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Today, we are talking about the real estate market, how it responds to changes in the city and the country. The representative of «Eco-Dim» construction company, Roman Buk, and the expert of «Halytska Real Estate» Roman Yuskiv will tell what is in demand, what are the prices for housing and what to expect on the market in the near future.
Recently, the sociological agency «Rating» published its study on how many refugees are considering staying to live in the Lviv region even after we win. Those who would like to stay are 26% of the currently displaced settlers. According to official data, there are about 240,000 Ukrainians in the Lviv region who have moved here from other regions. Do you see in your work how many people want to stay in Lviv and whether this is somehow reflected in the market of both primary and secondary real estate?
Read more about the survey results here
Roman Yuskiv: Let’s start with some definite perspectives. People moved here to escape the war, the bombing and to find temporary shelter, to find this horror that is happening on their land. When people have lived for a month and a half, they begin to look closely at the place where they live.
I met very wonderful people, including refugees, in particular from Kharkiv and Mariupol, with whom we became friends. One successful man from Mariupol was engaged in sea freight transport, but he has nowhere to return. He showed his house, which he built for 400 thousand dollars, in which he invested his whole life. There are four walls left. Now he is in Lviv, and the children and his wife are abroad. He told me that he did not know whether to stay in Lviv or go to the West, because there was nothing left of Mariupol. And the second demonstrative family I know is Kharkiv residents who now live in Ternopil, because it’s cheaper there. They are ready to look at real estate, but do not make any decisions yet.
[Read our coverage of the real estate market in Kharkiv just two weeks before the invasion: No panic but staying alert. How business in Kharkiv, Ukraine’s second biggest city, continues amid threats]
We hoped that there would be a boom in buying housing, as it was in 2015. Unfortunately, this did not happen because the registers were closed for two months, no action was taken, and hostilities are still ongoing. The missiles reach Lviv and there is no 100% confidence in security. Therefore, people who have more savings, they expect, prefer to keep money, rent housing and wait until the war is over.
And was there really such an increase in rental prices, which they tried to submit at the beginning of the invasion?
Roman Yuskiv: It was different. Objectively speaking, most Lviv residents provided shelter for free. I had 11 people living in my apartment. Many Lviv residents took in friends, acquaintances, or even strangers who simply lived with them. If we talk about my clients, our people also either rented out housing for free, or rented it out at pre-war prices. There were some Lviv residents, I am sorry for them, who decided to earn a living for the first two months of the war. They rented apartments three times more expensive than they cost.
According to a poll, 49% of internally displaced persons currently live in Refugee Centers. 22% – with their relatives, 21% – rent an apartment. Are these big numbers or not, if one-fifth were able to rent an apartment here? Moreover, 40% believe that prices are reasonable, and 54% – that they were inflated. Can you estimate the prices for how much in Lviv you can actually rent a 1-2 room apartment, for example, in the centre or in other areas of the city?
Roman Yuskiv: If we talk about budget housing – a standard two-room «Czech» (mostly, these are apartment buildings on 9 floors – ed.), in satisfactory condition, not Soviet, but without renovation, its rent now costs within 10 thousand hryvnias. In dollar terms, the price has not changed. But now the issue of employment of refugees arises. I was approached by a young man from Severodonetsk who asked to find housing. According to him, he found a job for 15 thousand hryvnias. But this means that he can not afford housing for 15 thousand hryvnias, nor can he afford 10 thousand. His budget – a maximum of seven thousand hryvnias – is very difficult to find any options within this amount. As for housing in new buildings, a one- or two-room apartment before the war usually cost around $ 500-600. It’s the same now.
There was just an outflow of people from Kyiv. Kyivans who came to Lviv in the early days had bigger savings, so they could afford to pay more. Now, most of these people have returned to Kyiv. If you take refugees from the Donetsk region, they are poorer people. Therefore, according to statistics, 49% live in refugee centres or with relatives.
Roman Buk: The situation in Lviv after February 24 turned out to be very difficult. It was difficult to predict what to do. We were not in this situation even in 2015. I observed the situation with pricing in the rental market. Many people in the East and in the Center of Ukraine thought about the people of Lviv that Lviv residents wanted to earn all the money in the world in the first days of the war.
