The primary housing market is attractive for investment only in 8, and the secondary market - in 14 regional centers of Ukraine - the results of a study by GIS "Uvekon".
The primary housing market is attractive for investment in 8, while the secondary market is attractive in 14 regional centers of Ukraine.
This was based on the study "Investment attractiveness of residential real estate in the regions of Ukraine", conducted by the Geoinformation portal "Uvekon", said Roman Shepetko, investment analyst at GIS "Uvekon".
According to the study, in 2020 the most attractive for investment in the primary housing market were the following regions: Vinnytsia region - compared to 2019, prices in the primary housing market in dollar terms increased by 25.5%, Khmelnitsky region - by 14.9 %, Zakarpattia region - by 13.4%, Kherson region - by 12.9%, Donetsk region - by 12.6%, Volyn region - by 12.6%, Cherkasy region - by 11%, Rivne region - by 10.8%, Mykolaiv region - by 10.5%.
The primary housing market is attractive for investment in 8, while the secondary market is attractive in 14 regional centers of Ukraine.
This was based on the study "Investment attractiveness of residential real estate in the regions of Ukraine", conducted by the Geoinformation portal "Uvekon", said Roman Shepetko, investment analyst at GIS "Uvekon".
According to the study, in 2020 the most attractive for investment in the primary housing market were the following regions: Vinnytsia region - compared to 2019, prices in the primary housing market in dollar terms increased by 25.5%, Khmelnitsky region - by 14.9 %, Zakarpattia region - by 13.4%, Kherson region - by 12.9%, Donetsk region - by 12.6%, Volyn region - by 12.6%, Cherkasy region - by 11%, Rivne region - by 10.8%, Mykolaiv region - by 10.5%.
Roman Shepetko noted that among the regional centers the investment attractiveness of the primary market is somewhat different: in Vinnytsia, the growth of prices in dollar terms on the primary market in 2020 is 26.6%, in Khmelnytsky - 16.9%, Lutsk - 15.1% , Kyiv - 14.8%, Cherkasy - 11.8%, Sumy - 11.8%, Rivne - 10.7%, Kherson - 10.3%.
"The growth rate of prices in the primary housing market in these regions and regional centers exceeded the return on alternative investments, such as the purchase of domestic government bonds, interest on bank deposits," he said.
At the same time, according to him, the growth of prices for primary housing in Sumy region (10%), Mykolayiv (9.9%) and Uzhhorod (8.8%) was equal to the return on alternative investments: they were lower than the return on IGLBs nominated in the primary market. hryvnia (yield 10.2%), but higher than the average interest rates of banks on time deposits for individuals, which amounted to 8.7%.
The growth rate of prices in the primary market of apartments in other regions was lower than the return on the above alternative ways of investing.
In the secondary residential real estate market, according to the results of the Review of investment attractiveness of residential real estate in the regions of Ukraine 2018-2021 (7 months), the most investment-attractive regions of Ukraine in 2020 were: Khmelnytsky - dollar price growth was 18%, Chernihiv - 15 , 3%, Dnipropetrovsk - 14.7%, Rivne - 14.2%, Kyiv - 13.4%, Poltava - 13.3%, Volyn - 12.9%, Vinnytsia - 12.5%, Sumy - 12, 2%, Zakarpattia - 11.3%, Kirovohrad - 11.2%, Zaporizhia - 11.1%, Zhytomyr - 11%, Cherkasy - 10.6%.
In regional centers, according to this indicator, the highest positions in 2020 were occupied by: Khmelnytsky - the cost of apartments on the secondary market increased by 19%, Chernihiv - by 16.2%, Sumy - by 15.9%, Poltava - by 15.2%, Rivne - by 14.2%, Zaporizhia - by 13.4%, Kramatorsk - by 13.1%, Lutsk - by 13.1%, Uzhhorod - by 13.1%, Zhytomyr - by 12.9%, Cherkasy - by 12.8%, Severodonetsk, where at the time of the study the leadership of Luhansk region was located - by 12.5%, Dnipro - by 11.9%, Kyiv - by 11.2%, Vinnytsia - by 11.1%. Real estate growth rates in the above regions exceeded the return on alternative investments.
"The growth rate of prices in 2020 in the secondary housing market in US dollars in Donetsk (9%) and Kharkiv (8.8%) regions, as well as in Kropyvnytskyi (10.2%) were at the level of profitability with alternative sources of investment" , - Roman Shepetko told.
The analyst said that in other regions and regional centers of Ukraine, the growth rate of prices on the secondary market was lower than the yield on IGLBs and interest rates on bank deposits.
In the rating of investment attractiveness in the segment of households, the most investment-attractive regions were: Kyiv region - according to the results of 2020, the growth of prices in US dollars was recorded at 18.2%, Kirovograd - growth - by 17.5%, Vinnytsia - by 14.2% , Mykolayiv - by 13.9%, Dnipropetrovsk - by 10.7%, Zhytomyr - by 10.6%.
In this segment of housing, the highest positions in 2020 were occupied by the following regional centers: Sumy - an increase in value by 18.9%, Poltava - by 18.4%, Cherkasy - by 17.7%, Lutsk - by 15.8%, Dnipro - by 15.1%, Kyiv - by 13.4%, Chernihiv - by 12.4%, Zhytomyr - by 11.7%, Kharkiv - by 11.2%, Severodonetsk - by 10.9% and Mykolaiv - by 10 , 5%.
