The share of investment transactions in the structure of sales in the primary housing market is about 15%, which is more than twice lower than the pre-war figure, according to a survey of developers conducted by Interfax-Ukraine.
“The share of investment apartments differs in different classes of residential real estate. The average rate of such transactions is about 15%. Since the beginning of last year, the share of apartments under development has remained virtually unchanged, while it has halved compared to the pre-war period,” KAN Development told the agency.
According to the company, the portrait of the investor has not changed significantly, but there are more buyers from the regions and those wishing to purchase multi-room, family apartments.
According to the developer Alliance Novobud, the share of investment transactions in its sales structure is currently on average 15%, while before the full-scale invasion the figure was 20-25% in Brovary and 30-40% in Kyiv.
According to Iryna Mikhalova, CMO of Alliance Novobud, there is a high demand for either finished or highly finished houses, but there is also growing interest in investing in the excavation stage due to the growing shortage of finished apartments.
“The portrait of the buyer has not changed much. Most often, these are people, private investors who are engaged in the rental business or plan to sell real estate by assignment. There are also legal entities that buy apartments in bulk for resale after renovation. They have high hopes for the demand from buyers under the “eOselya” and “eRestoration” programs,” the expert noted.
Kovalska Real Estate also noted a moderate recovery in investment demand. According to Igor Subotenko, the company’s director, the share of such transactions is currently 20% in the comfort class.
“Apartments are bought to save money and to increase the margin of start-finish construction, as the cost of each new project is getting higher,” he explained.
According to the expert, investors are interested in apartments for families of four or more people: zoned one-bedroom apartments of up to 60 square meters, two- and three-bedroom apartments of up to 110 square meters.
The share of investment demand in Intergal-Bud’s sales structure is currently 10-15%, while last year it was 5-10%, and before the full-scale invasion it was 40% or more. At the same time, the portrait of the investor has changed somewhat.
“Before the full-scale invasion, we recorded a considerable interest in primary investment among business owners and representatives of the IT industry. In 2021, young people, 28-30 years old, bought housing to earn money. Now these are people aged 40+, with almost no representatives of the technology and creative industries among them, but many employees and civil servants,” said Anna Laevska, Commercial Director of Intergal-Bud.
According to her, the share of IDPs among investors has also increased, as they invest their remaining savings in square meters to earn money after purchasing residential real estate.
According to Daria Bedia, Marketing Director of DIM Group, the developer’s clients mainly buy housing for themselves, but about 10% of transactions are investment. At the same time, most of the investors are professional, who previously had real estate in their portfolio.
One-bedroom apartments are in the greatest demand in the comfort+ class, while the requested area has decreased by an average of 15 square meters.
The Group is also considering introducing a format of income housing-apartments managed by a professional operator into its projects.
“This is a separate product that we are actively developing. In two of our projects, apartments with hotel services are designed as part of residential development. Among the added value are the best service for owners from well-known operators, the ability to comfortably accommodate relatives and friends in their homes without violating their privacy, and a well-developed internal infrastructure, as the apartments become a center of attraction for additional services: spa, restaurant, coworking, children’s areas, etc.” Bedia explained.
According to Roman Davymuka, CEO of Avalon, developers are actively developing additional services for investment housing.
“People are investing mainly in the long term – if in an apartment, then to make repairs and then receive rental income. We believe that special holistic services from the developer, including repairs, are the future of the product, and the market will develop into fully finished apartments,” he said.
Kovalska Real Estate is considering a turnkey renovation service. It is expected that the cost of repairs will be $400 per square meter. The service is planned to be launched in the new phase of Rusanivska Havan residential complex, the company’s director noted.
According to the press service of KAN Development, the developer has launched the KAN Market service, which allows customers to sell or lease their real estate and manage the full cycle.
For its part, Alliance Novobud is exploring various formats of additional services for investment housing, including the management of both apartments and parking spaces.
“We are considering engaging third-party partners to implement the collaboration, as well as an internal management company,” said Mikhaleva.
Bedia, DEVELOPER, DIM, HOUSING, Kovalska Real Estate, Суботенко
DIM Group is developing a format of income-producing real estate, apartments with hotel services as part of its projects, said Daria Bedia, Marketing Director of DIM Group, in response to an inquiry from Interfax-Ukraine.
“We are considering the option of income-producing real estate – an apartment format managed by a professional operator – as part of our projects. This is a separate product that we are actively developing. In two of our projects, we have designed apartments with hotel services as part of residential development,” Bedia said.
According to her, the added value for future investors includes better service for owners of well-known operators, the ability to comfortably accommodate relatives and friends in their homes without violating their privacy, and a well-developed internal infrastructure.
