Residential property
2012 Year results
Kiev
Residential property
Kiev
Key Events
The structure of the real estate market in Kiev, $ / sq.m.
Verkhovna Rada of Ukraine adopted the
Law on the implementation of social
initiatives of the President of Ukraine
concerning the reduction of the cost of
hypothec loans. The law stipulates that
the State Budget of Ukraine for 2013 and
subsequent years, provides compensation
of interest paid to banks and / or other
financial institutions for loans obtained by
citizens for construction (reconstruction) or
purchase.
primary market
39%
secondary market
61%
RC Boulevard
Fontanov
The President of Ukraine signed the Law
under which notary offices starting from
January 1, 2013 can perform state
registration of property rights, other
proprietary rights and their encumbrances
for registered real estate objects with the
entering of the relevant information into
the National Register.
The state mortgage institution launches
a program of housing rent with the right of
redemption by 3% per annum. The
program is coordinated in all profile
ministries. It is expected to be approved
by the Cabinet of Ministers.
A distinctive feature of the new proposals in 2012 is
to reduce the flat area, so that the budget of buying an
apartment in a new building could be comparable with
the same purchase on the secondary market.
High construction activity of the primary market of
residential property in the course of 2012, the result of
which was the putting into operation of a number of
residential complexes in all segments of the market.
Downward adjustment of the average price to 4%
per year, caused by changes in the supply pattern in
the primary market in connection with the release of
new objects at the early stages of construction.
Volume of the new housing in Kiev, thousands sq.m.
1501
1600
1201
1301
1401 1430
1300
948
1012
Reorientation of demand for primary segment
combined with high construction activity of
developers, provoked an increase in sales by 25%.
Implementation by developers of their own credit
programs and loans had a positive effect on the
number of transactions.
Start of sales of apartments in new facilities with
30% and higher of building readiness. Increased
buyer’s interest to such projects was observed in
case if a large company acted as a developer with a
good showing in the market, and having active
construction work at site.
800
400
0
2005 2006 2007 2008 2009 2010 2011 2012
Ukrainian Trade Guild © 2013
The renewed interest of developers to the
development of the residential facilities. In 2012, the
developers launched a number of significant projects
in all segments different from those already existing in
the market with more rational planning and improved
infrastructure.
The development of large-scale projects, both by
land area and quantity of apartments.
1200
From January 1, 2013 a new type of a
local tax of the Ukrainian tax system shall
come into force - tax on real estate
property other than the land. The
apartments which area exceeds 120 sq.m
and houses over 250 sq.m. are subject to
the taxation.
Tendencies
Residential property
Kiev
Proposal
By December 2012 the amount of the primary
real estate market in Kiev was about 13.5
thousand apartments. Secondary segment of
residential real estate was about 8.5 thousand
suggestions.
Reduction in the volume of apartments' supply
(2.3%) was caused by the increase of sales in
the secondary and primary market segments,
as well as traditional reduction of the volumes
of the secondary segment at the end of the
year.
Significant objects entered the primary real estate market in 2012
Object
Address
Class
Developer
“H-Tower”
28-30,
Shevchenko blrd.
47, Zverinetskaya
str.
2, Dimitrova str.
Elite
98
2012
Elite
St.Sophia
Homes
Iton Group
78
1 quarter 2013
Elite
Geos
88
2 quarter 2013
2-B, Heroes of
Stalingrad av.
6/1, Lymymby
str.
Lomonosova str.
Business
Metal –Service
560
3 quarter 2013
Business
UDP
811
2 quarter 2013*
Business
Liko-Holding
2-A,
Dragomanova
str.
5, Zadorojhny
provylok
1, Degtyarenka
str.
9-A, Otdykha str.
Bajhana av.
Business
Ukraziabud
399
4 quarter 2013
Business
Miskjhutlobyd
56
3 quarter 2013
Economy
Intergalbyd
1675
3 quarter 2013*
Economy
Economy
1562
264
2 quarter 2013*
3 quarter 2013
92-B, Glyshkova
av.
Bogaturskaya str.