“The growth rates of household prices in 2020 in Kharkiv (9.9%) and Poltava (9.6%) oblasts, as well as in Khmelnytsky (8.8%) and Kropyvnytskyi (8.6%) were equal to the yield from alternative methods investment. In other regions and regional centers, the growth rate of household prices was lower than the yield on IGLBs and bank deposits, ”Roman Shepetko stressed.
In turn, Volodymyr Shalayev, CEO of Uvecon Group of Companies, commenting on the results of the study, stressed that over the past 3 years, the investment attractiveness of residential real estate was based on several key factors, including: 1) limited opportunities to store and increase funds; 2) low confidence in government securities, which are domestic government bonds, 3) the development of new quality housing formats, 4) partial inflation and rising consumer prices for goods and services, 5) declining returns in 2020 from investing in IGLBs, and also reduction of interest rates on time deposits for citizens.
According to him, at the moment more than 60% of all investors who buy housing, trying to at least save their money. More than 75% of them invest in the primary housing market: mainly in the initial stages of construction, when the cost of m2 is 15-20% less than the price of a comparable apartment on the secondary market, taking into account location, year of construction, planning, developed infrastructure and more.
From 2018 to now, from the moment of investing in the primary market to the sale of rights to the future apartment (3-4 months before the commissioning of the object), a potential investor could receive a return on investment of an average of 30-35% in hryvnias (over 20% in dollars), ”the expert said.
He reminded that interest rates on bank deposits for a period of 12 months in the period from 2018 to July 2021 in hryvnia decreased on average from 14.9% to 7.5%, and in US dollars - from 2.9% to 0, 8%. Instead, during this period, the cost of housing in the primary market in dollar terms in the most investment-attractive regions increased by at least 15%.
“In Kyiv, the growth of prices on the primary market during this period is 44.6% in US dollars, and in Kyiv region - by 40.9%. In the secondary housing market, the rise in prices for apartments in Kyiv is 34.8%, and in the Kyiv region - 35.1%. Obviously, the housing market for many investors was and is the most attractive and virtually unalterable for maintaining and increasing the available wealth, "- said the expert.
He stressed that in the last 2-3 months there has been a gradual trend of slowing down the growth rate of housing costs. According to him, during 2022, price fluctuations in dollar terms, both in the primary and secondary markets, will not exceed 0.5-1.5% per month. After all, effective demand is almost exhausted and without a significant increase in incomes and the development of affordable mortgages at 3-5% per annum, it is now almost impossible to expand the circle of buyers.
“Solvent demand is 90% realized. This is the main reason for the slowdown in prices in the residential real estate market. By all indications and under the conditions of maintaining relative economic stability, in 2022 we will observe relative price stability in almost all segments of residential real estate, ”Volodymyr Shalayev summed up.
A detailed report on the results of the study "Investment attractiveness of residential real estate in the regions of Ukraine" can be found at: https://www.uvecon.ua/en/product-oglyad-investitsiynoyi-privablivosti-zhitlovoyi-neruhomosti.html
Note:
The study "Investment attractiveness of residential real estate in the regions of Ukraine", conducted by GIS "Uvekon", covers the period 2018-2021 (7 months). In 2018-2020, the average prices for the year were taken for calculation and set with the previous year. In 2021, the average prices for 7 months of 2021 (January-July 2021) were taken into account and compared with the same period of the previous year (January-July 2020).
The study "Investment attractiveness of residential real estate in the regions of Ukraine", conducted by GIS "Uvekon", covers the period 2018-2021 (7 months). In 2018-2020, the average prices for the year were taken for calculation and set with the previous year. In 2021, the average prices for 7 months of 2021 (January-July 2021) were taken into account and compared with the same period of the previous year (January-July 2020).
Average prices for residential real estate were taken in dollar equivalent and were calculated for each region of Ukraine and the regional center. To calculate the price dynamics, the average prices for residential real estate in each region and the regional center were taken.
Data on average rates on bank deposits are available on the official website of the National Bank of Ukraine (NBU). The dynamics of this indicator in 2018 was 14.9%, in 2019 - 14.9%. In 2020, the average interest rates on time deposits of individuals decreased to 8.7%, in July 2021 this figure was 7.5%.
The study used data on the yield on domestic government bonds (IGLBs) in the primary market, denominated in UAH. The data were obtained on the official website of the National Bank of Ukraine (NBU). The dynamics of IGLBs yield in 2018 was 17.79%, in 2019 - 16.93%, in 2020 - 10.2%, in July 2021 - 11.66%.
Information
Uvecon is a network group of appraisal and consulting companies established in 1992.
Uvecon provides professional services for business valuation and consulting, shareholdings, corporate rights; real estate (land, buildings and structures, apartments, cultural heritage sites); assets for international audit; integral property complexes; movable property (equipment and machinery, vehicles, goods in circulation, etc.); intangible assets, including rights to intellectual property (trademarks, patents, know-how, etc.); movable objects of cultural heritage.
Information support of the assessment is due to the Information and Analytical Center for Real Estate Market Research established in 2007. As part of the Analytical Center, the All-Ukrainian unified geoinformation system for collecting, analyzing, searching and visualizing price indicators of the real estate market of Ukraine (GIS Uvekon) was created. This product is an interactive work platform for real estate market participants, which allows the Customer to work with databases and analysis results online.
Leading specialists of Uvecon companies have certificates from the Royal Institute of Certified Appraisers (RICS) and the European Association of Appraisers (TEGoVA).