Those investors who work in the Ukrainian market, don’t even ask if real estate is a good investment. Because they know – it is. Given that real estate prices usually grow 1-2 digits per year, every year but 2015 (due to war), the Ukrainian market gives a possibility to earn 8%-15% annually from renting business and 10%-20% annually from flipping (in most cases, even without renovations).
Benefits of investing in real estate in Ukraine
Real estate investments in Ukraine are a business, which actively gains momentum. Small local investors mostly don’t have so much money to operate with more than 1-2 objects at a time, which they either let for rent or hold to flip when the price grows. So the market is neither saturated nor too hot yet. However, only in the last 10 years, residential apartments and houses added over 50% of their price all over Ukraine, while in Kyiv, most objects grew twofold in price. Along with that, income from rented apartments grows on a yearly basis, allowing owners of real estate objects to effectively stay within the planned level of margins.
In addition, the price of most residential apartments and houses is one of the lowest in Europe, as it is possible to buy a good object for only $80,000. Also, the biggest part of the real estate operations for Ukrainians and foreigners are taxed the same. And the income tax can even be zero under some circumstances!
Along with benefits, there are risks of an investment in real estate in Ukraine.
Risks of real estate investment
If you plan to reduce your expenses maximally, it’s possible to invest at the stage of construction, where prices can be 50% of the price of the point in time when the building is fully erected and commissioned. However, there are risks of not completing the construction process, the impossibility of commissioning, as well as there is a risk of cancellation of commissioning if ‘someone did not receive enough bribes’. So, you must know how to select reliable developers, how to check documents, and how to monitor changes in the situation of the object under construction.
When opting for a secondary-market object, the above-described risks aren’t effective but new arise, mostly, legal. Thus, an apartment or house might not have necessary agreements from all parties owning it to allow the sell operation, as well as it could be arrested, bank’s or state’s collateral, or in the midst of legal disputes. The biggest part of such information is public, while some cannot be collected unless addressing to a notary, attorney, or even some insiders in banks to find out all the truth. Only a few specialized companies in Ukraine are able to do that efficiently to cover all risks.
So the process of acquiring real estate in Ukraine looks like this:
- Finding a good object to buy. If on the primary market – finding a reliable developer first and then picking an object.
- Do all the work to find out the status of the picked object to cut off all the risks.
- Paperwork and documents collecting to buy it. That would include opening an account in a local bank to pay for the object.
- Make the deal according to existing legislation of Ukraine.
- Renovate the property, preparing it for renting or flipping.
- Pay all the taxes connected to the business.
How to protect yourself from risks when you invest in real estate in Ukraine
There are hundreds of big and small issues connected to the process described above and risks. If you don’t have a solid insight into the Ukrainian market and legislation or a local real estate attorney and an agent, who’d work out for you all the risks and issues, it is advised to contact a safe and trustable service of DGY Investments Company.
Our company has been working for years, having gained extensive experience on the Ukrainian real estate market, effectively leading thousands of deals for hundreds of our clients. We have a powerful and highly skilled team with many unique insights on primary and secondary markets, which help us find the best objects to create investment opportunities for our customers.