For private investors — 90% of the risk at a minimum: overview of the real estate of Ukraine

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Для частных инвесторов — 90% риска как минимум: обзор недвижимости Украины

Breaking news regarding the real estate market in Ukraine in June 2017

The sales market

According to the monitoring of ARPA Real Estate, in January-April 2017 in Kiev has sold 1740 apartments (including 735 in the primary market), while during the same period last year 2475 (1220). Thus, demand has fallen by 70%.

The market held by the so-called organic demand when housing is purchased by buyers for themselves, not for resale and primarily in the format of a transactions chain, “—says managing Director of ARPA Real Estate Michael Artyukhov for the resource dengie. The reasons for the falling demand several. First, the stabilization of the banking system (not in that sense. now it’s reliable, and that ceased to fall, large banks). No serious outflow of deposits, no significant cash flow of the guarantee Fund is the account from last year sales remained at a high level. Secondly, influenced by the stabilization of the dollar, because with it stopped and the prices of developers. Moreover, the sagging of the us dollar in combination with increasing the supply of housing on the market (today are offered for sale 55 thousand apartments in the 219 objects, whereas last year at this time — almost 20% less) encourages buyers to wait. However, while the cost per square meter decreased mainly in the business and premium segments.

On the residential real estate market continues to grow offer, but demand is limited and important factors to increase it in the short term, no. This creates excess supply, which gradually accumulates. Lending volumes are too small to stimulate demand and affect prices, “—noted the authors of the report of the national Bank of Ukraine on financial stability.

Demand is affected by another important fact. The correspondent of the edition “News-Ukraine” in an interview with the President of the League of experts of Ukraine Svetlana Bovsunovskoy, gives the following statistics: every 15th transaction in the real estate market is fraudulent with one of the parties. And the expert confirms his information: “It’s true. I would even say that for private investors there is 90% risk of at least… the Problem is that people act on these low prices. The situation may be such that the house is built, but stopped and cancelled everything, even the Declaration of commissioning, served lawsuits, arrests. And people have already invested 100% building a house and can’t move“. According to her, the leader in such situations is the Kiev region — it accounts for the largest number of lawsuits related to illegal construction.

Actually, the suburbs is a leader in fraudulent schemes. Director of the project company AIMM Grup Anna Iskierdo says that the region today is built more housing than in the capital.

Also the market has finally reacted to the request of the buyer of mass: a small shelter for a minimal price. According to research of consulting company City Development Solutions, 60% of the apartments in new buildings, which are now exhibited in the market for sale at “the stage of excavation” — apartments of small metric area. And to further reduce their cost, the developers increase the total number of apartments in housing complexes, thereby reducing the costs per apartment, which gives the opportunity to expose them attractive for the buyer price.

Confirmed projections for the secondary property market. According to the observations of realtors, owners of property built before 2000 began more willing to bargain, after every month of downtime, especially during the heating season, worth a round sum: Studio apartment, stood unsold from October to April, will cost 500-600 dollars. According to the specialist real estate Agency City New Life Vitaly Blaska, the overall situation looks like this: “If the object is sold at a price of $ 50,000 and more, the contract of sale, the price may drop to 2,000 to 3,000 dollars. In the sale of apartments at a lower price, the owners will likely concede to 1000 dollars“. If agents specify that most of the “secondary” on the market today are objects, whose owners have already lowered the price: originally, these apartments were offered for a price 10-15% higher than actual. The consulting company SV Development clarify that during January-may, the price of apartments in the secondary market (downtown and near-downtown areas of Kiev, not elite real estate) decreased by 2.5% YTD to $ 1132 per square meter. And according to ABCnews in may 2016, prices for secondary housing in Kyiv has dipped by 12%, from may 2014 — 38%.

With the beginning of the year in Lviv, Dnipro (former Dnepropetrovsk), Odessa, prices have decreased in 2,3−3%, to 890, 723 and $ 900 per square meter, respectively.

The state fiscal service further clarified the procedure for the sale of real estate. So, selling more than 3 objects per year (or natural persons) fall under the definition of “entrepreneurial activity, and therefore is taxable. Today, the SFS conducts audits for 2014-2016 and, in the case of detection of such transactions, donaciinae the appropriate amount of taxes: 18% of earned income (in the case of legal entities), as well as ERUs and, in some cases, VAT (in the case of physical persons), not to mention the penalties of 25-50% of the income. The only thing that saves investors — the courts refuse to side with the GFS and make decisions in favor of the defendants.

