An answer to this question is not as obvious as you think. The vast majority of investors or even ordinary people would definitely say no, but we also have to consider factors that make Ukraine an attractive investment destination.
Undoubtedly, the main and the strongest argument is growing influence of Europe and US on country’s economy. Ukraine receives billions of dollars credits by agreeing to be partly controlled by them. So, in case of any illegal actions in regard to their companies, they will just stop crediting, which will lead to a collapse of weak Ukrainian economy. Briefly, it means that international investors are less likely to be affected by corruption schemes comparing to domestic companies. Taking into account the low land price and willingness of the authorities to look “Democratic” and “European” in creditors’ eyes, investors don’t have to be afraid of project’s collapse due to corruption.
The second point that should attract international capital is low competition on the real estate market. According to nation’s mentality, majority of development companies are likely to take part in high-end and expensive projects. Affordable real estate market is in a terrible condition as companies operating in this segment prefer to use old technologies, which make their projects expensive and irrelevant in terms of common sense. It gives huge opportunities for foreign investors and development companies as they have money, technologies and relevant experience. On the other hand, high-end developers use relevant technologies and create good projects, however the balance between quality and price in some projects is a bit inadequate. According to these facts, all niches of real estate market in Ukraine are open for new companies.
Some figures also show the attractiveness of a number of spheres in the market. According to Colliers 2013 report, total stock of office space in Kiev is 2.5 times smaller than in Warsaw (Kiev is about two times larger in terms of population and area!). It proves that when Kiev will reach Warsaw’s level of economic development, it will require a few times more office space than now. In other cities situation is even worse. It draws the conclusion that Ukrainian real estate market is only in its infancy and is ready to accept new players and new investment flows.
However, negative factors like conflict with Russia, unstable political and economic situations, and social tension also exist. These issues have very strong pressure on decisions about investments in Ukraine, not only in real estate market. But we have to remember that massive risks bring massive benefits.
So are you ready to invest in Ukraine?
Author: Valerii Ivanets
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