Economy
Stolitsa Group
Kovalskaya
Group
KievGorstroy
855
2 quarter 2013
Economy
Stolitsa group
288
4 quarter 2013
“Zverinetskyi”
Chelsea Tower
Park Stone
Stabilization at the real estate market during
2011-2012 led to progressive renewal of
interest in development of residential
properties. Thus, at year-end of 2012 the
primary real estate market was replenished by
a number of significant projects in all
segments. Released positive trend is the
growing compliance with the requirements of
buyers and their financial resources.
Fountain Boulevard
By December 2012 proposal in segment of
real estate includes 16 residential objects
(about 1750 apartments excluding absorption)
that are in various stages of readiness. During
2012 proposal for luxury housing increased by
264 apartments owing to the sales in new
housing estates – “H Tower”, “Zverinetskyi”,
“Chelsea Tower”. The unique concept of “HTower” is to provide a better service to the
future inhabitants of the world hotel operator
“Hilton”.
Yaskravy
Venice
Novopecherskiy yard
Gelios
Vіdpochinok
Yuvіleyny
residential complex
on Glushkov Av.
residential complex
on Bogatyrskaya
*startup of 1st stage
Ukrainian Trade Guild © 2013
Apt., qty Startup
4 quarter 2013*
Residential property
Kiev
At the end of 2012 club house in Michurin street (7
apartments),residential complex “ Dimond Hill” (131
apartments) and two buildings in residential area
"Vozdvizhenka" (12 apartments) were put into operation
in the luxury segment .
Stable demand at primary real estate business class
stipulates the launching of new projects in the segment.
Key characteristics of opened objects during 2012
(Park Stone, Boulevard fountains, Novopecherskiy
Dvor, Gelios) are the supply pattern shift to twobedroom apartments with small footage and effective
planning solutions. Also in 2012, the sales of the 2nd
stage of the residential complex Novopecherskie Lypky
(419 apartments) started.
By December 2012 the proposition in segment is
formed by about 35 business class residential
complexes.
At the end of 2012 the segment was characterized by
high construction activity, which led to the entering into
operation of new stages of residential complexes, such
as Novopecherskie Lipky (623 apartments), Perstizh
Hall (151 apartment), Park Avenue (215 apartments),
Parkove misto (490 apartments), River Stone (428
apartments), Elegant.
The segment of the primary real estate economy class
in 2012 showed high activity. Due to entrance of new
residential complexes to the market, supply volume
increased by more than 4.5 thousand flats. In addition
economy class offer grew due to sales of the second
stage housing complexes Comfort Town (600
apartments), Ministerial (850 apartments), Sonyachna
Brama (311 apartments), Parkove misto (342
apartments).
Ukrainian Trade Guild © 2013
Major economy class objects were entered into
operation, 2012
Objects
Developer
Apartmen
ts qty.
Parkjvyi, 3rd section
Ave. L. Kurbasa
Residential complex on
Perova blrd
Ministerskiy, 1st stage,
Kondratiuka str.
Harkovye ozera, 1st stage,
Voskresenskaya str.
NBK
90
Keivgorstroy
168
Energopol Ukraine
540
InterGalbud
544
Residential complex on
tymaniana str.
Lipinka 1st stage,
Zamkovetskaya str.
Stolitsa Group
432
Stolitsa Group
254
Comfort Town 1st stage,
Regeneratornaya str.
K.A.N. Development
2500
Residential complex on
Urlovskaya str.
Residential complex on
Akhmatovoy str.
Residential complex on
Grigorenko str.
Kievgorstroy
n/d
Kievgorstroy
n/d
Kievgorstroy
n/d
The structure of the primary real estate market in Kiev,%
from the total number of apartments
4%
36%
elite
business
60%
economy
The positive features of the new housing
proposition at the economy segment are
the reduction of square meters. Thus, the
objects appeared on the market, where
min. footage of 1-bedroom apartments
starts from 34 sq. m. (residential complex
on Bogatyrskaya str.). Besides, the
proposition pattern changed significantly :
among the objects the market share of 1 and 2-bedroom apartments reaches 90%.
Activation in housing economy class
segment was caused by the developer’s
observance of terms of commissioning.
Primary housing from the leading real
estate companies became a virtually riskfree asset. Instability in the financial sector
of Ukraine (waiting for the introduction of a
tax on currency exchange and devaluation
of hryvna, the risk of non-return of bank
deposits) gradually return the buyers to
the primary real estate market. New
proposition in economy class creates the
background for further development of the
segment, which corresponds to the current
demand.