“Apart-hotels are becoming a center of attraction for additional services: spa, restaurant, coworking, children’s areas, etc.”, Bedia added.
DIM Group was founded in 2014 and consists of six companies covering all stages of construction. To date, it has commissioned 12 buildings in six residential complexes with a total residential area of over 218 thousand square meters. Six residential complexes of “comfort+” and “business class” categories are under construction: “New Autograph, Metropolis, Park Lake City, Lucky Land.
Investment deals account for up to 10% of DIM Group’s sales structure, while the requested area of housing has decreased by 15%, DIM Group Marketing Director Daria Bedia said in response to an Interfax-Ukraine inquiry.
“As of today, we have about 10% of investment transactions in the formats of a multifunctional cluster, eco-city, multifunctional complex based on the concept of a 15-minute city in the central business and historical center, while the vast majority of transactions – a little more than 90% of them – are still exclusively for themselves. The fact that investors have started to return to the market at all is an encouraging signal,” she said.
According to her, the first investment deals in the company’s properties began in late summer and early fall of 2023. Before that, professional investors did not dare to return to concrete, but the situation is changing.
“Firstly, the profitability of individual complexes and formats, given the high rate of construction, successful concept and growing real demand for this object, is still higher than bank deposits, even in times of war. Secondly, when evaluating an investment for the future, people realize that a liquid lot can bring 50-60% in the future if you choose a competent strategy,” Bedia says.
According to her observations, the majority of investors now are those who had real estate in their portfolio before the war. They come on three conditions: high rates of construction, a liquid concept and brand of the developer, its reputation over the past two years of war.
At the same time, the requested area has decreased by about 15%, while interest in European layouts has doubled. A large kitchen-living room of 17 sq. m in comfort+ and 20 sq. m in the business segment, two bathrooms, and separate bedrooms are becoming a must-have attribute. The area of 1-room apartments, which are most often bought in the business segment, reaches 50-55 sq. m, 2-room apartments – 75-80 sq. m, 3-room apartments – 100-120 sq. m.
Today, buyers in the comfort+ segment are most interested in 1-room apartments of 40-47 sq. m. with a kitchen-living room of 20 sq. m. and a separate bedroom with a dressing room. The top 2-room apartments are 68 to 75 sq. m. in size with two separate bedrooms and a kitchen-living room of 20 sq. m., and 3-room apartments are 85-90 sq. m. in size with three separate bedrooms, one of which is a master bedroom with its own bathroom and wardrobe, and a large kitchen-living room is also a priority.
DIM Group was founded in 2014 and consists of six companies covering all stages of construction. To date, it has commissioned 12 houses in six residential complexes with a total living area of over 218 thousand square meters. Six residential complexes of “comfort+” and “business class” categories are under construction: “New Autograph, Metropolis, Park Lake City, Lucky Land.
Ukrainian developers have concluded the first housing purchase and sale agreements using housing certificates issued as compensation for destroyed housing under the eRestoration program.
Today, housing certificates are used to purchase apartments in completed projects, Anna Laevska, commercial director of Intergal-Bud, told Interfax-Ukraine.
“Buyers are mostly focused on affordable housing in the economy and comfort segments. As of now, ready-made apartments in buildings that have already received a certificate of commissioning are available for participation in the program in the capital region. However, we plan to expand the offer with facilities under construction. We are talking about projects in Lviv,” she said.
According to Laevska, the first transaction under the program concerned a two-room apartment with turnkey renovation in the Syretsky Gardens residential complex.
According to the developers interviewed by Interfax-Ukraine, buyers with certificates are offered installment purchases and loans, the possibility of using the certificate as a down payment, and in some cases, individual offers and discounts.
Developer Alliance Novobud has also concluded the first deal under the eRestoration program: a family from Kyiv region purchased a three-bedroom apartment in a finished building in the Madison Gardens residential complex in Brovary using a housing certificate.
“There are requests, certificate holders are interested in different formats and classes of housing. With the eRestoration certificate, you can purchase any residential property in all Alliance Novobud projects. We have individual offers for each individual request. For example, a discount, installment plan, or lending for the remaining amount by partner banks on special terms,” said Iryna Mikhalova, CMO of Alliance Novobud.
According to the press service of Kovalska Real Estate, when buying a home using a certificate in the developer’s projects, all available promotions and discounts are available to customers, including a loyalty program for military personnel and rescuers. There is also an option to purchase by installments at 0% for up to 3.5 years for an amount exceeding the value of the certificate.
According to the company, customers are interested in purchasing two- and three-bedroom apartments in ready-made buildings. At the same time, in January, apartments were already reserved for two certificates.
