Ukraine Real Estate Market – Opportunities and Challenges


Property prices in Ukraine have fallen sharply since 2013 due to the political and resulting economic crisis in the country. The prices on the average are down by 20-50% depending on the type and location of the property. While this creates a great opportunity to invest in Ukraine’s property market, investors (especially foreign investors) must be well aware of the many questionable and risky practices that currently plague the real estate market in Ukraine. Such practices can pose serious risks for potential buyers especially given the inefficient and corrupt legal system in Ukraine that doesn’t allow for a quick and fair resolution of disputes and claims. Therefore proper knowledge of potential pitfalls is essential to ensure that your property investment in Ukraine is safe and successful.


The purpose of this article is to educate foreigners (who might be contemplating to invest in Ukraine’s property market) about how the real estate market operates in Ukraine, common practices in the buy/sell process along with the risks associated with them, and suggestions on how to buy property in Ukraine safely and with a peace of mind. You may also be interested in our Guide to Ukraine’s Real-Estate Property Law.

The articles is broken down into the following sections:

  1. The Opportunity: Provides an overview of Ukrainian real-estate market since independence of Ukraine and shows why investments in property are attractive at present.
  2. The Challenges: Highlights current challenges which you should be aware of when deciding to invest in real-estate in Ukraine:
    • Seller and Property Due Diligence
    • Real-estate Agencies
    • Official and Unofficial Prices
    • Mode of Payment
    • Good Faith Advance Deposit
    • Transfer of Property Title
    • Banks
  3. Final Thoughts

The Opportunity

Brief historical background on property market since independence of Ukraine and current opportunity

Development of Real-Estate Market of Ukraine since 1991-2013

Ukrainian real-estate market started its development path only after collapse of the Soviet Union in 1991 and Independence of Ukraine, when Ukrainian Government in 1992 allowed privatization of residential property and private property in general. Before that, including at times of the socialistic Soviet Union, private property was not allowed and people had right of use of property based on their residence registration. Therefore registration in apartment was equal to owning of real-estate in people’ mind.

In 1992-1993 prices on real-estate as well as on other goods were chaotic and varied for 20-30 % from deal-to-deal.  From the beginning prices for real-estate were formed in US Dollars due to hyperinflation of Ukrainian currency at the times of country reformation. Even shops changed prices for retail goods every day. In 1993 price for one-room apartment in Kiev was around 7-9,000 US Dollars. In other big cities of Ukraine prices were usually half price cheaper.   

From 1993 to 1998 price for square meter increased in average for 50-100% depending on region of Ukraine. In 1998 due to another financial crisis and devaluation of national currency (UAH) (from 1,8 UAH /1 USD to 5,5 UAH / 1 USD) real-estate market was is deep recession.

Starting from 2001 there was gradual development of Ukrainian economy which followed rise of construction in Ukraine. In addition, development of banking sector in Ukraine and adoption of number of important laws, regulating mortgage loans, led to boom in mortgage crediting. Lots of foreign capital banks with with cheap credit resources opened in Ukraine at that time. Prices for real-estate went unprecedentedly up and increased in 15 times compared to 2001.  In 2007 there were more than 20,000 real-estate deals per month only in Kiev. Such rise of real-estate market lasted till 2008.

Prices reached its peak in 2008 and started to fall due to economic crisis in 2008. Ukrainian national currency fell and from 5 UAH/1 USD to 8 UAH/1 USD. Many people lost their jobs and income of others became much lower in US equivalent. As a result, large number of people couldn’t pay their loans, especially those who took mortgage loans in US Dollars. Prices for real-estate during 2008-2012 prices decreased for around 67 % with small rise in 2013.

2013 – Present: Crisis and Investment Opportunity

In 2013 due to Euromaidan Revolution and subsequent annexation of Crimea by Russia, armed conflict in the East of Ukraine, Ukrainian economy started to fall again. This crisis has greatly affected the real-estate market in Ukraine and property prices have plunged between 20-50% depending on the property type and location. At present, average price for residential real-estate in Kiev is 1,100-1,300 USD/per square meter. The key factors that contributed to the crash in property prices include:

  • Currency crash. The local currency Hrynia (UAH) fell sharply from 8UAH/1USD to the current 25UAH/1USD.
  • The economic well-being of most of the working class population as well as small to mid-size businesses deteriorated greatly. People could no longer sustain the existing lifestyle because they either lost their job or saw a big reduction in the salary due to currency depreciation. For many people, this meant they could no longer make payments on their mortgage loan and had to default.
  • The freeze of the credit market. Because businesses and people could no longer make payments on their bank loans, banks ran into serious financial crisis and the the credit market totally froze. Bank were no longer providing credit facilities to anyone.
  • The political, financial, and currency uncertainty led to public’s loss of confidence in the government and banking system. Cash became king. Great many people wanted to convert all their assets (including their real estate) into a safe currency such as USD.

