2 million Ukrainians are vaccinated at least with one dose and 7.5 M are vaccinated with two doses. As the head state’s doctor reassured, the Covid-related limitations would be withdrawn in the country when 20 million are fully vaccinated (48% of the total population). In the primal Covid lockdown wave in 2020, this number was way lower, forcing more people to sit at homes, which lowered property investment opportunities. Now, as several hundred thousand people are vaccinated in Ukraine every day, it should take 6-12 months to reach the number of 20 million so as to return to previous life and business activity.

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More processes online

Before 2020, going online was more like a declarative thing for many businesses. In 2020-2021, nearly all of them had to readjust to working online.

Developers and other participants of the market made it possible for people to become acquainted with the characteristics and prices of real estate objects online, without the need to visit an office or see it with eyes. Thanks to a legal opportunity of signing documents with a digital signature, the conclusion of a bigger number of contracts in the real estate market can be done fully remotely, the same as making payments for them.

Changes mostly concern the primary market (objects directly from developers) but the secondary market (used objects) is also catching up, although at a slower pace.

Ongoing state support for mortgage lending

Investment opportunities of natural persons and private entrepreneurs are still being protected by the government. Recently, President Zelensky signed another law, which broadens the opportunities of private entrepreneurs to access a beneficial-interest mortgage. Now, the threshold of their yearly income is increased to UAH 50 million a year (approx. USD 2 million). We remind our readers that the state program makes lending yearly interest equal to 5%, 7%, or 9% (depending on certain conditions), which is significantly lower than previous market interest rates between 15% and 20% annual. Over $2 billion were already lent within this state program.

Shifting construction deadlines

Some companies cannot make sure that the construction process goes the same well and uninterrupted, as it was before the introduction of another lockdown. That includes disruptions in the supply chains and manpower. Since some personnel officially cannot get to the workplaces or work per se without a vaccination certificate, there will be shifts in the deadlines of finishing and commissioning of ongoing objects.

Developers go for such a step, as there exist gaps in the building legislation about the responsibility of developers for shifting terms – basically, they don’t pay any fines to anybody. So if you’re a client of one of the developers (you’ve bought a property in the primary market in Ukraine), you shall be aware that term shifting is something real.

Surely, this risk does not exist in the secondary market. So if you’re financially able to diversify your portfolio with objects of a secondary market, this will make you mitigate the risks of not meeting the planned cash flow.

The prices won’t decrease

It is possible to say with full assuredness now that by the end of 2021, real estate market prices won’t go down because of the enacted lockdown. The strategy of “wait and see” that’s been active in Ukraine for the past decades, still remains one of the strongest market forces. When sales drop as business activity declines for whatever reason, it is preferential for both developers and secondary owners to halt sales and wait rather than to decrease prices to sell.

It works always but the war. But since the East of Ukraine has another frozen Russian-triggered conflict (as many other countries surrounding Russia have today), the war is not hot anymore, so there will also be no war-caused prices deflation, as it was in 2014 in Donbas and Crimea.

Conclusion

The last in 2021 Covid-related lockdown in Ukraine shan’t drive prices lower. Developers and other owners are full of desire to “sit and wait”. There are no major factors, which could drive the market prices down from their pre-heated condition. Also, more people become vaccinated and the state support of lending is ongoing – which will soon make the economy alive again.

So we conclude that it is still a good time for investors to step into the Ukrainian real estate market, as it won’t shrink.

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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.

Property management

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.

Property Renovation

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.

Paperwork

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.

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