The rental market

Of the major cities in the three of leaders by the number of sentences, Kiev, Odessa, Kharkov. The last is somewhat unusual, because the cost per square meter of Kharkov usually inferior to the Dnieper. In turn, Odessa with the onset of the summer season is very close to the capital via the price expectations of landlords. if in Kiev the average rent starts from 6 thousand UAH (in the range of 7-8 thousand fits most transactions), then in Odessa 5-6 thousand today, the average rental rate. Of course, with the end of the summer season excitement in South Palmyra will subside. In Kharkov bet more democratic — 3-4 thousand UAH.

However, by the autumn of realtors advised to prepare for increased costs of rent: “we Can confidently forecast a gradual increase in prices for rental housing by 10-20% this year. This is due primarily to expected growth of prices for communal services“—warns the head of the portal Krysha.ua Vladimir Bogorad.

Analysts portal Domik.net add that to cities with traditionally high rental recently added Zhitomir — affected by its proximity to Kiev. He fell into the category of cities where the average rent for a one bedroom apartment in the building will cost from 6500 UAH. Strange, but located about the same distance in Chernihiv rent by about ⅓ cheaper.

Good news for tenants: the Supreme court, considering one of the lawsuits issued a ruling that will become a model for similar lawsuits — on the right of the owners to evict the tenants: “…a preferential right to the lease has the tenant, which is still rented property, paid for it and complied with all the terms of the agreement with the owner. He may be denied renewal of the lease only if housing is required for personal use to its owner or if the tenant has not informed the owner that it intends to exercise its priority right to continue to occupy the premises. Of course, reported in the form described in the lease. This applies both to the delivery of municipal or state real estate and housing people, “explains the court’s decision the senior partner of the law firm “Kravets and partners” Rostislav Kravets for meget.kiev.ua. Similar provisions apply to rental housing in many countries, but in Ukraine, until recently the rights of a tenant was much less protected by law than the rights of the owner of the property.

Construction

According to the Ukrainian state statistics service, the cost of construction works in housing construction in January-April 2017 increased by December 2016 5.5%, i.e. slightly ahead of inflation over the same period (4.9 per cent). For 4 months of builders completed work in the amount of UAH 6.6 bn, of which 2 billion in April. However, there is a 3 region, with strong construction activity — Kyiv, Odessa and Kharkiv region (434, 382, 112 million UAH of construction in April 2017 respectively). We can say that they are pulling the industry itself. In other regions, build a little, and in three (Donetsk, Luhansk, Transcarpathian region) have practically ceased to build in General: 1-1,5 million of work per month. In General, for a specified period in Ukraine performed construction works at UAH 20.3 bn.

On the other hand, the value of work performed cannot be so objective criterion for the evaluation of the real estate market, since the cost per square meter continues to decline. So, we see that the cost of work actually increases on par with inflation, thus offsetting the rising price of materials, fuel, rental equipment, etc. However, the statistics show that during the first quarter of 2017 was commissioned 2.9 million square meters of housing, which is 20% more than the same period last year. Moreover, the last time so much was passed in the first quarter of 2014, i.e. before the beginning of the protracted crisis caused by the coup d’etat in February 2014. In addition, the specialists of “Euroracing”, recorded growth of construction, noted that the increase, albeit small, is in 18 of the 24 regions of Ukraine.

In the whole country the positive trend generated by the results of Kyiv, Kyiv and Odessa regions. Compared to the first quarter of last year, their total result increased by 288 thousand sq m (+66%). This is 92% of growth indices Jan-Mar 2016“, — said in comments ABCnews the General Director of “Euro-Rating” Grigory Pererva. And the worst situation is again not in the Donetsk and Lugansk regions directly adjacent to the war zones, and where the number of SMR on the bottom of the rankings. The worst housing in the Kherson region of Ukraine, where in I quarter of current year has built twice less than in the same period of 2016.

