State of the real estate market in Ukraine due to the global financial crisis and Covid-19
Partner of Investment Company INTELEVRAZ Valentyna Grechka shares her more than 15 years of experience in real estate, investment and management, talks about the state of the real estate market in Ukraine due to the global financial crisis and Covid-19.
Just recently, the Ukrainian economy and real estate market gradually grew, the hryvnia strengthened against the dollar and the euro.
For example, a few months ago, we saw the office real estate market in Kyiv growing and developing, companies moving from the worst offices to the best ones, coworking spaces were opened almost every month and new projects were created.
But Covid-19 came to us, the global financial crisis and life changed almost at one point. The consequences of the crisis in Ukraine, of course, affected the real estate market.
– What is happening in the commercial real estate market now?
– Today, during quarantine, the relationship between tenants and landlords is decided individually.
Some tenants appealed to landlords to agree on preferential terms under current leases, some tenants agreed on unpaid rental vacations.
Given the current situation, I advise landlords and tenants to find compromise solutions.
Today we are seeing an increase in vacancy rates and a sharp decline in rental demand.
– Real estate management, what is it?
– In essence, professional real estate management involves the management of someone else’s real estate and other (related) property in the interests of the property owner for a fee.
The purpose of management is to ensure maximum profitability of the real estate transferred to management.
Practice shows that the most popular management services among property owners are business and premium, as they save a lot of time.
– What are the benefits of transferring real estate to the management of a professional company?
– In our case, the property owner receives a professional and client-oriented team consisting of lawyers, analysts, management managers and investment managers with many years of experience in the real estate market. Only the comprehensive work of experienced professionals can provide the landlord with a constant and maximum real estate income and confidence in the future.
– What basic services are provided by the management company?
– The range of services can be quite wide, for example, our most common services are:
1) consultations on zoning and repair (both initial and current);
2) technical and legal preparation of the premises for rent;
3) search for tenants and signing long-term contracts with them;
4) supervision of the premises (including operation of the premises, serviceability of household appliances, etc.);
5) preparation and work with lease agreements (making changes, clarifications, paying taxes, etc.);
6) invoicing, control over timely settlements;
7) monitoring of rental rates, trends in the real estate market, consulting;
8) control of the beginning and end of terms of lease agreements, support of arrival / departure of tenants;
9) activities aimed at maintaining existing tenants, constant communication with tenants;
10) work with tenant rotation;
11) resolution of organizational and technical issues arising from the property owner as a result of the implementation of lease agreements.
– What can you say about the real estate investment market?
– I predict that investment activity will slow down in 2020, as investors react to uncertainty. The transition to a protective strategy is expected, focusing on the main sources of risk, which include income stability, criticality of the availability of the facility for business and the density of tenants and customers.
Real estate investment has changed significantly during previous crises, but the general trend since the end of the crisis has been to increase investment in the sector. Real estate still offers attractive returns compared to other types of assets.
I want to note that a crisis of any nature allows 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 show their effectiveness in a pandemic. For now, it remains only to observe and work hard.
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