According to year results major objects of
economy class segment entered into
operation with a total of more than five
thousand apartments.
On December 2012, about 60 residential
complexes were made the proposition in
economy-class.
Residential property
Kiev
Costs & Prices
The cost of housing in the primary market in Kiev, $/sq.m.
3015
The average price of supply in the market of new
buildings of Kiev as of December 2012, amounted to
$1939/sq. meters. Decline in average prices by 4%
at the year-end is due to changes in the structure of
supply of the primary market.
By the class of primary real estate average prices in
December 2012 were as follows: in economy class $ 1316/ sq. m., in business class - $ 2191/ sq. m., in
elites - $ 7429/ sq. m. Decreasing in average prices
to index in December 2011, correspondingly was 1.3%, (economy class), -9.5% (business class), 2.2% (elites).
Primary market of residential real estate at economy
class segment was characterized as stable during
2012.
A little decrease of an average price was caused by
the sales in the new complexes at a price below the
market price. But, there was a planned price
increase of some already built objects with a higher
level of readiness. Changes in prices depend on the
level of readiness, so it reaches 15-30%.
2324
2048
2020
1939
1959
970
2004
2006
2008
2009
2010
2011
2012
The cost of housing in the primary market in Kiev by
classes, $/sq.m.
8000
7603
7462
7429
6000
4000
2463
2421
2191
1316
1334
1274
2000
0
Also in the sector, there is a huge difference in the
price offer of the leading real estate developers and
construction companies with weaker positions. The
gap goes up to $ 300 / sq.m. at a comparable quality
characteristics of the object.
Average market price of the primary real estate at
business class showed the largest decline of the
year.
2010
elite
2011
business
2012
economy
The cost of housing in the secondary market in Kiev, $/sq.m.
3480
2850
2046
2023
2120
1977
In spite of 9% fall, direct reduction in price
has not been fixed. Descending price
dynamics is caused by structural changes:
in 2012, the market slowly left those
apartments which were in finished objects
or were at the final stages of construction.
Thus, the main volume of demand is
concentrated in the segment of flats to 5070% readiness, and their costs are 1020% lower than of those put into
operation.
Price reduction at elite class, by the
results of the year, occurred under the
influence of new objects, released at the
early stages of construction. Thus, start of
sales in Chelsea Tower happened at the
stage of foundation. Also, because of
unsaturation
of primary real estate
market, the main effect on cost and
prices render an overstated price
expectations of developers. As a result,
prices for luxury apartments are within a
rather wide range from $ 3200 to $ 15000.
Negative price dynamics of primary
residential property, fixed in December in
all segments of the housing market was
caused by discounts provided by the
developers in the New Year holiday’s
period. The volume of discounts was 310%, but the least liquid apartments it
reached 17%.
1040
2004
Ukrainian Trade Guild © 2013
2006
2008
2009
2010
2011
2012
Generally, during 2012, the total state of
the primary market in Kiev remained fairly
stable.
Residential property
Kiev
Demand
Distinctive feature of 2012 was the gradual
increase in the share of primary residence in the
pattern of demand. This situation became possible
due to creation of the product, comparable to its
consumer characteristics at the secondary market.
This is a small area apartments, situated in a newly
created infrastructure and being on locations
available to transport.
The cost of housing in the primary market in Kiev by classes, $/sq.m., 2012
The main volume of demand in the primary
segment was concentrated in the field of residential
complexes that meet the above parameters. These
objects showed good sales figures: in the period of
seasonal activity in the market the number of
transactions were 20 apartments per month,
meanwhile average market index was 5.51
apartments per month.
The main volume of demand in the primary
segment was concentrated in the segment of
economy class (up to 80% from the total number of
transactions). In this case, the smallest apartments
were sold foremost. Thus, in many objects under
construction 1-room apartments up to 40 sq.m. are
fully realized, meanwhile , the apartments up to 4547 sq.m. were less interesting to the buyers.
Performing more efficient planning has provoked a
significant increase in demand for two-bedroom
apartments in the segments of the economy and
business class of primary real estate, because of
area reduction of apartment. But the main demand
for primary housing still remains for one-bedroom
apartments.
Ukrainian Trade Guild © 2013
Source: UTG
Residential property
Kiev
Residential cost on primary market in Kiev by classes,
on January – February, 2012, $/sq.m.