The developer also expects to expand its offer with the help of newly constructed facilities.
“At present, the certificate can be used to purchase an apartment in three commissioned houses by Kovalska. We are actively working, and soon it will be possible to apply the certificate to the objects under construction,” the company explained.
The DIM Group also offers to use installment purchase programs from the developer for up to five years if the amount of the certificate does not exceed the cost of the selected apartment. The program covers both already built residential complexes in Kyiv and the region and buildings at the final stage of construction.
“We are already working with the first applications from certificate holders who have chosen an apartment in our residential complexes and applied for a deposit. In the near future, we are waiting for the approval of applications and the receipt of funds,” said Daria Bedia, Marketing Director of DIM.
In general, the surveyed developers assess the housing certificate program with cautious optimism, noting its social importance.
“This is a very important government initiative aimed at helping Ukrainians who lost their homes during the full-scale invasion. It is difficult to overestimate the social component of eRestoration. However, it is difficult to predict whether the certificates will have a significant impact on the primary real estate market,” said Ms. Laevska.
According to the expert, the certificate program can be developed following the example of the eOselya affordable mortgage program, where the share of transactions in the primary market is no more than 2%.
At the same time, with competent support and uninterrupted financing, the compensation program can become a powerful market driver, according to Alliance Novobud.
“Government programs such as eHouse and eRestoration can have a significant impact on the demand and purchasing power of Ukrainians. For example, under the eHouse program, some projects account for up to 40% of sales of the total volume. The new construction market has high expectations for eRestoration,” summarized Mikhaleva.
As of January 31, 462 certificates for UAH 1.1 billion have been sold under the eRestoration compensation program, and another 311 have been booked. The total number of applications for compensation is 9.3 thousand, and 2.6 thousand certificates have been issued.
As reported, on May 10, 2023, Ukraine launched the eRestoration program, under which owners of damaged housing began receiving compensation of up to UAH 200,000 for repairs.
On August 1, 2023, Diia started accepting applications for compensation for housing destroyed by the war. Compensation will be paid to individual owners of housing that was destroyed due to hostilities after February 24, 2022, is not subject to restoration and is located in the unoccupied territory and not in the area of active hostilities. On December 27, 2023, the issuance of housing certificates in Diia began.
In May 2023, the Cabinet of Ministers allocated UAH 4 billion 433 million 350.0 thousand for compensation under the eRestoration program, in November – another UAH 1.5 billion for compensation for damaged property and UAH 2.5 billion for certificates for destroyed property.
The transition to a regime of managed exchange rate flexibility has not yet affected housing prices in the primary market, but it may change the behavior of potential buyers, and the rise in the dollar in the future may affect construction costs, according to Ukrainian developers interviewed by Interfax-Ukraine.
“We do not expect any sharp price fluctuations in the primary market. Pegging to the current US dollar exchange rate is a standard practice among developers. That is, in case of a significant depreciation of the hryvnia against the dollar, prices for square meters in the national currency equivalent will indeed increase. However, we do not see any reasons for this at the moment,” Anna Laevska, Commercial Director of Intergal-Bud, told the agency.
According to her, in the short term, the cost per square meter will be mainly influenced by the dynamics of real demand and the cost of construction.
At the same time, the rise in the dollar may lead to higher prices for contractors’ services and construction materials, said Dmytro Novikov, marketing director of City One Development.
“At present, we do not see any prerequisites for a rapid rise in prices in the primary real estate market. Even if the dollar rises in value, there will be no significant changes in the primary market in the near future. But it may have an impact in the future: if the cost of construction materials, which are directly tied to the currency, rises, the cost of construction will certainly increase,” he said.
Daria Bedia, Marketing Director of DIM Group, expressed a similar opinion.
“The pricing policy in the primary market is always closely linked to exchange rate fluctuations, as a large percentage of contractor services and the cost of construction materials, for example, are tied to the US currency. If the exchange rate rises significantly, it will create an additional burden on the cost of construction, which will push the price up,” the expert said.
At the same time, the rhetoric about the “rise in prices” against the background of a flexible exchange rate is nothing more than a marketing ploy and an attempt to persuade buyers to buy, she noted.
“There will be no rapid growth in this case, taking into account the constraining factors,” Bedia believes.
In case of a dollar appreciation, developers will be able to slow down the growth of costs only with the help of previously purchased stock of building materials, said Irina Mikhaleva, marketing director of Alliance Novobud.
“We can say for sure that with the further growth of the dollar, the cost of primary materials will also increase, primarily in hryvnia equivalent. The cost of construction will also increase, as manufacturers and suppliers of services and building materials will raise prices. The only way to slow down the growth of costs may be the stocks of building materials that were purchased earlier and are now at the disposal of builders,” she said.
