It was really hard year, even it’s better to say that it was unpredictable year for the whole real estate industry of Ukraine including Kiev as well. The beginning of the year 2008 hasn’t demonstrated any signals for such serious complications which happed in September 2008. The market activity was quite stable, and all forecasts assured the positive trend for the following year.  The number of transactions was situated at the stable level, and some market segments were underperformed, that stimulated strong demand for especially office and commercial premises.  Investors operated at the Ukrainian market were aimed at the development of logistic, hotel and office projects, and they got serious business plans regarding Ukrainian market until the year 2012. However Ukrainian market has implemented some changes which affected the whole real estate industry. As a result the market changed its course and everything goes in the “specific” incomprehensive way.

The question is quite easy: what do we have? What we should expect for the next year and how is it possible to define the mostly competitive and safe market segments. Someone can decide that those questions are very classical, and the person who knows the answer can clearly make right actions which will generate high level of return on investment.  From the other side it’s really complicated to try to make any forecasts which can demonstrate main lines of future real estate conjuncture.  By the way after solid market analyzes the team of “Real Star Estate” has got its own point of view which will be clarified in this article.
Firstly, we strongly believe that market collapse which happened in the autumn 2008 has visible signs of artificial nature.  The absence of sufficient credit sources has ruined the access to the financing both for private and institutional investors. Taking into the account the fact that the essential part of Ukrainian real estate was bought with credit funds, it’s logical to understand, that November-December 2008 become a critical period of time to borrowers due to the absence of money for compulsory credit payments. The reaction of land lords was very predictable; they just propose their assets to the market in order to get any money to cover credit obligations. For that moment Ukrainian market was unable to absorb such a strong proposition of real estate objects, as a result prices went down. We just want to pay your attention to the fact that collapse happened within 3 month timeframe; according to the international practice such a high dynamic is unusual even impossible for international markets!! However we are “unlucky” and cruel fate has caught us.
Secondly, an essential role was professionally played by the media sources. The huge number of different programs aimed at the disruption of real estate market was proposed to Ukrainians.  Newspapers, magazines, television had done all possible to make people to believe that all real estate segments were overvalued , and collapse was inevitable.

Thirdly, the difficult economical situation has put the final negative point in whole this story. Increasing rate of unemployment and negative economical trend has cooled down the real estate market to the lowest level for last 4 years.

Summarizing all we mentioned above the specialists of “Real Star Estate” have to declare that the year 2009 will be very important for the destiny of such strategically important industry as real estate. That’s understandable that land lords are in very difficult situation due to the existence of “the market of buyers”. Currently the main rule of the market is: “You have money you can order whatever you want”. We consider that all market players have to be very careful nobody has to panic.  The world experience proves that each crisis always finished with strong recovery.  The same situation will have place at the Ukrainian market. There are always bottom lines which can’t be broken. We are sure that bottom line of the commercial real estate is almost approached, and continuation of negative trend isn’t profitable for leading market operators.
We are not so optimistic regarding residential real estate market due to the very complicated structure. It’s evident that luxury premises will be significantly demanded even in the current situation.  From the other side low quality objects were clearly overvalued and their destiny is easily predictable, they can lose some more value. At that, it’s important to know that every situation is unique;  similar objects can show completely different dynamics.

As a conclusion we have to state, that the following year will be definitely decisive for all industries contacted to real estate. It’s fare to expect some more correlation of price policy for all segments including land and commercial one, but it’s important to understand that very low prices are not advantageous for land lords, especially institutional ones. As a result, the stabilization process may starts the spring 2009 and the recovery including market growth can’t happen earlier than the spring 2010. The main suggestion of “Real Star Estate” is: be patient, and you will save value of your assents and in the nearest future you even will be able to make good profit.