The maximum buyers’ activity was observed in
spring (March-April) and New Year (NovemberDecember) periods.
The structure of transactions financing on primary
real estate market in Kiev
9000
8000
7000
6000
Providing the credit lines by the developers has also
the positive effect on the number of transactions.
Thus, if in 2010-2011 term of loans was limited by
the date of commissioning, so, in 2012 the
developers met customers’ needs, prolonging
granting term on the average for a year.
This trend entailed changes in the structure of
financing transactions: the number of sales with use
of payment by installments made up 37%. However,
the main source (60%) of apartments purchase was
own funds of the buyers, mostly got from the
previous sold apartment.
The structure of transactions according the buyers purposes
on the primary real estate market, 2012
0.1
3%
5000
4000
3000
37%
2000
with loan
1000
without the loan
0
with credit line
60%
elite
business
economy
Average apartment’s sales volume per month in one
residential complex
5.84
5.14 4.98 5.04 5.26 5.43 5.52
3.54
2.99 3.34
3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2010 2010 2011 2011 2011 2011 2012 2012 2012 2012
The pattern of demand on primary market depending on
rooms’ quantity
10%
3%
1-room
0.9
2-room
52%
35%
3-room
other
improving housing
conditions
Ukrainian Trade Guild © 2013
In most cases (90%) the purpose to buy an
apartment in 2012 was to improve own living
conditions. The share of investment
transactions, circulated before the crisis, did
not exceed 10%.
In view of substantial increase of the cost of
resources, attracted by the banks, the
mortgage in 2012 did not develop. Average
interest rates for hypothecs loans are in the
range of 22-25% per year (growth in 2012
was 2.3%). Lack of opportunities to attract
long hryvna resources makes it impossible to
activate mortgage lending in the short term.
Residential property
Kiev
Contact information
UTG LLC
2-a Mechnikova str., (Business centre “Parus”)
01601, Kyiv, Ukraine
Tel./fax: (380 44) 537 23 64
www.utgcompany.com
Vadim Neposedov
President
vvn@utg.kiev.ua
Vitaliy Boyko
Managing partner
boyko@utg.kiev.ua
Eugenia Loktionova
Director
Loktionova@utg.kiev.ua
Victor Oborskiy
Head of strategy consulting department
v.oborsky@utg.kiev.ua
Victoria Pogasiy
Market research specialist
pv@utg.kiev.ua
This and other company’s review can be found on our
website www.utg.kiev.ua
This presentation is the publication of the generalized character.
Ukrainian Trade Guild is not legally liable for the information, the
analytics and the forecasts published in this overview of Ukrainian
Trade Guild in terms of possible third person losses as the result of this
report usage.
Any publication of news stories from the report given, whether as a whole or
in parts, is possible only with the company’s reference as the data source.
Photo on front page – RC Komfort Town, by author Oleg Stelmah
Ukrainian Trade Guild © 2013
Forecast
In condition of macro-economic stability,
prices on the primary and secondary
residential market will not be subject to
significant changes.
In 2013, we shall expect stable
development activity. The market will be
filled with new projects different from those
already existing, with more rational layout
and upgraded infrastructure.
New projects will be run mainly by major
developers, who are able to attract
substantial capital for a long period, as the
demand is formed on housing in new
buildings with a high degree of readiness.
Reorientation of consumer demand for
primary housing that started in 2012 will be
continued in 2013. There is growth of trust to
new buildings due to the qualitative changes
in the market development of residential real
estate. Particularly, in 2012, real estate
developers started to declare the real term
and observe initially announced date of
commissioning.
The trend of increasing competition among
key players in all the segments of the
primary market will continue in 2013.
Fighting for the buyer will be tightened, which
will result an extensive use of marketing
mechanisms to promote sales and significant
improvement of quality of service, including
after sales service.
Trends in the residential market in 2012
showed that the "price bottom" is past the point;
however, nevertheless, it is too early to forecast
the active growth. In prospect, the long term
price dynamics will depend on the development
of mortgage and growth of effective demand,
which is a consequence of development of the
Ukrainian economy in a whole.
Given that the primary market has significant
potential to increase supply due to the frozen
projects; in the medium term we should expect
growth in the number of new buildings in Kiev.
RC Green island