Kharkov real estate investment potential


Kharkov (Kharkiv) real estate investment potential. Considering the continuous process of European integration of Ukraine as well as development of collaboration and cooperation with many other most progressive countries of the World, amount of foreign investments into Ukraine is increased from year to year. The main directions of investments into Ukraine are investments into the industrial sector of Ukrainian economy and to the various types of property in Ukraine, mainly it is investments into Ukrainian real estate (commercial and residential as well) and into Ukrainian land.

Over the past few years prices of the real estate have been significantly and rapidly increased and accordingly from one hand Ukrainian real estate represents rather good object for investment allowing rather high investment income and from the other hand due to the rapid development of Ukraine (economical, financial, industrial, scientific, etc.) it can be considered as the good base for business in Ukraine or even Europe.

Of course the most developed region of Ukraine is Kiev with the highest prices of the real estate (commercial, residential and industrial as well). It has rather developed automobile roads system, an airport, developed railways and even river transport routes together with developed communication systems as well. Therewith, Kharkov region in this regard can be considered even more advantageous region for the real estate investments.

Kharkov region has a lot of advantages in comparison with other developed Ukrainian regions (first of all the Kiev region, Dnepropetrovsk region, Odessa, Nikolaev and Sevastopol regions). From one hand Kharkov region has rather developed real estate market (primary and secondary markets) with comparatively smaller prices, then the same in Kiev. Kharkov region is the large region with well-developed infrastructures and communications but without excessive hurry and traffic jams and without highly polluted air like in Kiev. Kharkov region has an international airport, developed automobile roads, railways and underground (metro).

The other attractive features of Kharkov region are: the advantageous location, huge scientific and educational potential, high industrial potential, well-developed banking sector, good availability of industrial, commercial and residential real estate at reasonable price and the excellent availability of well experienced and educated personnel. And more then this Kharkov is just a beautiful city.

The advantageous location means that Kharkov, which is the main city of the region, is located in Ukraine of course (which indeed can be mentioned as the cross between many European countries and countries of former USSR, including the Russian Federation) and nearby the border with Russian Federation, which is indeed the Great Empire. Kharkov city even was the capital of Ukraine many years ago and accordingly provides the excellent possibilities for business cooperation and collaboration with many countries of the former USSR including the Russian Federation (Russia) and the European countries as well just due to its advantageous geographical location.

Huge scientific and educational potential of Kharkov region means that it is indeed the second or even the first scientific and educational center of Ukraine due to availability of big number of very good higher educational establishments, many of which have already many centuries of history (academies, universities, institutes, etc.) and large number of special secondary educational establishments, which educate good personnel of working professions. All these educational establishments are also the leading profile scientific centers of Ukraine. All this is due to the fact that Ukraine was positioned as the industrial, scientific and educational center of former USSR and accordingly there were huge investments made in the same.

Due to the availability of big number of the higher educational and specialized secondary educational establishments and the big number of functioning large commercial and industrial companies the Kharkov region is provided with highly qualified and experienced business and working personnel, which is also delivered from Kharkov to many other cities and regions of Ukraine and even abroad – to the Russian Federation and Europe as well.

The same situation as concerning Ukrainian industry and mainly the industry of Kharkov region as far as many large industrial complexes of former USSR were established and developed for years. That is why Kharkov city and Kharkov region are well-ensured with industrial facilities including production and warehousing areas.

Some key information about the Kharkov region

Kharkov Region (Ukrainian: Харківська область, translit. Kharkivs’ka oblast’; also referred to as Kharkivshchyna - Ukrainian: Харківщина and Kharkiv Oblast) is the region (province) in eastern Ukraine. The region borders Russia to the north, Luhansk region to the east, Donetsk region to the south-east, Dnipropetrovsk region to the south-west, Poltava region to the west and Sumy region to the north-west. The area of the region makes about 31,400 km?, corresponding to 5.2% of the total territory of Ukraine.

The region is the third most populous region of Ukraine, with population of 2,857,751 (as of 2004), more than half (1.5 million) of whom live in the city of Kharkov (Kharkiv), the region administrative center. While the Russian language is primarily spoken in the cities of Kharkov region, elsewhere in the oblast most inhabitants speak a mixture of Russian and Ukrainian called Surzhik.

Some history of the Kharkov region

The territory of Kharkov region has been permanently inhabited since at least the late Paleolithic period (10,000–12,000 years ago), but archaeological evidence indicates a human (Neanderthal) presence as early as the Mousterian period some 80,000 years ago.

The territory was relatively sparsely inhabited until the 1630s, when large numbers of Ukrainians began to settle there before and during the Chmielnicki Uprising. Most of the settlers were migrants from the Dnieper region, many of whom were fleeing fighting between Cossacks, Poles and Tatars. They called the newly settled region the Sloboda Ukraine ("word sloboda means fortress, mostly made of wood") or Slobozhanshchina, as the area is still sometimes called, and ruled it from the newly established fortress-city of Kharkov (founded 1656). In 1654, the region was incorporated into Muscovy (and subsequently the Russian Empire) under the terms of the Treaty of Pereyaslav.

