Sean Here! It’s been over nine months since Russia began a full-scale war with Ukraine, and the effects of the conflict are still being felt in Kyiv’s real estate market. As the CEO of Vestor.Estate, I’ve had the opportunity to observe the market’s fluctuations and changes during this tumultuous time.

Before the War: Unawareness of the Threat

Before the war, many in Kyiv were unaware of the threat posed by troop deployments around Ukraine. The conflict in the East seemed stagnant, and people went about their daily routines as usual. However, when the noise from the troop buildup reached a fever pitch, there was a sense that there might be a flare-up in the east. Still, no one could have predicted that Russia would attack the capital. Despite our confidence that resistance would be too fierce for Russia to overcome, chaos ensued in the first days and weeks of the invasion.

Chaos in the First Days and Weeks of the Invasion

The real estate market in Kyiv was heavily impacted by this chaos. Most tenants in managed properties had already been evacuated by their embassies and organizations. Although those that remained had to negotiate with landlords. Some leases were immediately canceled, but the bulk of agreements were a sort of negotiation where the leases weren’t canceled, but the rent was decreased for some time. The optimism and desire among tenants to return were the biggest drivers of this decision. Even though some tenants continued to pay the total pre-war price, the vacancy rate went from about 10% to about 80% over the spring. Later, in the summer, tenants realized that the war would be long and canceled their leases one by one.

New Wave of Tenants Arrives

As the summer progressed, a new wave of tenants arrived in Kyiv. This wave comprised people from humanitarian organizations, NGOs, and other groups that are used to working in less-than-ideal environments. And just like in 2014, when the war started, the location became a significant factor, as these new arrivals were very clingy to areas with embassies and other expats nearby. Rental prices were down from pre-war levels by about 30-40% in USD terms, but as the number of available nice properties in super central locations began to dwindle, prices started to increase again. By August and September, the rental market was the busiest it had been since 2013.

Prices Start to Increase Again

During this hectic time, prices for 1-2 bedroom options increased from lows to about 10% below pre-war prices. As an owner, I was pleased with this development. It felt like a vindication of the strategy of not settling for locations outside the center when advising investors about where to buy. Although there were talks of “cheap” properties in places like Podil, towards Olympiski Stadium, I insisted that these places would be much harder to rent in any crisis. Paying a premium for the location was necessary and paid off in the end.

The Future of the Real Estate Market in Kyiv

In conclusion, the Kyiv real estate market has experienced significant changes due to the war with Russia. While the initial chaos caused by the invasion caused many tenants to cancel their leases and leave the city, a new wave of tenants has arrived. They were looking for housing in central locations close to embassies and expat communities. Although rental prices were initially down, they have started to increase again as the number of available properties in central locations dwindled. As the conflict continues, it remains to be seen how the real estate market will continue to evolve and adapt to changing circumstances.