Author Topic: The Ukraine wobbles  (Read 13219 times)

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Offline free spirit

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The Ukraine wobbles
« on: 18:55 12-Oct-2008 »
Forum members will probably be interested in this long article on the Ukrainian economy and the financial pressures the Ukraine is under: http://www.rgemonitor.com/euro-monitor/254001/ukraine_wobbles_as_the_financial_ground_beneath_it_trembles


Offline free spirit

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Re: The Ukraine wobbles
« Reply #1 on: 20:08 16-Oct-2008 »
Dear people,

Now we know the Ukraine has some problems, but they seem under containment at the moment and IMF involvement may keep them under containment.

As far as property prices are concerned, Ukrainian prices are at multiples of what might seem sensible for the country, and so a slight devaluation of the h. is not really doing anything. I haven't got the exact figures. Did the h. move from 4.8 to 5.4 or similar sorts of numbers. But only a real devaluation would really make the Ukraine cheap - eg a hryvnia at 10 to the dollar, for example. [leaving aside that even with the hryvnia at 10 to the $, the Ukrainian properties won't be actually "cheap".]

My questions are

1) is there any chance of a maxi-devaluation?
2) how would the financial crisis affect property values themselves (even before conversion to $). Will the hryvnia value decline sharply? Does the 80% fall of the stockmarket, and problems next door in the Great Bear, mean that property values in hryvnia terms will go down a lot?
3) then, when you put a devaluation of the hryvnia side by side with a fall in the hryvnia value of property, ,what will be the impact on the $ values? Maybe the sorts of property of interest to foreigners will continue to be quoted in $'s with little movement of the needle despite other problems?

I suppose the key for me is not whether there can be a 10% fall in the $ value, say of house in the countryside with 30 mins of Odessa - which would not be enough for me - but whether the Ukraine could end up with Hungarian-level property prices.

Taking all these factors together, only a crisis of the greatest proportions could bring prices to the Hungarian level, and so generally speaking a Ukrainian crisis would just produce a smaller falll in property prices - but not enough to make the country "cheap".  Property is a funny market - when prices fall, most people just refuse to sell and stay put - so very large falls in value don't tend to happen quickly. 

Of course I know it would be bad for many people in the Ukraine to see maxi-devaluations etc, and I am not wishing any bad scenarios on anyone's personal finances, but trying to see what the news that the Ukraine is seeking IMF help actually means, in brass tacks, for the man on the street, or the foreigner on the dusty streets of Odessa.


« Last Edit: 20:10 16-Oct-2008 by free spirit »

Offline free spirit

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Re: The Ukraine wobbles
« Reply #2 on: 20:17 16-Oct-2008 »
Credit default swaps are a measure of how risky a country is. To insure $10m of Ukrainian debt against default for five years currently costs $3m upfront and $500,000 a year - a total of $5.5m. Almost as bad as those pricey credit card payment protector insurance scams in the UK!

See:

http://blogs.wsj.com/marketbeat/2008/10/16/after-iceland-who-is-next/?mod=googlenews_wsj

Offline azzice

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Re: The Ukraine wobbles
« Reply #3 on: 12:14 19-Oct-2008 »
For residential market I agree 100% with Mr. Skalinin (skalinin.blogpost.com):

The residential market is dead. I'm telling about middle and low segments. They will down, no doubt during next year.

Taking into the premium properties (real "premium"!) are lack of supply, I don't think that market will fall down. But you should forget about high price for low quality. Main topics in that market now:

1.No mortgage for near the future or crazy rates exceeding USD 20-22 %/y
2. 25% properties will be frozen (remember, no mortgages?)
3. Developers with 1-2 residential project will leave the market (time to buy them!)
4. Exchange rate rally 4.6-5.6 UAH/USD make the market unpredictable.
5. Possible personal and family expenses cut will suspend the purchases
6. Mortgages flow rate increasing for existing loans (it could be a personal disaster for many people, like in States)

I guess few people can imagine what can happen if all (or some of these) get real. Unfortunately we have not Federal Reserve or sort of that to save housing market.


What about Land prices?

The owners of large suburban plots began to massively ask them for sale. Land near Kiev in a rapidly losing value very quick. Owners of large pieces of commercial land are ready to concede the real buyers third of the price. Land already is not a tool for speculations.

Prices at suburban for the first time in the past seven years have stopped to grow, and in some cases even started to fall. According to Knight Frank, prices of large commercial land plots in 1H2008 decreased on average of 8%, and some of them even 25-30% down. At this spring large areas (several hectares) with access to the route on 10-15 kilometres zone from Kiev offered for USD 700-900 sqm. now owners have already agreed to sell them not more than 300-500 per 1 sqm.

The main reason – no buyers at all. No crazy income, no glammy speculations. Land owners put own assets up for sale. Huge land lots put up for sale from developers, who need funds for projects in progress. Land, which offers now has a speculative pricing, and we all know that. That’s why it is hot offers but no one need them. Therefore, in order to find a real buyer, you must put the price down significantly.

But owners in Obukhov district can sleep well: our tycoons still want to live there. Take a breath.

Offline free spirit

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Re: The Ukraine wobbles
« Reply #4 on: 12:47 19-Oct-2008 »
That person's English is very difficult to understand. I think I got the gist.