Over the next 340 years, the area became heavily Russified. Kharkov itself became one of the cultural and administrative centres of the Russian Empire in the mid-18th century, and served as the capital of the Ukrainian SSR from 1919 until 1934, when the Soviet authorities moved the capital back to Kiev. The modern Kharkov region is a relatively recent creation, having been established on 27 February 1932.

Some facts about Kharkov region

The Kharkov region has a primarily industrially based economy, including engineering, metallurgy, manufacturing, production of chemicals and food processing. It also has important agricultural sector with 19,000 square kilometres of arable land (comprising 5.9% of the total arable lands of Ukraine).

Also there is the Airplane plant for space controlling systems in Kharkov. It is the major center for all branches of engineering, from large-scale manufacture to microelectronics. The gas field, which is located on the territory of Karkov region, is one of the biggest in Ukraine.

Population of Kharkov region (as of year 2001) makes about 2,895,800 persons (1328900 males (45,9 %) and 1566900 females (54,1%)). There with this data covers only the officially registered citizens (i.e. those who are domiciled here), but the actual population of Kharkov region is about twice bigger of the official date.

As of the 2001 census, the ethnic groups within the Kharkov region are: Ukrainians - 70.7%, Russians - 25.6%, Belorussians - 0.5%, Jews - 0.4%, Armenians - 0.4%, Azeris - 0.2%, Georgians - 0.15%, Tatars - 0.14%, others - 2.1%. The groups by native language are: Ukrainian 53.8%, Russian 44.3% and other languages 1.9%.

Residential real estate in Kharkov

Residential real estate market of Kharkov is represented by primary and secondary real estate markets. The primary residential real estate market of Kharkov region offers standard flats in already constructed old or not very old standard blocks of flats (so called secondary market) made of breaks or concrete panels. One can also find separate houses (or cottages) with land plots as well.

The same is offered on the secondary Kharkov real estate market, but normally quality of such real estate is rather lower then the same of the new flats and cottages offered on the primary Kharkov real estate market. Therewith purchase of the real estate on the secondary market in Ukraine is rather risky, therefore from one hand it is always better to buy it on the primary market and from the other hand, before buying any real estate in Ukraine (especially the real estate on the secondary real estate market) it is strongly recommended to make due diligence of such real estate checking and analyzing each and every available document as concerning such real estate, otherwise, especially for a foreigner, there is rather significant risk to be defrauded or to pay twice or more higher price.

Commercial real estate in Kharkov

Commercial real estate market of Kharkov is represented by primary and secondary real estate markets. The primary commercial real estate market of Kharkov region offers standard office premises in already constructed old or not very old standard Soviet buildings (so called secondary market) made of breaks or concrete panels or other old Soviet construction materials. Therewith at the moment Kharkov city has enough quantity of modern office premises (separate office premises (for a single user or multiple office buildings) or office premised combined with industrial premises). Commercial real estate can be purchased or rented as well.

Therewith purchase of the real estate on the secondary market in Ukraine is rather risky, therefore from one hand it is always better to buy it on the primary market and from the other hand, before buying any real estate in Ukraine (especially the real estate on the secondary real estate market) it is strongly recommended to make due diligence of such real estate checking and analyzing each and every available document as concerning such real estate, otherwise, especially for a foreigner, there is rather significant risk to be defrauded or to pay twice or more higher price.

Industrial and retail real estate in Kharkov

Another two types of real estate in Kharkov, which are actual for foreign investors, are industrial premises, which can be used for various types of industrial productions (plants, factories, workshops, etc.) and retail real estate, which can be used for various shops, supermarkets, boutiques, etc. (for small shops and boutiques most often are used the ground flours of commercial real estate within limits of the city, and for big shops and supermarkets most often are used separate ready-constructed old buildings, which are redecorated in the modern style accordingly, or new specially constructed buildings).

Ukraine is ranked as one of the most attractive and promising retail markets worldwide. Growth in consumer spending capacity and the corresponding expansion of the retail market in response to the strong demand means that the retail property market is undergoing phase of healthy development.

Apart from Kiev, the highest demand for retail real estate is in Kharkov, which is located at the crossroads of key transportation routes. There is demand both for retail trade centers as well as for independent stores.

It is important to note that when buying property in Ukraine foreign investors can face the following problems: corruption, lack of regulation, lack of controls and an insecure legal frameworks for enforcing personal property rights.

The most essential tip for prospective investors is to have a well-informed independent adviser, who can speak both English and Ukrainian, the language in which real estate transactions are conducted. Failure to obtain a good legal advice can result in disastrous financial losses. It is particularly important to have a decent local lawyer, who is well versed in the local legislation.

Kharkov real estate market is most certainly an emerging one and comes with all the problems commonly associated with an immature market. However, emerging markets also bring unrivalled potential for substantial profits and often the best investment opportunities in the longer term. The risks involved in investing in Kharkov real estate market are greater than average, but, then, so are the potential returns.

The above information is provided herein in educational and informative purposes only. It is provided that you have to get appropriate advice as regarding issues of your interest in Ukraine in order to have the exact, extensive and up-to-date legal and other related information.

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