Ultimate Guide to Ukrainian Investments 2022
– Pros and cons
– Types of investments
– Ukrainian real estate
Life often spins at the speed of light and runs at a loud gallop ahead of us. People, in turn, are trying to keep up and want time to develop, grow, and achieve their goals in life. It is not easy because you need to devote enough time and effort, which, alas, is never in abundance. But there are good alternatives in this case.
Living by the laws of nature in today’s world, the fact remains that passive income is an essential aspect of the path to success. Each of us wants to feel confident in the future in one way or another. The concept of “investment” is very appropriate in this case. The investment of various amounts of capital and further actions to profit or achieve has another beneficial effect. It’s an excellent tool for those ready to use it and make it part of their daily lives.
People invest worldwide and there are a large number of varieties and features. You can invest in your own country or realize your opportunities abroad, increasing your chances for profit. This modern trend is constantly evolving and pushing the boundaries.
Let’s go in the direction of this relevant topic today. How promising is it for foreigners to invest in Ukraine, a relatively young country with many resources? What are the pitfalls, and what benefits can you get? How can you make the investment process simpler? What factors shape the investment market, and how is the situation changing?
We managed to collect a lot of up-to-date applied information, considering external conditions, tax regulation, and other factors. You can use these materials to analyze the effectiveness of investments and compare returns and risks with different options. We used only proven studies describing the macroeconomic assessment of the actual situation in Ukraine.
In 2021, the markets were favorable to private investors. Many made good money. So it’s time to get down to the details.
Ukrainian assets in the realities of 2022
The geopolitical situation in Ukraine is one of the few factors that impact investors. The artificially-created excitement in the global media space is exaggerated. The situation in Donbas is relatively stable. Negative information messages from Russia are aimed solely at destabilizing the situation around Ukraine. The inexhaustible conflict with the aggressor neighboring state harms the moods of potential investors. But if you study the case in more detail and seek competent advice from experts in Ukraine, the picture will no longer seem the same as before.
Undoubtedly, risks exist, as in any other country, which is an integral part of the investment process. For example, another wave of the COVID-19 pandemic and the threat of lockdowns remain real for everyone. Despite this, the life of the business community in Ukraine does not stop, and this is good.
Inflation worldwide, including in Ukraine, is also a noticeable factor. But if you behave correctly and do not take unnecessary actions, it will not affect your profitability.
According to the Ministry of Economics of Ukraine, the main achievement in 2021 was the country’s macroeconomic stability. Some indicators showed a record value. The absolute indicator of Ukraine’s GDP of $200 billion was the most significant since 1991.
In 2021, Ukraine’s economic freedom score was 56.2, making its economy the 127th freest in the 2021 Index. Its overall score increased by 1.3 points, primarily because of the increased tax burden score.
The Ukrainian government aims to ensure the sustainability of key indicators in 2022, namely GDP growth, increased gold and foreign exchange reserves, and curbing inflation within acceptable limits. At the same time, negotiations are underway with large foreign investors. The business climate in Ukraine will be transformed and move to the best world standards.
Thanks to the favorable situation in foreign markets, the Ukrainian currency this year ranked sixth in the world in strengthening against the U.S. dollar.
Based on the results of 2021 and forecasts for 2022, we can confidently move on to investment options and their differences in Ukraine. Regardless, when making responsible decisions with finances are at stake, you need to sort out everything you know.
What are the benefits of investing in Ukraine, and what stops many on this path? We offer you our small selection.
Pros and cons of investing in Ukraine
The volume of foreign investment is one of the indicators characterizing the degree of the country’s integration into the world community. It depends on the attractiveness of an investment project.
