In 2018, investment transactions in the global commercial real estate market set an absolute record. According to the company JLL, last year the volume of investments grew by 4% and reached its maximum level in a decade – 733 billion dollars.
Most of the money invested in real estate in London – $ 36.4 billion, New York was in second place – $ 31.4 billion, and in third Paris – $ 27.2 billion. Experts said that, despite the exorbitantly high prices, investors continue to choose big cities anyway.
Let’s see how things are going with real estate investments in Ukraine, which market is better to choose, primary or secondary, and how much will such investments pay off.
Investors are increasingly investing in Ukrainian real estate.
The aforementioned studies dealt specifically with the commercial real estate market, i.e. large companies and investors, and not about individuals. Despite the fact that Ukrainian cities clearly do not fall into the lists of the most popular and interesting for investors, the real estate market here is also not idle.
“Following the results of 2018, practically in all segments of commercial real estate there was an increase in demand from tenants, a decrease in the vacancy rate of premises, which consequently affected the increase in rental rates. This is the main indicator for investors who specialize in investment in commercial real estate, because these signs usually lead to an increase in the cost per square meter in the medium term, ”said InVenture investment company in the commentary today, adding that investors was quite tangible.
Earlier it was reported that the attractiveness of the Ukrainian real estate market for foreign investors is growing. Experts note that this is due to the decrease in quality and affordable assets in other European countries. The Ukrainian real estate market is so far underestimated, and there is a possibility of rent growth in all segments of commercial real estate – commercial real estate, offices, warehouses, etc.
As for payback, depending on the type of real estate, the time it takes to pay off varies.
“Depending on the commercial real estate segment, the average return on investment that is acceptable to investors today varies from 7 to 10 years, depending on the size of real estate, location, liquidity and other factors. In 2018, we accompanied several sales transactions of commercial real estate where its profitability varied in the range of 12-15% per annum. Also, a number of investors are interested in stressful and distressed assets, where the level of profitability and risks are correspondingly much higher, ”explains InVenture.
Investment in housing remains reliable and popular
In addition to investments in commercial real estate, the option of investing directly in housing remains popular. Housing prices in Kiev have traditionally remained quite high. The average cost of one square meter in the capital new building is about 24 thousand UAH. But do not forget that much depends on the area: it is cheaper to buy housing in Desnyansky district, where one square meter will cost UAH 16,800, in Darnytskyi the price will rise to UAH 18,500, in Solomenskoye – UAH 22,700, in Goloseevsky 24 thousand. uah
According to various real estate portals, the average price of a one-room apartment in Kiev is 38 thousand dollars (about 1 million UAH). If you take the average price for renting single property with a good repair of about 10 thousand UAH, we see that investment in such an apartment will be repulsed in 8.5 years. This, if we are talking about investments for the delivery of housing for rent, but there is another option – the purchase of real estate and the subsequent sale with an increase in price.
Investment in residential real estate remains popular. After all, this is a stable, reliable income that you can provide for yourself for many years.
“Investing in real estate, in particular, in housing, is one of the most reliable tools for saving money, as the market situation in the period 2016-2017, when many holders of bank deposits cashed them out with the aim of reinvestment in square meters, speaks directly,” explains Roman Gerasimchuk, Director of City Development Solutions.
How to choose a property for investment?
Perhaps the first thing a person thinks about when searching for real estate in which he wants to invest money is the choice between the primary and secondary markets. The company City Development Solutions noted that the primary housing market has significant advantages compared to the secondary in terms of profitability, but there are also big risks.