Suburban bliss can come as cheaply as an $180,000 loan with 15 percent interest rate.
Walking on a Saturday morning through Green Hills, a suburban residential neighborhood under development a few kilometers outside of Kyiv, you meet lots of young families with small kids.
Not all of them live here. Some just invested in the construction of houses, worth at least $180,000, and are now coming every weekend to check the building progress.
In contrast to some apartment buildings in Kyiv where neighbors rarely talk to each other, homeowners in this development are already starting to behave like American community dwellers.
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They engage in lively chat once they bump into each other. They also give each other flower pots and pies as gifts.
Busy construction work breaking through the serenity of nature doesn’t seem to disturb them. On the contrary, they are happy to see the activity, which in post-crisis Ukraine symbolizes hope that this development will be one of the few ready on time.
Ukraine’s real estate market still has a long way to go to reach pre-crisis levels. After a severe drop during the 2009 global recession, suburban development grew a bit last year, and is expected to do even better this year.
Volodymyr Stepenko, marketing director at SV Development, forecasts that developers will sell 900 houses in suburban developments this year.
“The market is held back as few mortgages are available for people buying houses and a lack of financing for developers. However, things are getting better. The quantity of frozen projects is decreasing,” he said.
At some so-called cottage development projects, getting loans is easier.
The Green Hills project is one such example. It is being developed by Dragon-Ukrainian Properties & Development, a real estate arm of Kyiv-based Dragon Capital investment bank. Through a deal with a bank, loans are available for homebuyers at 15 percent annual interest.
The hottest selling homes are no more than 180 square meters at a price tag of $1,000-1,200 per square meter. The price of suburban bliss, therefore, is around $180,000.
Market players say supply currently exceeds demand. There are more than 55 suburban developments around Kyiv with more than 2,500 houses available for sale, said Stepenko.
Seventy more neighborhoods are on their way with 12,000 houses, and 60 more developments are in the design stage.
However, market experts advise that the best projects to invest in are those that are complete or nearly complete, as it is not certain all of the planned projects will be built.
Mykhailo Yermolenko, general director of real estate agency Knight Frank, recommends three developments: Green Hills, Mayetok and Solnechnaya Dolyna.
At these sites, the first set of homes are already built. Prices are reasonable. Stepenko said ten other projects were relatively safe investments and reasonably priced (see the table for more details).
The limited amount of completed developments is what keeps prices from falling considerably. Yermolenko says that economy and business class houses in suburban developments are becoming cheaper, down by up to 10 percent from last year. Prices in the premium segment, however, are growing, 3.5 percent up since the end of 2010.
Families buying houses are picky. Ukrainians don’t seem to want townhouses and duplex homes, which are so popular with many Europeans and Americans.
“More than 80 percent of customers want a separate house. It is our mentality, having a fence and being some distance from other people,” explains Dmytro Pikalov from UTG real estate group.
The hottest selling homes are no more than 180 square meters at a price tag of $1,000-1,200 per square meter. The price of suburban bliss, therefore, is around $180,000.
When picking a developer, the most important thing people look for is how actively the neighborhood is being constructed.
And people want good roads, a forest, a lake or river, and a piece of land around the house. They are interested in what materials the house is made from, preferring stone, bricks and concrete, says Stepenko. Surprisingly, families do not seem to demand schools, kindergartens, gyms or clinics.
“A kindergarten, a playground or a supermarket can be of some interest. But somehow people do not care much about infrastructure, and even if they are promised it will be built in the future, they do not take it seriously knowing that few developers fulfill promises,” says Stepenko.
Many families seem eager to enroll their children in schools located downtown in Kyiv, and to commute to work and back home each day. Thus, developers are seeking plots no further than 30 kilometers away from the city.
Houses to the south in the direction of Obykhiv and Odesa are the most expensive. Homes on the westward road to Zhytomyr are cheaper, according to Pikalov. Even less expensive housing can be found in the Brovary and Boryspil directions. But reaching downtown from there means battling with traffic jams on the bridges.
“The Vyshgorod region is becoming more and more popular because our new political elite settled there,” says Pikalov, referring to President Viktor Yanukovych’s estate in Mezhyhiriya.
Kyiv Post staff writer Kateryna Panova can be reached at [email protected]
