Here's a winning post I found over at the confused"Carnival of Real Estate" or something like that, which looks to be a group love-in for out of work real estate clerks like Greg Swann. No doubt this post got a lot of real estate clerks and their clients all into a lather, and on planes to Kiev:
Best investments in Ukraine 2006
2006 for private investors, having free funds, was successful. Since 1998, when prices for residential real estate were twice dropped, there was possible to purchase one-room apartment for $5K. Now this apartment costs about $80K.
There is 1600% for 8 years and aprox. 60% for 2006 income for real estate deals.
Talking about real estate pricing I have to say about enourmous growth - from $1350/sq.m at February to $2300 at December (at Kiev for sure). Make note, that is not only income from arbitrage. Most of them using for rent business. So potential income about 70% for 1 year.
So, in short-term conditions, real estate investments are most profitable and reliable asset in Ukraine.
So, I decided to dig a bit about this obvious Ukraine Housing Bubble:
From CIA Fact Book:
GDP - per capita (PPP): $7,600 (2006 est.)
Net migration rate:
-0.43 migrant(s)/1,000 population (2006 est.)
Population growth rate:
-0.6% (2006 est.)
8.82 births/1,000 population (2006 est.)
14.39 deaths/1,000 population (2006 est.)
Inflation rate (consumer prices):
8.5% (2006 est.)
Average Income (2005): $1,520 / year
And then this article on the impending collapse:
What Kiev's Property Boom and Dot-Coms Have in Common
Property prices in the UK rose by just under 10% last year, according to the Nationwide building society, while many analysts expect a similar figure this year.
But that pales into insignificance compared with Kiev, where the BBC reports, prices have risen by 10-25% in the last two months of 2006 alone…
Kiev, the capital of Ukraine, is now apparently the “most expensive city in Eastern Europe” in terms of property, says the BBC. Prices at one development start at $1m for a three-bedroom flat, while the cheapest one-bedroom flats start at around $100,000.
But of course, the Kiev property boom couldn’t all be down to supply and demand and a small group of hugely wealthy business people, could it? There must be a pretty wealthy population to support a city where the cheapest one-bedroom flat costs in the region of £55,000, surely? After all, that may not be London prices, but there are certainly a few far-flung parts of the UK where you might just be able to get a one-bedroom place that cheaply.
So what’s the typical inhabitant of Kiev earn? $25,000 a year? Maybe $15,000?
No. Ukraine is one of Europe’s poorest countries - apparently the typical salary is around $2,400 a year. So the average Kievite would need to pay just over 40 times their annual salary to buy the cheapest property in the region.
As the BBC concludes, “the main driver for the property boom is speculation.
“It could be a bubble - and if so, there is no way of knowing when it might be burst,” concludes the Beeb ominously.
Could be a bubble? Of course it’s a bubble! Who is buying these places? Why on earth would you choose to live in Ukraine unless you had family or a job there? Not that there’s anything wrong with Ukraine particularly, but has it turned into the world’s financial centre over night? No. Have the streets recently been repaved with gold?
There is no public register in Ukraine, so the honest truth is that no one’s really sure how much prices have risen.
One estate agent in the BBC piece says that she bought a flat for $30,000 three years ago, and it’s now worth “up to $200,000”.
It’s these kind of stories that show the unsustainable hysteria that lies beneath the global property boom. When you hear of properties in Kiev going for 100 times average earnings, that’s when you start to think about the triple-digit p/es of the dotcom bubble era.
And then there was this article on rents (but hey, who cares about fundamentals and the P/E ratio - we're all getting rich!!!)
Real estate rental prices falling
Some good news for renters in Ukraine's capital. On Tuesday, 5 Kanal's Kyivskey Chas news program reported that rent prices have started to fall in Kyiv.
Real estate experts explained that the demand for apartments in Kyiv has recently fallen by more than 30%.