Kyiv residential real estate booms as high demand causes price surge

Kyiv residential real estate booms as high demand causes price surge
Kyiv’s apartment prices are up by 23% in the last year, driven higher by rising incomes, new availability of mortgages and the recovering economy.
By by Cameron Jones in London August 25, 2021

Demand for residential real estate in Kyiv is outstripping supply. As a result, Kyiv has a lack of available apartments and prices are surging, following trends seen earlier this year.  

Kyiv’s apartment prices are up by 23% in the last year, according to Lun.ua, an online marketplace for real estate. The average cost of a new apartment in Kyiv was $922 per square metre in 2020; now it’s $1,131. They are set to climb by a further 10-15% by the end of next year, say experts, due to banks giving out more mortgages to encourage buyers than ever before and planned tax hikes on real estate that will also push prices up further.

Kyiv apartments are small compared to more developed parts of the world, where the average available apartment space per resident is about 30 to 40 square metres. In Germany, that number is closer to 45 square metres; in Ukraine, it’s 20 square metres per person, according to Kyiv city official statistics.

Kyiv and Lviv lead Ukraine’s five largest cities for office space costs, which are also rising. During the first half of this year, the purchase price of Kyiv office real estate increased by 18.4% y/y, $2,269 per square metre – more than double the national average of 8.4%. Office rents grew by 13.3% in Kyiv to $18.7 per square metre, reports UBN.  

Nationally, office rents declined by almost 1%, Volodomyr Shalaev, director-general of the Uvecon group, tells Interfax-Ukraine. In Lviv, rents increased at the same pace as Kyiv, but office selling prices soared by 29%, to $1,210 per square metre.  

With e-commerce booming, warehouse prices have been especially dynamic and grew at double-digit rates in Lviv, Kyiv and Dnipro. Sales prices for warehouses grew by 40% y/y in Lviv, by 31% in Kyiv and by 27% in Dnipro.

New apartment prices have risen across Ukraine by an average of 16% since the start of last year, according to a study by OLX Real Estate. In Kyiv, the nation’s most expensive major market, the jump was 22%. In Kyiv, average prices for new apartments are $41,000 for 1-bedroom, $59,000 for 2-bedroom and $83.300 for 3-bedroom. In Lviv, the second most expensive market, comparable prices are $32,000, $44,700 and $52,000.

Up to 32 new business centres will open in Kyiv by the end of next year, Volodomyr Heliuta, managing partner of UTG Offices, told Interfax-Ukraine. The leasable area adds up to 670,000 square metres – almost one third of existing office space in Kyiv. “Frozen and postponed projects have been actively revived since the middle of 2020,” he says. “Outdated shopping centres, hotel complexes, enterprises and factories are being reconstructed into office real estate.” IT is the main driver of the expansion, he and other commercial real estate analysts say. .

New foreign investment in construction in Ukraine should add up to $2bn by 2025, Valeriy Kodetsky, president of City One Development, tells Interfax-Ukraine. “Powerful foreign investors” are interested in building new factories and production facilities, participating in large infrastructure projects, and building commercial and residential real estate projects, Kodetsky said, summarising conversations he had last month in Monaco at the CC Forum Global Investment in Sustainable Development.

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