Ms. Mikhaleva noted that the market reaction can be predicted only if the dollar gradually rises, without sharp jumps.
For their part, KAN Development believes that even a sharp fluctuation in the exchange rate will have a minor impact on the housing market.
“Even a sharp fluctuation in the exchange rate, if it affects the cost of real estate, will not significantly affect the housing market. If the hryvnia drops by 10%, it will strengthen later. Government mortgage programs will not be suspended and will continue to be issued in hryvnia. As for new housing, developers will continue to adjust to the market price in dollars. So far, we do not see any factors that could sharply collapse the hryvnia,” the developer commented.
According to the Kovalska Group’s press office, the transition to exchange rate flexibility may have an indirect impact on demand and may slow down the pace of recovery in the real estate market amid a general decline in purchasing power.
“For example, buyers who have savings in another currency and are ready to buy today may postpone their purchase decisions until the exchange rate is “better”, and buyers who are considering purchasing under government and partner programs such as eOselya, preferential mortgages, etc. may go to the secondary market in search of cheaper housing due to “uncertainty”,” the developer noted.
Susanna Karakhanyan, Head of Sales at Greenville Group, also spoke about the likelihood of changing the behavior of potential buyers.
“For those who are now thinking about buying a home, a window of opportunity is opening to invest before the exchange rate gains speed and starts to grow after the commercial one. This situation is likely to accelerate investors who are ready to pay the full price immediately,” the expert told the agency.
In addition, the situation has become unpredictable for those who planned to take out a long installment plan to buy a home.
“While the NBU exchange rate was unchanged for more than a year, investors could clearly calculate their payments. Now the situation will be unpredictable. Therefore, developers will try to take control of the situation: for example, to fix the exchange rate for a certain period in order not to lose a buyer and demonstrate loyalty,” Karakhanyan said.
As reported, on October 3, the National Bank of Ukraine switched to a regime of managed exchange rate flexibility.
Since the beginning of autumn, the primary real estate market has seen an increase in transactions for the purchase of business class apartments with an average price of $2 thousand per square meter, Daria Bedia, Marketing Director of DIM Group, told Interfax-Ukraine.
“According to our analysts’ research, business class now accounts for 25% of the sales structure, although this figure was 15% in the spring. Such signals are encouraging, so we expect an increase in demand this fall. Of course, everything will depend on the news at the front, the frequency and consequences of shelling in the capital and possible power outages. We are also well aware that this category of buyers is likely to leave Ukraine for the winter in late fall,” Bedia said.
According to her, the level of demand is directly influenced by the project itself and its concept, stage and activity of construction. Important criteria include the developer’s reputation, ability to keep its word in terms of deadlines and promises, as well as flexible purchase terms in case of 100% payment and installments. Much attention is paid to the type and quality of materials, spatial zoning, landscape design, service company, security and concierge services. People who choose business class value a sufficient number of parking spaces and an underground parking lot with an elevator to the residential floors.
According to DIM Group analysts, apartments with the correct layout are in high demand, more often either classic layout solutions or Euro-formats with spacious kitchens-living rooms and isolated private rooms.
The area of one-bedroom apartments, which are most often bought in the business segment, reaches 50-55 sq. m, two-bedroom apartments – 75-80 sq. m, three-bedroom apartments – 100-120 sq. m. According to DIM’s Marketing Director, the mandatory attributes of such apartments are a large living area with panoramic windows of 30 sq. m. or more, a master bedroom with a dressing area and a separate bathroom of 20 sq. m., and a children’s room of 25 sq. m. or more with a wardrobe.
At the same time, the tendency to reduce the average area of purchased apartments continues.
If earlier, according to her, in the business class were interested in three-bedroom apartments in the range of 120-150 sq. m., now up to 120 sq. m.; while two-bedroom apartments are now more in demand in the range of up to 85 sq. m. against 85-100 sq. m. earlier. Only the demand for one-bedroom apartments has not changed at the level of 50-55 sq. m.
“The average area of apartments in terms of demand decreased by 10-15%. But the bulk of the sold objects were designed before the war, so developers still have large apartments that are not very interesting to buyers. After all, the total purchase receipt is more important nowadays. Therefore, developers offer more flexible terms for large apartments in terms of installments and discounts,” Bedia summarizes.
DIM Group was founded in 2014 and includes six companies covering all stages of construction. So far, it has commissioned 12 houses in six residential complexes with a total living area of over 218 thousand square meters. Six comfort+ and business class residential complexes are under construction: “New Autograph, Metropolis, Park Lake City, Lucky Land, etc.