In the case of the adoption of the new General Plan of Kiev, the capital can give traditional the palm the construction of the city. The fact that one of his points is the almost complete prohibition of building on the left Bank of the Dnieper in the next 20 years. This is due to the fact that in previous years the left Bank was built most active. Because of this, the social infrastructure of the left Bank is overloaded. In addition, the Kiev bridges no longer stand up to daily morning and evening traffic (living on the left Bank, as a rule, work on the right).

Ukrainian analytical center indicates that the construction in the first quarter was one of the factors that has ensured GDP growth of 2.5% compared to the same period last year. The share of construction in GDP is 2%, while the industry grew by 21.3%. Plus estate activities (8% of GDP) grew by 6.2%. In other words, the construction and sale of real estate in the primary and has been a driver of economic growth (the agro-industrial complex, which is not tired to extol the government, worked with a small minus).

From June 10 to build multifamily housing in Ukraine Ukraine became a little bit easier. Entered into force the law “On improvement of urban development”, and the government has adopted several regulations in order for the law to work. In particular abolished the category of complexity of construction, now all the construction objects are classified in the class of consequences (from CC1 to CC3). For the start of construction of the SS1 do not even need to get permission to start construction, sufficient notification message to the local authorities. Also increased the intervals between inspections of facilities SS1 — every 5 years, CC2 — time in 3 years, CC3 — once in 2 years.

Deputy Minister “temporarily occupied territories” Georgy Tuka during a press conference announced how much money will be required for the construction of housing for IDPs, who were forced to leave Donetsk and Lugansk regions of the fighting: “According to optimistic calculations, in order to provide housing for 500 thousand families, the term is used — households, requires a minimum of $ 5 billion. If you take that 10 thousand dollars for the construction of any housing. Such no money in the budget, nor externally“. As previously reported, the German state Bank KfW is ready to help Ukraine with a loan for this purpose, however, of any billions it is not: discussed amount in the range of 150-200 million euros. Meanwhile, the government is thinking to abolish the taxation of construction companies that will undertake the construction of such housing.

Real estate tax

Approaching the start date of payment of this still new for Ukraine, tax until July 1, the owners of the facilities covered by the law (of the apartment area of 60 sq m and a house area of over 120 sq m) should receive a payment notice GFS. Meanwhile, Vice-President of the Ukrainian Union of Industrialists and entrepreneurs Yulia Drogovoz warns that the tax situation is anecdotal: according to her, the tax is, and a unified register of persons to whom it applies, is still there. First, the electronic registry data not available for facilities built before 2013. I.e. “…90% of the housing was only about 40% are listed in the electronic registry. Of those 40%, about 5% fall under the taxation“, — she told the UNIAN news Agency. I.e. theoretically absolutely real situation, when the owner of the apartment area of 65 sq m pays the tax, and the owner of fifty apartments — no. The latter usually use the rule that undelivered in service housing is not taxed.

Mall, offices, commercial property

According to the consulting companies Jones Lang LaSalle in Ukraine, in the first quarter of 2017 rental rates in the shopping center of Kiev has increased by 4.5% compared to the same period last year — up to $ 815/sq m per year. This could not prevent even the fact that the number of vacant premises in the capital of the TEC as at April this year amounted to 10%, i.e. 4% more than in April last year. Such data include the consulting company UTG. The reason for the increase in vacancy was the opening of Lavina Mall.

Ukrainian MPs continue to deny. This time might not be so lucky the restaurant owners in apartment buildings, as well as owners of grocery stores (if in stock products alcohol is present). Such proposals are contained in bill No. 6465, registered in the Parliament in late may.

In most cases, the location of entertainment venues, residents learned after providing the relevant authorities approvals and to deal with such an undesirable neighborhood, the courts are forced“—argue their position the authors of the bill in the explanatory Memorandum. As for the stores, the reason they want to ban them — the fight against the shadow market of alcohol.

Shop owners see the bill and the machinations of major retailers, because the sale of alcohol allows you to stay afloat many of them.

After years of wandering IKEA is finally able to enter the market of Ukraine — this was during a press conference said the head of the Board of the shopping center “Mandarin Plaza” Alexander Chernitsky. He says: at the end of the current year in Kyiv to begin construction of the SEC “Yuzhny” with a total area of about 450, thousand sq. m. IKEA Employees visited Ukraine and it is assumed that IKEA would become a tenant of the shopping center.

 

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