Despite the war, since the beginning of 2023, several REIT funds (real estate investment funds) have appeared on the Ukrainian real estate market, whose activities are aimed at investing in the construction of commercial real estate that can bring constant profit.
Now the most popular for investment from scratch are commercial real estate in such segments as logistics, retail real estate, as well as service apartments.
REIT funds are essentially "management" companies that direct the funds received to invest in real estate that generates income. The specialist noted that the lion's share of the profits of REIT funds are rental payments, which provide stable and predictable cash receipts.
Volodymyr Sementsov, co-founder and managing partner of INSPI Development, said that for the citizens of Ukraine, investing in REIT funds can be a good alternative to preserving and increasing the existing fortune. After all, citizens can purchase freely convertible securities of the fund and can bring a profit of 8-12% per annum in dollar terms.
“REIT funds can become a powerful alternative tool for investing and preserving the existing wealth of citizens. For example, in 2023, the profitability of hryvnia deposits, taking into account inflation, will not exceed 6%, and foreign currency deposits - up to 3%. In addition, the tax on income from deposits is 18% of personal income tax and 1.5% of the military tax is still required (total 19.5%). As for the taxation of investments in REIT funds, the tax for the investor will be paid by the investment fund: this is 9% tax on dividends, 1.5% military tax and fund remuneration in the amount of up to 1-1.5%. That is, only 11-12% in hryvnia equivalent will be calculated from the investor,” he said.
At the same time, the war associated with it, the state of uncertainty and the inability to calculate the further consequences of armed aggression somewhat hinder the development of Ukrainian investment funds, and international funds that are interested in restoring the country, are still in a state of expectation.
Within 2-3 years after the victory in the war in Ukraine, several funds may appear, created by developers together with commercial banks, whose activities will be focused on objects of predominantly commercial real estate, elite residential complexes (club houses), as well as service apartments in the live-work format -play (with "hotel" service, additional infrastructure facilities, such as cafes, fitness centers, shops, small shopping centers, co-working spaces, parking, etc.).
"Pilot" investment funds are, so to speak, probing the soil, analyzing the real estate market, and so on. However, after winning the war, citizens may be interested in investing in investment funds that specialize in investing in profitable commercial real estate and, in particular, in the creation of service apartments. After all, now there are tectonic changes in consciousness: the rethinking of housing as a necessary property continues, and the “place of life” inherent in the younger generation, in a broad sense, becomes the main thing, depending on the preferences and specific needs of a person at a certain stage of life,” he stressed.
At the same time, according to the expert, in addition to purely Ukrainian funds, 3-5 international specialized funds may enter the market, which will primarily be interested in objects with budgets from 10 million to 100 million dollars and a minimum yield of 7-8% per annum. .
The creation of REIT funds will be mainly interested in powerful Ukrainian development companies that plan to implement simultaneously from 3 to 5 large-scale projects in different real estate segments. In addition, several international REIT funds are already ready to enter the Ukrainian market and join the post-war reconstruction of the country. However, for the "mad" investment development, one of the most important requirements put forward by international companies is the creation of favorable and transparent business conditions, the absence of political and corruption obstacles," summed up Vladimir Sementsov.