Influence of COVID-19 on the real estate market of Ukraine
Over the last weeks, our company has received many questions from clients regarding the impact of COVID-19 on the Ukrainian real estate market.
Today we want to answer the most frequently asked questions:
What happens in the StayAtHome commercial real estate market?
What is the situation in residential real estate?
Recently, the Ukrainian economy has gradually grown, and the hryvnia has strengthened against the dollar and the euro.
For example, recently we told that the office real estate market in Kiev is growing and developing, companies are moving from the best offices to the best, coworkings are being opened almost every month and new projects are being created.
But a coronavirus came to us and life changed.
The effects of the crisis in Ukraine have definitely affected the real estate market.
About commercial real estate
Today, during quarantine, the relationship between tenants and landlords is resolved individually.
Part of the tenants appealed to the landlords to agree on preferential terms under the current lease agreements, and some of the tenants agreed to unpaid vacation rentals.
Given the current situation, we advise landlords and tenants to find compromise solutions.
Today, we are seeing an increase in vacancy and a sharp decline in rental demand.
About residential real estate
During the quarantine, some developers have to partially or completely stop construction.
We predict that developers who do not have enough working capital to hold out for more than 3 months may experience a crisis and be forced to suspend their projects or look for partners / investors.
Regarding renting apartments, there are now proposals for renting one-bedroom apartments near the metro station for 6-7 thousand hryvnias per month. Today, landlords are paid in full.
Demand for new proposals for long-term rental apartments has fallen sharply.
But the market for daily rent generally stopped working.
Regarding the real estate investment market
We predict that investment activity will slow down in 2020 as investors respond to uncertainty. The transition to a security strategy is expected, with a focus on major sources of risk, which include income stability, the criticality of having a business object, and the density of tenants and customers.
The volume of real estate investments has changed significantly during the previous crises, but the overall trend after the crisis has been an increase in the volume of investments in the sector. Real estate still offers attractive returns over other types of assets.
We would like to point out that a crisis of any nature gives an opportunity for renewal. Even the most pessimistic scenario sooner or later involves a resumption of economic activity.
We are confident that by this time we will see new formats, new technologies and new solutions that will prove effective in a pandemic. In the meantime, all you have to do is watch and work hard – the best from home, of course.
Keep yourselves. All health!
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