The end result of all of the above was that there were very few buyers and a lot of sellers in the real estate market. Not surprisingly, property prices started to fall sharply and that’s where we are today. Experts predict that real-estate prices will continue to decline in 2016 for up to 6% due to low demand.

Signs of Hope

There are encouraging signs about the situation in Ukraine.

  • In 2016, Ukrainian economy finally started to recover from crisis. The World Bank as well as Ukrainian Government expect Ukraine to experience an economic growth rate of around 1% in 2016.
  • Ukraine has taken on a path to reform itself into an easier place to do business and an attractive investment destination in general. The progress is slow but steady.
  • Ukraine is working hard to closely integrate itself with European Union and other western countries. This in itself is forcing the country to clean up all aspects of governance and way of doing business. In fact, Ukraine has no other options but to embrace this change because it’s heavily dependent on financial and political support from the west at present.

What Does it Mean?

We believe that Ukraine’s property market will continue to be rocky for the next 1-3 years while the reform process hasn’t yet resulted in tangible progress in economic climate and public confidence. There is a potential of another 5-10% decline in the property prices during this period.

However we believe that longer-term (3-7 years horizon) outlook for the real-estate market in Ukraine is quite bright for the following reasons:

  • As soon as the economic situation improves and the banks start providing mortgage loans to consumers, the demand will pick up greatly. This should result into good capital appreciation since the current prices are at the rock bottom.
  • Given all the negative factors at present, you can still get a 7-8% rental yield in major cities (Kyiv, Lviv, Odessa) in Ukraine. Once the economic climate improves, the rental yield will only improve in reference to today’s property prices.
  • Ukraine is a beautiful country with rich history, strategic location, good size natural resources, and a low-cost but skilled workforce. Only the corrupt political system has held the country back in the past which is going through a positive transformation now.
  • Buy/Sell transaction costs for real-estate in Ukraine are low. Moreover, the tax regime on real-estate in Ukraine is very attractive if owned by an individual person (i.e. not corporate entity).

Indeed, at the current prices and with a longer-term horizon in mind, investing in Ukraine’s real estate market could be a very attractive option for the savvy investor. Nowadays it is possible not only to buy real-estate for considerably lower price, but also significantly negotiate the price.

The Challenges

Current challenges when buying property in Ukraine

A number of challenges and risks exist when buying property in Ukraine. If you are interested in investing in Ukrainian real-estate, you have to be ready for a number of problematic situations and tasks which you will have to deal with. It’s crucial to be aware of these issues in order to make an informed decision and avoid problems later. In the sections below, we discuss each one of these issue in detail.

Seller and Property Due Diligence

Ukrainian legislation and system of registration of property titles has significantly been changed over the last several years. Nevertheless, fraud in real-estate deals is common, therefore you should make sure that all the necessary legal checks have been made, including identifying the owner and his/her outstanding liabilities, rights of third persons (mortgage, lease, family members, etc), possible disputes etc. The best is to hire a reputable real-estate advisory firm in Ukraine.

Also, it is highly recommended to perform proper technical inspection of the building/ apartment /office space which you are interested to buy: old buildings may require additional funds for reconstruction whereas quality of newly-built buildings is not always good.

Real-estate Agencies

There are a number of challenges when dealing with the real-estate companies in Ukraine.

  • In Ukraine, neither the real-estate agencies nor the real-estate agents are regulated and they do not require any special license to operate. Moreover, the legal system in Ukraine is weak. Consequently, for real-estate agencies there is not much at stake (except their commission) when they are dealing with their clients.
  • Commissions are also not regulated. As a rule of them, real-estate agencies will charge you 2-5 % from real-estate purchase amount, however higher rates do not guarantee better quality service.
  • Real-estate agency’s fee includes also services for legal check of real estate. However, as the fee is paid to the agency only if the property is actually sold, real-estate agency is always interested to make the deal happen. For these reasons, it is risky to rely on legal opinions, made by real-estate agency’s “experts”. Moreover, on practice they never give you any copy of signed legal opinion regarding the real-estate and they bear no legal responsibility for the safety of deal.
  • In most cases, the main role of real-estate agents is selecting real-estate properties in accordance with given criteria and organizing the viewings. They tend to do a very poor job in providing any useful and accurate information about the location, building, property, market pricing. Most of the time, its anecdotal information and designed to entice the potential buyer.
  • They don’t do any preliminary checks on the sellers in order to pre-screen them and weed out any fraudulent or dishonest sellers.
  • In most cases, database of Ukrainian real-estate agencies contains information only on asking price, location, general description of real-estate and some pictures (often not professional). Moreover, information there is often not accurate. As a result, choosing of real-estate requires lot of viewing and lot of false starts, all of which is very time-consuming process and waste of time.

