Kyiv Hot for property investors

Kyiv is now believed to be the most expensive city in Eastern Europe in which to buy a home.

Prices increased by 10-25% in just the final two months of 2006.

New blocks of flats are springing up across the capital of this former Soviet republic.

Concrete shell

One such is the Triumph apartment complex.

It overlooks rolling hills and golden-domed churches on the edge of the city, and according to TMM, the company responsible, will have a swimming pool, spa and underground parking.

Although months remain till the building is complete, much of it has been sold already.

And although the flats remains a concrete shell - as with most flats in Kiev, it is up to the owners to fit floors and doors and finish the walls - a three-bedroom unit is valued at about $1m.

This kind of price is estimated to be about three times what it would have been two years ago - although, with no public register, no-one is entirely sure of the exact figures.

The cost of apartments has already overtaken some EU cities like Amsterdam.

Kyiv has experienced such a property boom. People have purchased apartments three years ago for $30,000, and now they’re worth up to $200,000.

Speculators

Part of the story is simply a rising demand for accommodation as wages go up and the economy grows - a demand for which supply cannot keep up.

Many sites operate 24 hours a day

“People simply want to move out of their old Soviet style housing, and move into something more comfortable,” says Jaroslav Kinach from property developers XXI Century Investments.

In addition, many Ukrainians don’t trust banks, preferring property as a way of securing their savings.

And then there is also a new class of super-rich Ukrainians looking for ways to invest their money: a tiny, but incredibly wealthy, group of business people who have done well since the collapse of the USSR, often in traditional industries such as steel production.

But the main driver for the property boom is speculation.

Investors tend to snap up new flats, then leave them unfinished and empty - adding to the imbalance between supply and demand.

The most expensive places cost $25,000 per square metre.

That’s not a joke. Apartments of this price are about 100 to 300 square meters in size.

Such a valuation would put the top of the market at around $7.5m.

Out of balance?

But despite the building frenzy, Ukraine remains one of the poorest countries in Europe.

For many living in Soviet-era blocks, the new flats remain out of reach

The cheapest one-bedroom flat in Kyiv costs in the region of $100,000- far beyond the reach of most people in a city where the average salary is about $200 a month.