KYIV — They are designed and built for one single purpose: to house people as quickly as possible. After World War II, more than 3,000 such residential blocks emerged in Kyiv. Red bricks, five-stories high, no elevator: simple and without frills, they have become a typical fixture of the Ukrainian capital’s cityscape.
These are called khrushchevkas, the low-cost, panel buildings from the time of Soviet leaders Joseph Stalin, Nikita Khrushchev and Leonid Brezhnev. With their thin brick walls, tiny corridors, and kitchens no bigger than six square meters, the apartments constitute uniform blocks, many of which are dreary, dirty, and semi-dilapidated. But that’s not the only reason they have fallen out of favor with homebuyers — even those with limited budget.
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What the war with Russia has shown is that the khrushchevkas and other Soviet-era panel buildings from later decades were more heavily damaged, or even destroyed, by missile strikes — more so than modern concrete residential blocks and skyscrapers.
“Even if debris falls on modern buildings, the owners may need to replace a few broken windows, but the building itself will still stand,” says Roman Gerasimchuk, founder and director of City Development Solutions, a real estate consulting firm in Kyiv. “The risk of missile attacks makes buyers more inclined to choose modern buildings.”
Calculating in war damage risk
The Russian invasion may have led Ukrainians to buy a different kind of housing — but despite the war, they buy. The Ukrainian real estate market is currently experiencing a veritable boom.
Surprising as it may seem, in the past year — the second year of the war —, the real estate market has recovered strongly. In 2023, according to data provided by Opendatabot, an estimated 404,000 houses, apartments, and plots of land changed hands in Ukraine. This represents a 70% increase in transactions as compared with the first year of the war, in 2022.
People want to continue to live their lives as normally as possible.
While this still represents fewer sales than in 2021, before Russia’s invasion (when the country saw a record number of more than 631,000 properties and plots sold), many Ukrainians now appear willing to invest in real estate despite ongoing uncertainty. However, official statistics do not capture the value of the traded properties.
The fear of war damage has apparently not deterred buyers from investing in brick and mortar. “People want to continue to live their lives as normally as possible,” says Gerasimchuk. “This is not our first war. In fact, we have been in a state of war since 2014.”
Moving to Lviv and Dnipro
Three main buyer groups are driving the market: the largest group consists of people moving within Ukraine because their own homes have been destroyed, their home regions have become too unsafe, or because they believe that the greater Kyiv area and western Ukraine are safer and better defended than other parts of the country.
Among them is also increasing number of households who received compensation by the state after their homes were destroyed in attacks. “This group is small and currently includes only a few hundred people, but that number is growing,” says Gerasimchuk.
In Lviv, western Ukraine, real estate prices have risen sharply because many large companies have moved there, and their employees are consequently buying or renting apartments in the vicinity. The market is also booming in Dnipro, as many people have decided to flee Russian-occupied areas to relocate there.
And there are also the Ukrainians currently serving, or who have previously served, in the war. The compensation for soldiers and medics is high compared to the cost of living. In the wake of currency reforms, hyperinflation, and significant economic growth in recent years, real estate in Ukraine is now seen as a safe and lucrative way to invest savings.
Finally, there are Ukrainians who had set their sights on buying property or land before the war broke out, and ended up postponing the purchase. However, investors who previously bought apartments for investment purposes, either for speculation or to rent them out, have largely disappeared from the market.
A boon for interior design
The demand, too, has changed: real estate agents recently reported during the Ukrainian construction congress that what Ukraine’s internal migrants are looking for, first and foremost, is ready-to-move-in apartments. In Ukraine, as in several other Eastern European countries, apartments are traditionally sold as shells, completed but empty.
Buyers usually take care of the interior design themselves. But with people increasingly looking for turnkey apartments, business has been booming for interior design companies — and with it, the prices for the service, which now range between 0 and 0 per square meter.
Storage rooms also sell well
Project developers, however, are having a hard time selling apartments before construction work has started. Today’s buyers only commit when the property is already under construction, or even largely completed. But this takes longer than before, as many citizens have left the country and men have been drafted into military service. Ukraine’s state labor administration reported in September that the number of open positions in the construction sector exceeds the number of all registered unemployed.
“What used to sell poorly in new housing developments were parking spaces and storage rooms; today, they are bestsellers,” said Anna Laevsk, commercial manager of Intergal-Bud, at the construction congress. “Parking is important because people are afraid to leave their cars outdoors.” Storage rooms also sell well today because internal migrants often need a place to keep their belongings.
Security first
Security aspects have become – unsurprisingly – more important. Buyers and tenants, for example, value an underground garage that can be converted into a makeshift shelter with ventilation, heating, internet access, intercom, etc.
They mainly want to live on the lower floors.
Fortunately, underground garages are now the norm in modern buildings in Kyiv. Basements, especially those from Soviet-era buildings, are considered unsuitable for seeking shelter during strikes, particularly prolonged attacks.
Location is also a deciding factor: For the buildings, first, which should preferably be far away from infrastructure that could be a potential target, says realtor Yuriy Pita. Airports, power plants, strategically important companies, and military facilities are to be avoided.
For apartments, too: “Buyers’ preference have changed, they mainly want to live on the lower floors,” says Gerasimchuk, before adding drily: “Nobody wants a panoramic view anymore.”