Offline Vera

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Re: The Ukraine wobbles
« Reply #5 on: 15:02 19-Oct-2008 »
Azzice,

What whould you say a good price for a plot of land (20 соток) in about 1 hour drive away from Kiev now? How low would you say that might go in 6 months time or 1 year's time? Thanks for the info you posted, quite useful.
Do you know there region which is not far from kiev 1-1.5 hours drive yet good land by reasonable price?

Nik, what would be the price for such land plot (20 соток) in Odesskaya Oblast'?
« Last Edit: 15:05 19-Oct-2008 by Vera »
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Offline azzice

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Re: The Ukraine wobbles
« Reply #6 on: 15:07 19-Oct-2008 »
mmh

how many km from kiev borders? which direction?

Offline P-N

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Re: The Ukraine wobbles
« Reply #7 on: 15:10 19-Oct-2008 »

Nik, what would be the price for such land plot (20 соток) in Odesskaya Oblast'?

For what purpose V? 

Does it need to have electricity, gas and water, planning permission, or is it for your beloved self sufficiency agri-plot - the price difference would be reflective of the questions asked.
« Last Edit: 15:14 19-Oct-2008 by P-N »
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Offline Vera

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Re: The Ukraine wobbles
« Reply #8 on: 15:20 19-Oct-2008 »
I am thinking in both directions- if it is not too far from Kiev then to buy and hold it for now and later buind a house there.
How good are lands near Odessa for agriculture I was thinking it would be great for my parents to relocate to the south when they both retire and have anough land to grow stuff there.
Of course utilities are highly desirable in both csenarions.
I am sort of really interested but of course as everyone else waiting for prices to go down.
"You never really know a guy until you've stared at him for 8 hours through high powered binoculars." -Spongebob Squarepants

Offline azzice

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Re: The Ukraine wobbles
« Reply #9 on: 15:29 19-Oct-2008 »
i think you can fin something good for 30 usd/sqm... 60'000 USD for 20 sotka.

Offline azzice

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Re: The Ukraine wobbles
« Reply #10 on: 15:33 19-Oct-2008 »
but of course it s better wait 6 month before taking any decision

Offline P-N

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Re: The Ukraine wobbles
« Reply #11 on: 15:57 19-Oct-2008 »
I can split the land prices down for you as follows then V with regards the immediate vacinity to Odessa City (no more than 10 km outside):

Land with utilities and central sewage:

In the "rich folkes side of town" it is around $18,000 per sotok.  


Land with utitilities but without central sewage (needing a pit for waste):

A few kilometers away from these areas (which are just as nice but do not have central sewage systems) it is about $8,000 per sotok

In both instances you will find it difficult to have adjacent land of the size you mention as the areas get released by Odessa in block for domestic construction.


Land without utilities but with planning permission:

$3000 - $4000 per sotok and enough land around it to meet your agricultural needs also as it is not a popular buy dependant upon the utilities scheduled inputting (if it is even on the list).




There is another option, depending upon your timescale which I am considering personally.  If you are still a Ukrainian citizen, (if not I am sure your parents are), there is a massive amount of city owned agricultural land soon to be sold within the Oblast about 1 hour from Odessa itself (I cannot tell you where in an open forum).  Obviously being foreign I cannot buy it, but Anechka can.  It will be sold at $6000 per hectare we have been told (or $6000 per 1 kilometer square for those not knowing how big a hectare is).  

My interest is in some of the land which runs along the main roads closer to the well populated area which already exists, as getting planning permission for this will be easier in the future, but we are talking about a MASSIVE area of agricultural land going up for sale.

As an investment, even for lease purposes for farm use, it seems to me to be a "no-brainer" with so much land for so little money.  To what extent I invest will be the question, as there are so many possibilities popping up here, in the UK and the USA which have caught my eye and unfortunately I cannot afford all of them.

It maybe that I approach this opportunity with the soon to be sold agricultural land as a "co-operative" to buy a lot of hectares with any others interested, as the price is so low and consider either leasing most and applying for PP on roadside land with a view to business centres or logistical centes for the produce.

« Last Edit: 16:27 19-Oct-2008 by P-N »
"When surrounded by the dark void of the willfully blind, it does not excuse those that are a spark of light their duty to shine" - Me

Phasar

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Re: The Ukraine wobbles
« Reply #12 on: 16:05 19-Oct-2008 »
can I ask, whats a "sotok "  ???

Offline P-N

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Re: The Ukraine wobbles
« Reply #13 on: 16:08 19-Oct-2008 »
can I ask, whats a "sotok "  ???

100 square meters
"When surrounded by the dark void of the willfully blind, it does not excuse those that are a spark of light their duty to shine" - Me

Offline Vera

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Re: The Ukraine wobbles
« Reply #14 on: 22:24 19-Oct-2008 »
All the answers are really informative and the info is food for thought ,so to speak.
With winter coming and prices that are expected to fall I think I will wait and see what happens in the next 6 month and what the price dinamics is going to be and think about my strategy regarding this in, like ,February.
Everyone gets a thank you for being so helpful!
"You never really know a guy until you've stared at him for 8 hours through high powered binoculars." -Spongebob Squarepants