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Last Updated: Mar 31, 2013




House prices continue to recover in Ukraine:
  • In Kiev, secondary market apartment prices were up 5.1% in March 2013 compared to last year, at an average of US$ 1,951 per sq. m.
  • Primary market average prices rose by 6.7% to US$ 1,748, over the same period.

The Ukraine is still crippled by the after-effects of the great housing boom (2004 to 2008) which saw average Kiev apartment prices surge 300%. In the wake of the boom’s collapse - house prices are still 46.2% below their from September 2008 US$3,627 per sq. m peak, according to S&V Development -  the currency lost massively in value, the banking system collapsed, and GDP shrunk 15% in one year.

Ukraine’s economic recovery is being held back partly by concerns about President Viktor Yanukovych, elected in 2010.  His political dominance increased in 2012 with the victory of his Party of Regions in parliamentary elections.  Few believe the result was free and fair.  Most problematic is the imprisonment of former Prime Minister Yulia Tymoshenko.  Unless she is freed, the EU is unlikely to ratify the Association Agreement.

Ukraine’s economy slowed sharply in 2012, growing only 0.2% because of the euro crisis, and tighter monetary policy.  Ukraine’s GDP is predicted to grow 2.5% in 2013.

In January 2013, a real estate tax was introduced, applying to residential property owners of apartments more than 120 sq. m. and residential buildings higher than 250 sq. m.

The tax rates for 2013 are:
  • UAH 11.47 (US$ 1.41) per sq. m. for apartments with “living space” on, or less than, 240 sq. m. and residential buildings with living space on or less than 500 sq. m.
  • UAH 30.97 (US$ 3.80) per sq. m for apartments with living space above 240 sq. m. and residential buildings with living space above 500 sq. m.

Ukraine house prices“Living space” excludes kitchens, dining rooms, corridors, bathrooms, and storage rooms

There are no major restrictions on foreigners buying property in Ukraine.  All secondary residential transactions (i.e., resales) are in US dollars, while primary sales are quoted in hryvnia, but still paid in dollars.

Analysis of Ukraine Residential Property Market »


RENTAL YIELDS
Last Updated: Jan 08, 2007



Yields in Kiev range from 7.50% - 10.2%, by Global Property Guide estimates. The average price per square metre (sq. m) of apartments is around €2,930.

Please note however that our yields data for Ukraine is now very old. They were last updated in January 2007, and the recent price rises mean that these figures may no longer be accurate.

Read Rental Yields  »



TAXES AND COSTS
Last Updated: Sep 03, 2014



Rental Income: Gross rental income of nonresident foreigners is taxed at a flat rate of 15%. Leasing a property is also subject to 20% VAT.

Capital Gains: Capital gains are taxed at a flat rate of 1%. The sale of buildings or premises is also subject to 20% VAT.

Inheritance: Inheritance tax is imposed at a flat rate of 30% if the successor is a nonresident and the benefactor of Ukrainian property is also a nonresident.

Residents: Residents are taxed on their worldwide income at a flat rate of 15%.

Read Taxes and Costs  »



BUYING GUIDE
Last Updated: Dec 05, 2013



Roundtrip transaction costs, i.e., the total cost of buying and selling a property, are around 5% to 7% of the property value. The agent's commission is around 3% to 5% of the property value. Other costs include pension fund levy (1%), state duty (1%) and registration fees.

Read Buying Guide  »



LANDLORD AND TENANT
Last Updated: Oct 09, 2006



Ukraine house pricesRent: Rent and rent increases can be freely negotiated. The parties may agree on the procedures for periodic rent increases (i.e. depending on inflation). This must be stipulated in the lease contract.

Tenant Eviction: A landlord can terminate a lease without prior notice and without application to the courts, if the tenant has failed to pay rent for three consecutive months.