However, it should be noted that very often, when people came to Lviv and Western Ukraine in particular, they were received free of charge. Probably, each of us had such guests from completely different families, who came, then went on, new ones came. With someone, they stayed to live. There were actually a lot of people. Extraordinary things were happening at the Lviv railway station. Many people were just in transit through Lviv to Poland. There was a situation when people took ads, perhaps some old ones, where there are phone numbers, and offered a price twice or three times higher for the rented apartment. And such a demand actually provoked the proposal, which sometimes went beyond numbers.
However, expensive housing, equipped with the latest technology, was rented before. Therefore, it cannot be said that the people of Lviv took it and wanted to earn more money. The market dictated such conditions, and some went for it, some did not.
26% of people are going to stay in Lviv – do you feel this about the people who come to you, and is there any demand and interest of people in buying new housing?
Roman Buk: Yes, there is a demand today. It all depends on what the prospects will be, or how quickly the war will end, when it becomes clear that being in the West of Ukraine is really safe. Then, those people who need housing will finally be able to make a decision for themselves. Some will decide to stay in Lviv, some will probably go to other regional or district centres, where the cost per square meter may be slightly lower. Someone will return to their homes if they have somewhere to return and see some meaning in it.
Therefore, today there is a lot of delayed demand. According to statistics, there are people who want to stay in Lviv and are still waiting, though having the funds to buy a home or having the opportunity to receive these funds in the future, perhaps on credit. They have to decide for themselves whether to pay these funds for an apartment here, or perhaps have to move to another region.
As far as I know, your company has housing at the final stage and the housing you are just starting to build. Is there a difference between the demand for ready-made housing and what can be bought in instalments at the foundation stage?
Roman Buk: Today, the buyer prefers a home or project to purchase housing that will be available in the near future. When we start building a house, it has a minimum price, when the house already has some degree of readiness, the prices are a little higher – everyone chooses what is best for him. But what is put into operation sooner is in greater demand today than those apartments that are at the foundation stage.
Did prices rise in the primary real estate market after February?
Roman Buk: As for the price, the situation was divided into pre-war and during the war. In the 20s of February, our foreign exchange rate fluctuated slightly. When the dollar began to rise, we realized that prices for building materials would rise in the near future. And in the 20s of February, we were already sitting down and reviewing the price in hryvnias, in order to make it as objective as possible to the current economic situation.
After February 24, everything changed dramatically, but prices in dollars remained. They were at a certain level and have remained, even in some places, the exchange rate is very high, but we have a price in UAH, which is sometimes 50 cents cheaper than it was earlier.
In the agreements now, are the prices prescribed in dollars or in hryvnias?
Roman Buk: We at «Eco Dim» work exclusively through the Construction Financing Fund. In the agreement on participation in the Fund, we do not have such an opportunity to link the hryvnia price to the dollar equivalent or vice versa. Therefore, when signing the agreement, the price is fixed in hryvnia and the developer cannot automatically change it in any case, without warning his investor.
Therefore, the investor always, even if there is a rise in price of building materials, which forces to reconsider the price, usually has the opportunity within 5-10 days to pay for their square meters at the price that was fixed at the time of signing.
Roman Yuskiv: I have talked to several refugees, whose moods also indicate delayed demand. They expect that for their destroyed housing, there will be compensation from the state or some soft loans. Therefore, if they buy a home now, they will not use the chance of preferential lending or any preferential compensation in the future. This is also one of the factors that may delay demand a bit.
That is, expect to then buy a home for the compensation received?
Yes. At least they hope so.
And what are the current prices in the rental and commercial lease market?
Roman Yuskiv: Rental prices have mostly returned to pre-war level in the currency equivalent. In hryvnias, of course, they have grown up. Everyone who needed to find housing has already found it, and more expensive premium apartments are still empty.
Another point that has become very important for everyone – is the question of housing security where they live. According to the chief architect of Lviv, Anton Kolomeytsev, the city has developed recommendations for the construction of new housing. Is there a change in demand depending on where the property is located, the number of floors of the property, and so on – what factors do people see for themselves, in addition to price, important now when buying or renting an apartment?
Roman Yuskiv: For example, clients from Kharkiv who want an apartment or a cottage immediately told me that they do not want to be near the airfield, tank factory and military units.
Are their requests different now? Most people ask for the center, suburbs, do they pay attention to the track, the availability of parking, proximity to shelter?
