Just like its huge neighbor country, Ukraine has seen an influx of portfolio investors looking for exposure to its burgeoning real estate market. Since the beginning of the second quarter of the year, shares of the Ukraine property companies have risen by about 40%.

The old leader of the market is 21 Century that listed in London a few years ago. Its stock value took off at the end of March this year and has obtained a 43% return since then. And VK Development locally-listed developer of commercial property is Dragon Ukrainian Properties and Development fund (DUPD) that raised 208 mln USD on London AIM market in May, 2007 in order to invest in commercial developments and existing properties in Kyiv and the region over the next two and half years. Since that time shares in DUPD had shot up 35% by the end of July, despite the fund not having spent a penny yet.

Ukraine real estate stocks up 30%-40% in 2007

^{(Picture is provided by B.Aris, Special report, Businessneweurope, N4, 2007, p.6)}

The analysts say the Ukrainian real estate market still remains one of the largest unexplored real estate markets in Europe. With providing of high quality office, retail, warehouse, residential and hotel properties insufficient, the Ukraine's property market waits to benefit a lot.

Despite increasing gas and oil prices, the Ukrainian economy recorded an impressive 8% growth in 2006, far above the consensus forecast of 3% and GDP is expected to be above 6% per year till 2010.

Demand on A-class Kyiv property remains highly attractive. At 10-15% levels they are among the highest in Europe and in the next two years, the inflow into the sector and the emergence of a professional property investment market are expected. This shoul put upward pressure on the real estate in Ukraine prices, leading to spreads converging with the Eastern European average of 200-250 basis points and lifting prices 25-70% over a 5-year period.

Great rise in prices has been driven by foreign investment. The Ukrainian state statistics committee admits that foreign companies have invested about 1.8 billion USD into Ukraine property sector since independence and 31 mln USD in 2006.