Refugees from the war-torn Donbas are driving demand for apartment rentals in Kyiv, boosting rent prices at least 15 percent in the last three months.
In the apartment sales market, people from the two easternmost oblasts of Donetsk and Luhansk account for 70 percent of demand for apartment purchases on the secondary market, according to Korrespondent.net, citing dom.ria.com, a real estate agency website.
An estimated 45,000 people from the Donbas are living in the Kyiv metropolitan area, with more than 3 million residents, according to Volonterska Sotnya, a civic movement that provides assistance to displaced people. Some lived in summer shelters provided by the Ministry of Social Policy, but now are in search of shelter before the winter.
“We came here with my mother in August. It was extremely hard to find accommodation since many fraudsters are trying to make money on refugees,” Kateryna Kovalivnych, 25, a native of Donetsk, told the Kyiv Post. “Many owners don’t want to lease apartments to refugees… My case was easier since I’ve found a job of as a shop assistant in Kyiv. My mother and I don’t plan to go back (to the Donbas) for at least a year, because even if all calms down, a lot of time will be needed for reconstruction in the region.”
The Kovalivnychs rent a room in a two-room apartment that they call “bearable.” The daughter laments it takes a lot of effort to go through the bureaucracy to get state support in resolving the housing issue.
The newcomers’ appearance, however, haven’t significantly affected sale prices, stated Zakhar Fedorak, chief editor of real estate web-portal 100realty.ua.
“Rent deals have somewhat gone up, prices are going to stabilize now at Hr 3,500-4,000 for a small flat somewhere not in downtown after a recent increase,” added Serhiy Kostetsky, an industry expert with SV Development, a real estate consultancy.
Realtors say that as soon as the refugees regain access to their currently frozen savings accounts, they’ll be able to rent or buy more apartments in Kyiv.
The hryvnia currency’s 38 percent devaluation this year pushed prices for residential property in Kyiv up by 47 percent on the after-market, and 19 percent for new ones, though prices in U.S. dollar terms have been declining.
A square meter in a new apartment currently goes for $1,103. On the secondary market it averages $1,226 per square meter, according to SV Development. Ukraine is known for higher secondary market prices because new apartments, especially at the low-to-mid price categories, often require substantial investment for floors and plumbing that are often not included.
Apartment sales have dropped by 9 percent since January, with primary market deals exceeding those on the secondary market. Nearly half of deals in both markets involve two-room apartments.
Only 14 percent of transactions exceeded $100,000.
Edward Brazas, chief statistician at the Ukrainian Association of Realtors, doesn’t foresee sharp moves in real estate prices by the year’s end. “Now the number of transactions on the secondary market in Kyiv counts for hundreds, not for thousands as before. On the primary real estate market, the situation is better … but there are also not so many buyers,” he said during an Oct. 9 news conference.
An underdeveloped mortgage market is another reason lagging sales, says Fedorak of 100realty.ua. Some banks, like the biggest privately-owned Privat, abandoned all mortgage offers except for those backed by the State Mortgage Agency. Others, like Delta Bank, provide mortgages only for the new apartments built by certain developers.
The interest rate for mortgage loans of 5-15 years can exceed 20 percent, while the European Union average is 2.6 percent. This drives apartment buyers to seek mortgage offers with housing developers. The State Mortgage Agency provided Hr 80 million in loans through September, 45 percent less than the same period last year.
Kostetsky of SV Development says real estate could become an alternative investment destination for at least a portion of the Hr 104 billion of withdrawn banking deposits because hording cash is risky.
This would let the market grow, he noted.
Kyiv Post staff writer Olena Gordiienko can be reached at [email protected]
