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investong in modern buildings

Investing in modern buildings: does the new means the better?

When deciding between types of apartments to invest in, it is essential to learn the Ukrainian real estate market peculiarities and pay attention to the details of each choice matching your appetite for risk with your return goals. In the article, we will talk about what to expect from investments in new buildings.

When you look at the new buildings, there are also two types of them: high-rises and low-rises. 

For high-rises, the range is wide: from economy to luxury class. Prices for apartments in there are based on a building’s location and the view. These apartments are usually sold utterly unfinished as “shell and core.” Therefore, renovations in the building are made for about four years after it is commissioned. That’s why you need to make sure the properties above, below, and around your considered apartment are renovated.  Otherwise, you or your tenants will be forced to listen to your neighbors’ drill sounds for a long time. 

Low-rise buildings are known as Club Houses and featured as an elite segment. They are mostly located in prestigious areas, promoting the idea of exceptional living conditions.

When you consider new buildings, there are many advantages, such as modern infrastructure, utilities, and a strong emphasis on privacy and security. Also, there is usually an underground parking as well as different stores, restaurants, and other facilities located in the buildings. 

However,  hang on thinking that a new building would be the embodiment of the latest building technology and design accomplishments. Most of the new buildings in Kyiv don’t use steel I-beams, but the same old construction methods instead, like a reinforced concrete skeleton that is loaded in with bricks. Modern heating, air conditioning systems, and ventilation are quite rare even in luxury segment buildings, and wall units are used predominantly. 

In terms of apartment planning, it is supposed to be more accessible due to the absence of interior walls. But the buildings are not well-planned, and load-bearing walls running through the middle of the apartment are not rare situations. 

Prices for such apartments in the Kyiv center usually range a lot.  However, business-class apartments are offered for $3,500/m2. Some lower-floor units may cost cheaper, about $2,500, but they are usually located outside the area for upmarket rentals. 

If you are successful enough to find an opportunity to buy in a new building at pre-construction prices, you can obtain a decent ROI on an apartment. But in this synopsis, you need to accept construction risk (in contrast to renovation risk for old buildings). For example, the building will be finished, on time, and without significant delays. 

For sure, apartments in new buildings have their votaries. The overwhelming majority of Ukrainians do not even consider historical buildings as options but prefer modern ones only. It is a common thing to state the new means the better, and we know there are respectful reasons to buy there. 

The choice is yours, but what we see now is that most apartments in luxury complexes are not offered for rent by the Ukrainian owners, even though they do not use it for their residence. As a result, owners and tenants (who are usually locals) there do not create a comfortable environment for potential foreign tenants like it often happens in the “old” center.  By the way, you should be ready that, along with the lower risks, such investments provide much lower yields for investors due to high purchase prices for the units.

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