In other words, most of the real-estate agencies and their agents hardly serve the interest of the buyers.

Official and Unofficial Prices

There is no accurate price history information available about properties in Ukraine (this information is not available in the State Registry of Property Rights and their Encumbrances (SRPRE). The only document where you can see the last price, for which selected real-estate was sold – is the last title document (providing it was paid agreement, for example sale-purchase agreement), however even this pricing information is very often not correct for the reasons given below.

According to Ukrainian law, the price of real estate can not be lower than its market price. In case the seller is private individual, independent appraisal will be required. Generally, if the property is held for less than three years by an individual, an income tax is payable on the sale amount of the property which cannot be less than from market price of real-estate. Now here is the problem. Since the government itself has a very bad reputation of being corrupt, people in Ukraine have a very negative view of paying taxes. In fact, majority of the people don’t want to pay any taxes at all if they can avoid it.

Therefore, when selling a real estate property, if the seller is confronted with having to pay income tax, they will most likely split the payment into official and unofficial components. In practice, it is always possible to agree with appraisal company to make the market price lower (sometimes more than 50%). In this case, parties indicate in sale-purchase agreement not full sale price, but only part of it and then pay part of the real sale price in cash before signing the sale-purchase agreement and another part (usually smaller) is paid officially.

Not only such practices create problems with accurately determining the property prices,  they also contradict with Ukrainian law and bring risks to the buyer. As in cases of termination of agreement or disputing the validity of the agreement, the buyer will have the right to claim only the official sale amount as indicated in the sale-purchase agreement. One of the ways to lower risks for the buyer is such cases (as usually advised by real-estate agencies) is to include penalty to the seller for termination of the sale-purchase agreement in the amount equal to the unofficial payment. However, this will not really help the situation when sale-purchase agreement is recognized as VOID, as in this case all the provisions thereof (including related to penalties) are void as well.

If you disagree to lower purchase price in the sale-purchase agreement (i.e. the official price), the buyer will often be asked to increase the prices to cover for the seller’s taxes.

Mode of Payment

What the law says:

According to Ukrainian law, all foreign investments have to be done in Hryvna (national currency of Ukraine) or one of the allowed foreign currencies currencies (USD, EUR, and few others) through a bank transfer. It is not allowed to make foreign investments in cash. For foreign investor there are four lawful ways to pay for real-estate, namely:

  1. To transfer money directly from overseas (in one of the allowed foreign currencies) directly to the seller’s account in Ukraine. In this case the seller will  receive such foreign currency in his/her account.
  2. Transfer money to the buyer’s own investment account in Ukraine, convert the foreign currency into the local currency Hryvna (UAH) and then make bank transfer to the seller’s account in Ukraine in UAH.
  3. If buyer and seller are both legal entities, legal entity-foreign investor can also transfer money from overseas to investment account in foreign currency in Ukraine and then transfer money from investment account in foreign currency to investment account of the seller in Ukraine in foreign currency.
  4. If the seller is non-resident of Ukraine, then foreign investor-buyer can make a bank transfer from his overseas account to the sellers’s overseas bank account or choose any of the options described above.

Note that if buyer and seller are residents of Ukraine, all the payments for real-estate have to be made in Hryvna and only through bank transfers according to the law.

What is actually happening at present:

The above regulations on the mode of payment for property transactions in Ukraine are actually hardly followed in practice at present. Due to the poor and unstable health of banks, crash of the local currency UAH, and strict currency control measures (the result of political and financial crisis that started in 2013, people in Ukraine have very low trust in the banking system and do not want to keep any large amounts in the banks or in local currency. A big portion of the economy in Ukraine has become cash economy and overwhelming portion of the population prefers to keep their savings in cash outside of the banks and in US dollars.

Not surprisingly, in most cases, people pay for real estate in cash in US Dollars. There are enough “practical mechanisms” that are used for this purpose to evade the law and your real-estate agency will usually give you “creative” advice on how to get cash in Ukraine if you have money overseas and other aspects of such deal. Unfortunately, such “mechanisms”  of paying cash for real-estate not only violate Ukrainian law, but also bring practical risks and additional headache at the time of repatriation of your investments and investment income. In case when you evade law at the time of purchasing of real-estate, you will not be able to officially and lawfully repatriate your income and investments at least first 5 years after purchase of the real-estate (because for bank transfer and purchase of foreign currency the bank will require documents, evidencing proper payment for the original investment).

If you refuse to pay cash and insist on bank transfers, usually you will have to either give higher price to the seller than others, who can propose cash, or the seller may even not be willing to sell you the real-estate at all.

