How quarantine will affect prices for renting apartments in Kyiv

Victoria Bereshchak

Real estate market columnist

The rental housing market has suffered much more significantly than the primary and even secondary segment.

The point is, even during last year's lockdown, it lost ground by an average of 70% in the capital, and by the autumn, when the recovery began, the rollback was not so noticeable: only 40% of the lost volumes were won back. This is due to the well-established trend of remote work: many companies, even with the removal of strict restrictions in 2020, left employees at the home offices, and those employees either immediately returned home to the regions, or made such a decision over time.

The second nuance: salary cuts, in particular, in those businesses that are most affected by the coronavirus:

retail, namely the one that cannot boast of being omnichannel,
restaurant industry,
event sphere,
the sphere of recreation and tourism (hotels, spa hotels).

The salaries were cut by 30-40%, and after that not all employers returned to the previous salaries. This flattened the employees' wallet, and it became too expensive to rent apartments. The way out was—either to leave Kyiv, if it was possible to work remotely, or to look for options in a home city, or to abandon the sole lease in favor of the increasingly popular flat-sharing format. Therefore, the rent of one-room flats in Kyiv has decreased in favor of renting three-room options.

During the current lockdown, the rental market already cannot boast of the demand volume. Some of the owners have lost their tenants due to stubbornness (they were not ready to give a discount and installment payments during a difficult period), some—due to the market washing out. The tightening of quarantine restrictions this time is much more expected than the previous one, however, it will also have a negative impact on the market.

First, few students will leave. Most likely, even if some educational institutions gave the lesson offline (this is a small percentage), by the end of the school or academic year they will anyway do this online. Secondly, visiting specialists will be gone again. And in the summer they are unlikely to look for and rent apartments: as you know, this is the off season, demand is recovering in August.

Due to these factors, the exposure period will increase to 8-10 weeks, in particular, for one-room apartments in the dormitory areas in the old housing stock.

Starting from autumn of 2020, the market began to recover. Prices rose within 7-12% on the primary market, while on the secondary market this growth was slightly more modest—4-6%.

In total, in Kyiv, we witnessed a demand for high-quality objects with fresh renovation, a set of necessary equipment, a developed internal and external infrastructure of the residential complex.

But these are parts of the rental market, the volume of this part does not exceed 47% in the total structure. The rest is secondary housing stock and very often not the most liquid one. And here, by the way, the situation is much less rosy due to low demand and intransigence of the owners.

Now the volume of renting is far from the indicators of 2019, some specialists are unlikely to return to the capital and will remain in remote or full-time work in the regions, so the demand will lose ground further. This should affect the price tag if homeowners do not want to be idle for 2-4 months, waiting for the tenant.

In the regions, the growth in value was wave-like, in Lviv and Odessa—seasonal and spontaneous, and in some periods even exceeded the Kyiv one. In Dnipro and Kharkiv, there is a less noticeable increase in apartment rental prices: an average of 4-7% during the recovery period till winter 2021.