Square meter prophesies

Those wishing to buy some real estate now have a hard time trying to make sense of the market-price forecasts are constantly changing. One estimate is often followed by a contrary prediction. The cause behind this situation is, according to the representatives of the Kyiv Real Estate Union, a lack of professionalism among real estate agents or, worse still, absence of any analytical studies as such.

“If we look at what some so-called “specialists” in real estate are saying now, we will see that one forecasts a 25 percent increase in prices, whereas some other predicts a 15 percent drop,” says the union’s president Oleksandr Rubanov. He emphasizes that forecasts of this kind “are not based on serious studies or [analytical] tools.” “These are prophesies rather than forecasts-and prophesying is apt to have no constraints,” believes Rubanov.

Oleksanr Andreev, the managing director of the joint-stock company Apartament and a union member, agrees: “What they call “analytics” today is in fact something similar to tarot readings,” he says. “Analytics is a deep science. It is not totally foreign to real estate agents but making complete and correct conclusions is the exclusive province of analysts.”

According to experts, real-estate analytics in Ukraine is an embryonic state now. However, rapid development is expected, judging from examples in the neighboring countries. “We will approach the issue of analytics professionally,” says Rubanov with confidence. “For this purpose we have already studied the experience of our colleagues in the CIS and other foreign countries.” According to him, the Ukrainian Union of Real-Estate Agents and the Russian Guild of Real-Estate Agents have already signed a contract, in particular with Gennadii Sternik (a Russian real-estate market analyst and professor at the Department of Economics and Municipal Construction Management in the Plekhanov Russian Academy of Economics — M.S.). Rubanov says that the subject of the contract is “practical assistance in developing standards and analytical methodology for the Ukrainian real-estate market.” The union plans to present an analytical program for Kyiv’s real-estate market in October. As of now, programs of this kind are unavailable on our market.

At the journalists’ request the union offered its own forecast. They were cautious and avoid specific figures. According to Rubanov, thorough investigation is needed for more detailed forecasts.

According to the union, early parliamentary elections will cause prices to rise. “The autumn elections will, most likely, lead to an increase in real- estate prices,” says the union’s first vice-president Ihor Odnopazov. It’s simple, he says: “Today money is channeled into preparations for the elections and when they are over it will be redirected at real estate.” Experts believe that this will lead to an increase in demand, thus narrowing the bridge between supply and demand and causing prices to rise. But not all of them. “Prices for social and economy-class real estate tend to go down on the secondary real-estate market,” says Odnopazov without giving any specific figures. He notes that so-called “social” real estate includes primarily well-known Krushchev-era apartments whose lifetime is about to expire. This is, in his opinion, one of the main factors causing a reduction in their price. “Krushchev-era apartments have the lifetime of 50 years, so this is no surprise,” he comments.

Therefore, experts maintain that there is no point in investing into these apartments. Rubanov says that their reconstruction is unlikely to become a common occurrence because this would go against investors’ interests. “It is more beneficial for developers and investors to build new houses rather than to reconstruct old ones. Therefore, until all free construction sites in Kyiv are used, there will be no large-scale reconstruction,” he says.