Good Faith Advance Deposit

After seller and buyer agree on price and other essential terms and conditions of the agreement, in order to confirm their intentions to conclude the sale-purchase agreement, they usually sign preliminary real-estate purchase agreement accompanied with a good faith advance payment by the buyer (usually 2-5 % of the sale price). According to law, this real-estate preliminary agreement if signed has to be signed in notarial form and the advance payment has to be given to the seller and if the seller subsequently refuses to sell the property, he/she has to return back to the buyer the advance payment plus the same additional amount as penalty; in case when the buyer refuses to buy the property (not withstanding any serious issues discovered during the legal and technical inspection of the property), the buyer loses the advance payment. Such preliminary agreement is not required by law, but secures buyer’s interest to buy property and if the seller refuses to sell the property as agreed in preliminary agreement, the buyer will be able to cover expenses, related with legal and other checks, which are usually done after signing the preliminary agreement.

In practice, to avoid paying notarial fees for certification of the agreement, parties often sign not-notarial written agreement and leave the buyer’s holding deposit with the real-estate agency. Good thing is that in this case advance payment is kept not by the buyer, but by a third party i.e. real-estate agency. However since the preliminary agreement is not notarized, it has a poor legal standing and in case of any disputes, the buyer is in a very weak position to demand payment of any penalty from the seller. The best the buyer can hope is to get his/her deposit back.

Therefore, you should be very careful with choosing a reputable real-estate agency as well as carefully examine preliminary agreement.  Make sure that in the preliminary agreement there are all necessary provisions, securing your right to refuse from the deal and get back the advance payment if technical or legal check of real-estate reveals any risks related to the deal.

Transfer of Property Title

In Ukraine, property title is transferred at the moment of registration of property title in the State Registry of Property Rights and their Encumbrances. The buyer and seller have to agree in the sale-purchase agreement on the moment when property title is transferred to the buyer.

In case of cash payment, money are usually given to the seller just before the signing and notarial certification of the sale-purchase agreement, which contains seller’s confirmation of full receipt of the sale amount. In these cases, parties usually agree that property title is transferred to the buyer at the time of concluding the sale-purchase agreement and notary registers property title for the buyer immediately after signing and notarizing of the agreement.

In cases, when payment is made according to law through bank transfer, parties usually sign sale-purchase agreement, stipulating that payment is made within specified period of time and property is transferred to the buyer after full payment of sale amount to the seller. After the payment has been made and notary received confirmation on full payment, the notary registers property title for the buyer. In this case, it is important to agree on documents and methods, how such payment can be confirmed, so that buyer after making the payment did not depend on the seller.

A notary is required to certify the sale-purchase agreement, advice and handle the applicable taxes, and to register the property in the state registry. Unfortunately, the experience and knowledge of notaries varies widely in Ukraine and very often you might get the wrong advice (such as applicable taxes, title transfer mechanics, and so on) from them. Just as an example, many notaries in Ukraine are convinced (with no legal arguments but just because of lack of proper knowledge) that registration of property title for the buyer (which leads to transfer of ownership) is possible only on the day of notarizing and signing of the sale-purchase agreement. This not only does not correspond with the Ukrainian law, but also may force the buyer to agree on cash payment. We highly recommend to choose an experienced notary who is up-to-date with the latest regulatory regime concerning real-estate transactions in Ukraine.


If you are making payment through an investment account in Ukraine, it is very important to open an account with a reliable bank. Some banks have special divisions specializing in working with foreigners including staff that can speak their language (English, French, German, etc.).

Due to the lack of foreign investments over the last several years and constant changes in legislation, bank officials and notaries of Ukraine have very diverse practice of understanding Ukrainian legislation and lack of practical experience of such deals especially involving foreigners.  Unfortunately, without prior preparation and proper legal advice, you can be misled by them (not intentionally) in terms of mode of payment, tax rates, necessary documents, and other aspects of the transaction.

As an example, bank officials at present often believe that foreign investment can be done only through investment account regardless of the provisions of legislation on foreign investments (Regulation of the National Bank of Ukraine “On Issues related to Foreign Investment in Ukraine” as of 10th of August, 2005 # 280). In our practice, sometimes it took days or weeks for us to convince such bank officials and often had to point them the relevant parts in the latest regulations. In appears that lawful (i.e. non cash) real-estate deals are so seldom in Ukrainian practice, that banks just do not know how this can be done.

Final Thoughts

Investment in Ukrainian real-estate can be a good opportunity

To sum-up, Ukrainian real-estate market at present presents a very attractive investment opportunity for savvy investors. However, there is lack of quality service providers at the stage of choosing real-estate as well as preparing for the deal. If you are interested in buying property in Ukraine, you have to make sure you hire credible consultants for real-estate matters to provide you with quality legal support and necessary assistance.

Related Resources

Here are some additional resources that you might find useful :

For further information and assistance, please contact us.