Read Landlord and Tenant  »



ECONOMIC GROWTH
Last Updated: Mar 31, 2013


Ukraine's GDP deceleration in 2012, positive growth in 2013

In 2012, Ukraine’s economy expanded by only 0.2% y-o-y, a sharp deceleration from 5.2% growth in 2011, according to the State Statistics Committee. The decline in y-o-y growth was not really surprising since the economic downturn was already felt during Q3 2012, as GDP contracted by 1.3% y-o-y. The situation worsened in Q4 2012, as GDP plunged by 2.7% y-o-Renewed economic growth during the first two quarters (2% in Q1 and 3% in Q2) has helped avoiding contraction in the entire year.

The recent euro zone debt crisis has hit Ukraine’s economy causing a decline in external demand and affecting the performance of export-oriented industries. Meanwhile, the local economy was dampened by tight monetary policy aimed at defending the currency peg.

Ukraine’s economy is expected to improve in 2013 with a real GDP growth of around 2.5%. Ukraine experienced unusually low 0.2% y-o-y inflation in December 2012, a continuous decline from 4.6% in 2011 and 9.1% in 2010. In 2013, inflation is expected rise to around 8% y-o-y due to the increase in tariffs for energy. Unemployment was 7.8% in 2012, a slight decline from 7.9% in 2011, according to the IMF.

The country’s budget deficit widened to around 3.8% of GDP in 2012. Including Naftogaz and Pension Fund deficits, the public sector deficit is estimated at 6% of GDP.

Ukraine is in talks with the IMF for a US$15.4 billion loan, partly to repay foreign debts that will peak at US$9 billion this year. The new agreement, if reached, could reduce the estimated fiscal deficit to around 4% of GDP in 2013. However, before it happens, Ukraine must first fulfill IMF’s condition that includes raising gas prices and allowing depreciation of its currency.

Ukraine is a deeply divided country. The Russian-speaking Eastern half leans towards Russia, while the Ukrainian speaking Western half leans toward the West.

The country’s tragedy is that the Orange Revolution of 2004, which forced a second Presidential election after protests and resulted in a clear victory for Viktor Yushchenko (with 52% votes) over Viktor Yanukovych (with 44% votes), has never bore fruit.

Yushchenko instituted no reforms, and proved an ineffective leader. He quarreled deeply with his former ally Tymoshenko, who he saw as corrupt and accused of being a covert friend of Russia.

The result of the split in the pro-Western party has been the election of a pro-Russian president, Viktor Yanukovych. Yanukovych barely won the 2010 Ukrainian Presidential Election against his fierce nemesis, Yulia Tymoshenko. Then in March 2010, Mykola Azarov, a close ally of the President, was appointed Prime Minister to replace the dismissed Tymoshenko.

Just months after the elections, Tymoshenko was arrested by the new government. And in October 2011, she was sentenced to seven years in prison after being convicted of overstepping her authority over a natural gas deal negotiated with Russia in 2009. Tymoshenko’s incarceration and alleged maltreatment in prison has sparked outrage throughout Europe. Ukraine was forced to cancel a regional political conference in Yalta, after majority of European heads of state declined to attend in protest over Tymoshenko’s imprisonment. The dispute has also led political and free trade agreements between Ukraine and the EU being shelved.

In the recent Ukrainian parliamentary election last October 2012, President Viktor Yanukovych’s Party of Regions obtained 185 seats, followed by the opposition Fatherland with 101 seats. Perceived the abuse of power, media control and incarceration of two prominent opposition leaders played a role in the results.







  • High yields in Kiev
  • Pro-landlord rental market
  • Low transaction costs
  • Moderate rental income tax rate
  • Strong GDP growth
  • Expensive property relative to GDP
  • Corruption & instability woes
  • Vulnerable to winds of crisis
  • Weak property rights
RESIDENTIAL PROPERTY FACTS
Price (sq.m): €2,807 For a 120 sq. m. property, usually an apartment.
Rental Yield: 9.09% For a 120 sq. m. property, usually an apartment.
Rent/month: €2,550 For a 120 sq. m. property.
Income Tax: 15.00% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 6.00% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.
Cap Gains Tax: 15.00% Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord and Tenant Law: Pro-Landlord Rating is based on a detailed study of each country’s law and practice.

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News & Discussion
MARCH 2010

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