- Geographical position in Europe
- Large population
- Favorable natural conditions
- Large market size
- Undeveloped industrial and social infrastructure
- High level of education of the population
- Highly-skilled workforce, including engineering and technical workers
- Low wages
- Rapid and stable dynamics in the IT industry’s development
- Low level of competition in the country
- Negative international rating of Ukraine
- Lack of political responsibility of the state
- Lack of stability in legislation
- Low-income bureaucracy
- Lack of decision-making initiative
- Long term consideration of documents to register joint ventures
- Lack of government guarantees for foreign investment that could be defended in court
- The tax system and the work of the tax inspectorate (high taxes and fees; subjective interpretation of existing laws)
- Violation of agreements with representatives of state structures or enterprises of Ukraine
- Undeveloped domestic financial market
- Underdeveloped and expensive infrastructure services
Types of investment
Today, there are many options for investing in Ukraine. You can consider each of them and choose those options that will become your sources of profit in the future.
- Mutual funds. It is believed that you should invest no more than 10% of your funds in these accounts. This type of investment fund assumes that a broker will manage your funds. That’s a risky business. The chance of making a profit is 50/50.
- Business investment. Risk-loving way. Not every business can be profitable. For starters, you could partially invest money in another person’s business. Despite all the external and internal difficulties, developing small- and medium-sized businesses in Ukraine is reasonable. Having determined the operational focus, you can get your benefits. Many restaurateurs attract investments to their projects, as evidenced by the high level and demand for food establishments.
- Securities. Both small and large companies use this most common investment method. The main thing is to find a licensed, reliable broker who will help you buy and sell securities. But it’s not easy to do without recommendations from local experts.
- Private lending (P2P lending). People use your funds, and you get a percentage of the service. A significant risk is running into an unscrupulous borrower.
- Startups. There are several areas in Ukraine in which investors are willing to invest: AI, ML in any field, FinTech, and Data Science. The interest and demand of foreign investors are due to the following factors: economic growth, shortage of people, increasing demand for automation and digitalization, and the need for data analysis and forecasting.
In 2021, Ukrainian smart TV developer Kivi signed an agreement with Shenzhen MTC, one of the world’s largest electronics manufacturers. The Chinese giant will invest $13 million in developing a line of Kivi smart TVs in 2021. The funds raised will be used to create hardware and software solutions, implement design innovations, and improve sound and image quality.
- Cryptocurrency. The crypto industry experienced an eventful 2021. Bitcoin even became legal tender in El Salvador. There was a virtual ban on using cryptocurrency in China, and trading started of the first cryptocurrency exchange-traded investment fund ETF. At the same time, digital asset fraud hit a record amid the pandemic. Despite this, cryptocurrencies are becoming more and more popular.
In 2021, the Verkhovna Rada legalized virtual currencies in Ukraine. The market regulator will be the Ministry of Digital Policy, which will facilitate adapting Ukrainian legislation on the circulation of virtual assets to international standards and protect the rights of market participants.
According to Forbes Advisor, the Best Cryptocurrencies to Invest in February 2022 are Bitcoin (BTC) with a market cap of over $730 billion, Ethereum (ETH) over $327 billion, Tether (USDT) over $78 billion, Binance Coin (BNB), over $63 billion, and U.S. Dollar Coin (USDC) over $50 billion.
Against all odds, in January 2022, the price of Bitcoin fell below $34,000 for the first time since July. It significantly dropped from the last all-time high of over $68,000 in November 2021. For Bitcoin, such ups and downs are nothing new. It has happened repeatedly. Since 2017, this cryptocurrency has been constantly on a rollercoaster ride and has had both grandiose ups and downs. When you invest in bitcoin, it will be worth paying attention to it.
While listening to the advice of experts, crypto investors, especially beginners, should be extremely careful when allocating part of their portfolio to cryptocurrencies. In this gambling confrontation, you can both win and suffer a complete collapse. Just keep this fact in mind.
- Real estate. This is a good investment opportunity. You have two profitable options after purchase: renting and reselling. Now in Ukraine, there is a fall in real estate prices.
We touched on connecting Stock Investments and Real Estate Investments in one of the previous articles; Get more information on such an effective strategy to grow your money.
