Investment real estate operations: overview of commercial and residential market segments
Last year was a record year for the global commercial real estate market. The volume of investments increased by 4% and reached the highest index for 10 years – 733 billion dollars. This indicates the development of the segment and growth in demand for space. Investment transactions with real estate remain one of the most profitable, which confirms the review of the market in different cities and countries.
The most promising in terms of investment remains London and New York. The third place is occupied by Paris. Real estate in major metropolitan areas remains the most in demand, despite the regularly rising prices.
The Ukrainian market does not have such scale, but there is a good growth dynamics. Large companies and investors are increasingly paying attention to local real estate, expecting high profits. Over the past year, increased demand was observed in almost all segments, vacancy rate decreased and rental rates increased. These figures are a good sign for investors to make a tangible profit in the future.
Not only domestic companies, but also foreign ones pay attention to the Ukrainian market. This is due to the fact that in Europe the number of interesting objects in terms of income is decreasing.
The payback in the Ukrainian segment is within 7-10 years. It is influenced by the object area, location, liquidity. The yield of 12-15% per annum is considered high, but in stress and problem assets this indicator will be higher, although the risk is also high.
The popularity of investing in residential real estate does not decrease. In Kiev, the cost of apartments is quite high. For example, the average price per square meter in a new building is 24 thousand UAH, the figure varies depending on the city area. The payback period is about 8.5 years if the apartment is rented.
An important point is the selection of an object for the attachment. Primary and secondary markets have their pros and cons. New constructions provide the big profitableness, but this variant also has risks.
The investment demand for apartments in the capital for some years has subsided, but it is insignificant. About 15-20% of them in Kiev are purchased for further lease.
Another option to generate income is to buy a house at the initial stage of construction and sell it after it is put into operation. This gives an opportunity to make a profit of about 44% within 2 years. Rentals generate an average profit of 12% annually. The minimum amount for investment in residential real estate is 500 thousand UAH – this is how much a studio apartment costs in remote areas of the capital. Not everyone has this amount, so people take mortgage loans from banks.
The real estate market in Ukraine has its problems, but over the past few years there has been a positive trend and the number of investment transactions is increasing.
