VidPlane
Runday
AIM Reality Kyiv-cool

Are Expats Being Overcharged for Housing in Kiev? Supply and Demand Problem? The Good, Bad and Ugly of Apartment Hunting

are-kiev-expats-being-overcharged-for-rent-2

As the summer holidays draw to a close and Kiev returns to work, peak relocation season for expats is in full swing, especially for those with school-age children. For new arrivals this will be an introduction to the “joyous adventure” that is Kiev real estate as they search for (and hope to find) what they consider Western-standard housing. But after moving day, if you pulled many Kiev expats aside and asked them if they believed that they are paying a “fair price” to rent their apartment, a good number would tell you that they suspect they’re overpaying. This article will address whether there is a housing price scam for expats (“yes” and “no” and the reasons for this perception), what constitutes suitable “expat housing” in Kiev, whether there is a deficit of such housing, and what opportunities this situation may offer for property investors who are seeking rental income.

Pricing Scam? Perception and Reality

The idea that you’re being ripped off because you are a foreigner who is far from home is not new–as human beings we are just wired for this type paranoia–it’s really our default setting. And let’s be honest, this does happen. Here in Kiev there is no shortage of dishonest brokers, who are prepared to take advantage of foreigners that are unfamiliar with the local real estate market. Actually, such brokers do not discriminate and will readily victimize local clients too; indeed this topic has been addressed here in previous articles. Or perhaps your employer is using a relocation company to provide you with housing in Kiev. In this situation the relocation company may be outsourcing your property search to third-party service providers, who may not be interested in showing relocating expats all of the available properties on the market. Technically, you’re not being scammed, but often you’re not getting the best possible housing that your budget would allow. Still other large businesses and international organizations may have housing committees, tender requirements, and cumbersome housing search policies that can “tie the hands” of your real estate agent and put you at a disadvantage when you’re competing with other tenants for “more desirable” properties in downtown Kiev, leaving you with the leftovers or otherwise less desirable properties.

Renovation Missteps and Other Shortcomings

All of the above circumstances can obscure the fact that there is a real shortage of housing in central Kiev that is suitable for expats.  But what exactly constitutes “suitable expat housing”? In most cases, this will mean apartments in downtown Kiev that have been renovated to the level, taste and style of expats. And a good way to illustrate this concept is to discuss the types of apartments that you’ll find in Kiev, including bathrooms, kitchens, furniture, flooring, and interior design, and what can represent deal-breakers and shortcomings for apartment-hunting expats. What follows can be an especially useful checklist if you’re new to Kiev.

If you’re fortunate enough to have a generous housing budget in Kiev then while apartment-hunting you may encounter some flats with a garish, baroque decor that recall ex-President Yanukovych’s Mezhyhiryia mansion. Inside them you’ll find lots of flashy but often impractical design touches such as overly fancy chandeliers, custom lighting, and giant gaudy murals on the walls. There’s often a mismatch between the tastes of owners of these flats with incredibly expensive, over-the-top renovations, and the market demand for such housing. Their local owners are looking to recoup their renovation costs quickly and can seem mystified by the lack of tenants who are ready to meet their price expectations. By contrast, expats as a whole and Scandinavian tenants in particular, usually want something light and bright, with neutral coloring and a minimal decor that is understated as opposed to heavy-handed, and more like IKEA than Beverly Hills.

Bathrooms and kitchens in expensive Kiev flats can also be showrooms for puzzling design choices and missteps.  Often bathrooms will contain big jacuzzis that no one uses, or showers that are difficult to climb in and out of instead of more modest shower closets or low-set bathtubs with showers. Or you’ll find toilets that are installed too close to the wall leaving no leg room, space-eating bidets in bathrooms that aren’t large to begin with, or flimsy hooks instead of large solid (preferably heated) towel racks. Sometimes otherwise nice apartments in good locations can fall short of expectations because the kitchen or bathroom hasn’t been renovated recently, or you encounter partial renovations where corners were cut and it’s obvious that the landlord ran out of money while renovating his apartment. Such apartments may feature older appliances which might of have been top of the line in their day but are now approaching the end of their useful lives, kitchen countertops made of compressed cardboard and composites instead of better materials such as natural stone, or a renovation style that dates back to the 90’s or early 2000’s.

Easy Fixes and Structural Problems

Sometimes the shortcomings of a flat can be easily remedied with relatively inexpensive fixes if the apartment’s owner is amenable, such as adding a “boiler” (hot water heater) or additional air conditioning units. But other drawbacks are structural and for them there are no easy fixes such as yolochka – a cheap parquet flooring that easily collects dirt instead of higher quality laminate flooring, balconies that have been enclosed turning them into closets with windows, otherwise high quality apartments that haven’t been renovated with tenants in mind such as large 300+ m2 apartments with only two bedrooms, or flats with odd layouts where smaller apartments apartments have been combined into one larger unit. Still other times the building itself is the problem. For example, higher floors in older buildings can have weak water pressure, or the paradnoye (“entrance area”) is in bad condition, or an apartment is up on the seventh floor and there’s no elevator in the building or the elevators constantly break down, or they are too small to accommodate baby strollers. And finally there is an acute shortage of parking in Kiev; even the underground parking garages of newer apartment complexes often have space for less than one car per apartment.

All of the above shortcomings limit the supply of housing for expats in Kiev and contribute to a structural deficit in a city where the average living space per person is less than half the EU average. While this deficit does exist, fortunately expats often may actually have price leverage with many local landlords since often they are seen as a highly desirable tenant–expats are considered “safer choices” over a local tenant since they will often stay longer if they arrived on a long-term posting, while a local tenant may be there only as long as it takes to complete the renovation on his new apartment, etc. However, this negotiating advantage won’t help you if you’re not able to act quickly when the scramble for housing begins during the busy season.

Kiev’s Expat Housing Deficit = Opportunity for Investors

So what does all this mean for property investors in Kiev’s residential real estate market? It’s simple–buy apartments in Kiev’s center that already enjoy other natural advantages such as the right building type and location, and renovate them to Western tastes and you’ll have have an opportunity to earn attractive yields of 10% to 12%+ per annum, if you buy at the right price. When it comes to apartment renovations, what seems simple to Westerners is often not at all obvious to local owners in Kiev. If there is a expat housing deficit in Kiev now, well then try to imagine if Ukraine’s nascent economic recovery continues, and international companies expand their presence and expat staffing. So if you, or someone you know, has a nicely renovated three-bedroom apartment in central Kiev, with a neutral interior design, and devoid of the deal-breakers outlined above, then there are many expats (and Kiev real estate agents) who would like to talk to you.

About the author: Tim Louzonis (tim@aimrealtykiev.com) is a co-founder of AIM Realty Kiev, a real estate agency that specializes in real estate services for expats. Tim is a long-time expat with Ukrainian roots. He first came to Ukraine as an exchange student in 1993 and returned in 2008.

A version of this article originally appeared in the September 2016 issue of Business Ukraine magazine.

Are you interested in buying or renting residential property in Kiev? Do you own an apartment in Kiev and need help selling it, finding tenants or with property management? See these related articles.

How to Buy Property in Kiev?
How to Rent an Apartment in Kiev?
Where to Live in Kiev? Everything You Need to Know About Kiev’s Neighborhoods
Let Your Apartment in Kiev
Sell Your Property in Kiev
Property Management Services in Kiev

The post Are Expats Being Overcharged for Housing in Kiev? Supply and Demand Problem? The Good, Bad and Ugly of Apartment Hunting appeared first on AIM Realty Kiev.

    Original source.

 

About the author

Aim Reality