To maximize your earnings or increase the capitalization of your investment, you need to invest in houses that are under construction. In this case, there is always a chance to make a mistake: choose the wrong building, miscalculate the profitability, or even get stuck with unfinished housing. Deplorable cases of such an outcome are not uncommon in Ukraine.
Ukrbud, one of the largest developers in the country, was a time bomb that exploded in December 2019. By 2019, its portfolio included about 50 residential complexes in the capital, of which 22 were under construction. Problems at the construction sites made themselves felt in the summer of 2019; the company postponed commissioning dates for a year or more. The company declared bankruptcy, and it could not complete construction of 22 residential complexes. Over 13,000 investors were threatened with being left without apartments. In August 2020, the State Mortgage Institution agreed to allocate UAH 2 billion to complete the frozen objects of the bankrupt Ukrbud.
The expert opinion of the Ukrainian developer Igor Nikonov will help you understand the situation in the construction market as a whole.
- Low risk of bankruptcy. Real estate prices can be volatile, and the investor can suffer losses, but the property will have value.
- Relatively high returns. Return on investment fluctuates between 7% and 10% in dollar terms.
- Good hedging against inflation. Real estate prices tend to grow with other costs. So it’s an excellent value-returning asset.
- Possibility to receive passive income. Working with a reliable company in Ukraine, you can put in minimum time and effort to obtain a good income.
However, this type of investment also has disadvantages.
- Relatively high initial investment. The initial investment for renting out a real estate object starts from about $100,000.
- Low liquidity. Buying a real estate object and selling it could be a tough job for private investors. Therefore, most investors seek expert help from reliable and trusted real estate companies in Ukraine.
As mentioned in the report “Public Housing Policy in Ukraine: Current State and Prospects for Reform” by Cedos, Ukraine has one of the highest owner-occupation rates (over 90%). Even 10% of Ukraine’s population, approximately 41.5 million people, is 415,000 people. These factors create high organic demand for residential real estate rent in Ukraine. Also, apartments in the historical center of Kyiv, where most of the embassies and business centers are located, are popular among expats.
These indicators confirm the demand for this market in Ukraine. Despite all the pros and cons, the decision is always yours. There are several directions in this area that correspond to the different goals of interested investors.
Real estate types
Once you have determined your purpose for investing in real estate, you will choose the type that will make the most sense. Let’s look at the different options.
- Residential real estate – apartments or houses that can be rented out or resold.
- Commercial real estate – investments in commercial real estate are profitable only if you need them for your business. Therefore, this is not the most beneficial option.
- Land plots – you can have a good income if you invest your capital in a land plot, which can later be rented out or sold for development.
- Country estate
- Under construction – a popular type of investment but hazardous in Ukraine, including due to the lack of an effective judicial system.
Each type of investment in any country has its guarantees and risks. And Ukraine is no exception. With many advantages and acting thoughtfully and in cooperation with trusted experts, a young country that is developing can become your source of stable profit.
Find something that will bring you good passive income and pleasure. After all, the transience of our life stimulates us to new achievements. Be bold in your thoughtful decisions, invest, and luck will smile on you sooner or later.
If you want to deal with this matter seriously and thoughtfully, the game is worth it. Try to look for your preferred option or combine different things. In many cases, having experts who can help you more profoundly and more thoroughly, guide you, and help you realize what you want will be a more reliable option.
Vestor.Estate has been developing in the Kyiv real estate market for several years and provides a full range of services for investors anywhere in the world. Our successful cases in the historic real estate market speak for themselves. The historical secondary market has two types of buildings featured on our blog.
We guarantee you reliability and will help you realize your goals in the optimal time. You will get the desired result and be a worthwhile asset in the very heart of Kyiv.
If you are considering this type of investment, you may be interested in our advantageous offer. Find out about your investment opportunities in Kyiv real estate and get a stable income with Vestor.Estate.