Roman Buk: I have not met any special requests or requirements regarding safe shelter or other things. Of course, when a person considers buying an apartment and sees that there is a military unit nearby, it already depends on everyone. Someone is afraid, perhaps not in vain, and says that this option does not suit him. Other people may have noticed, but I haven’t heard any discussion that an object is not suitable because it is located near something dangerous.
They ask if there are basements, but they also asked about basements before the war, because they may have intended to store some of their belongings there. Today, the basement has acquired a new purpose, it is a shelter.
In our new projects, we are trying to provide a basement that can serve as a shelter. A place where you can comfortably hide, wait, and be safe. Because when there are some small cells and people are standing in the corridors – it’s not convenient. When it is a large room with ventilation and a place for making coffee and tea, where there is comfortable lighting, where you can sit on a normal chair or sofa – such spaces we’ve already begun to provide.
Among the recommendations developed by the Lviv City Council is attention to underground shelters that can be converted into parking lots to ensure the availability of water and the possibility of a longer stay. And the second is the creation of separate security rooms in the apartment. Among the requirements are reinforced exterior walls, a single riser, reinforced window barriers. We asked several developers how ready they are and if they can implement it – the reaction was very different. Can you try to predict whether it is possible to build such rooms, how much it can increase the cost of housing and whether people are willing to invest more in it?
Roman Yuskiv: In my opinion, we will first need to talk about this with developers, but my opinion is that it should be like cars. The cheap Daewoo cars and Mercedes. If the developer is building a simple, budget housing – it may be some special rooms or parking, which will have additional fortifications, but it must be multifunctional. In premium-class houses, luxury, for the money of buyers you can build an expensive bomb shelter and more. It’s like with cars – both budget and premium «will ride».
Roman Buk: Regarding new buildings and places for shelter, there is no clear answer to this, but I know for sure that the buyer who today is buying a home, which costs several thousand per square meter, and if he understands that an apartment with shelter for it will cost more, he will be dissatisfied that it falls on the shoulders of the buyer.
If we are talking about shelters that should be on the floor or in each apartment, then we must understand that in the long run, the shelter should remain a shelter, but not a shelter for bicycles. We have learned to make cells wherever possible.
Another point about the shelter on the floor or in the apartment, at the moment the redevelopment of the apartment can be done to your liking after putting the house into operation – removing or delivering partitions. Some people combine the kitchen with the living room, some people make some other design decisions in their apartment, there are new trends and so on. If you build such a room within the apartment, you need to understand that such a wall can not be dismantled. And that kitchen or room will remain exactly as it is, and preferably not laid by something else.
If you provide such rooms in new apartments – how long can they be implemented?
Roman Buk: It can be implemented in each subsequent project. If we talk about the fact that we have studied the issues, made decisions, and developed a project, then such a house with 3-5 entrances will be built in one and a half to two years. This is if we say that it should be built at the expense of investors-buyers in the construction process. If the developer already has the funds to build such a house, then this process may take less time.
Do you feel the difference in the people who buy housing? Earlier, it could be said that among them was a large segment that works in IT and lives in Lviv. There was a large segment of people who were working abroad and had the opportunity to invest in real estate in Lviv for their family. How has it changed now? Who are among those solvent people who have the opportunity to buy housing?
Roman Yuskiv: In the secondary market, we now have those who were before the war and want to buy something in the future. Even those Kyivans who wanted to have apartments in Lviv asked to keep them informed. This is two-thirds of all customers. And, probably, one-third is a distant demand – refugees who are watching, who will probably buy something, but not now.
Roman Buk: I can’t say that the portrait of the buyer has changed a lot depending on his employment, but there is a situation when people could go abroad, return to Ukraine and earn money abroad. There were many more than there are now. Due to age restrictions, many people can no longer go to work in another country and raise money for housing.
As for IT professionals, they have not gone anywhere, they continue to buy housing, but today there are quite a few buyers who potentially need to buy housing. And there are hundreds of times fewer buyers who need and are ready to buy it.
Roman Yuskiv: If you remember 2021, there was also a lull. Everything stopped, no one bought anything, everyone was waiting for the end of the world and there was no demand as such, but still, people were looking for something, some apartments were sold, and literally six months later, it «shot» and the real estate boom began. The prices started to rise for both primary and secondary markets. I think the situation is similar now. People will watch, look closely, waiting for the determination so that ours will repel and defeat the invasion, and then the market will simply revive.
Moderator: Serhii Smirnov
Text: Roman Tishchenko-Lamansky
Translated by Vitalii Holich
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