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Will Foreign Investors Enter Ukraine’s Real Estate Market?
Managing Partner of De Jure Law Firm, PhD in Law, attorney Hryhorii Tripulskyi, in his article for Yurydychna Praktyka, explores real-life cases and the hidden pitfalls of investing: from expected returns to documentation issues and legal risks.
Why do investors hesitate even when there appears to be a “window of opportunity,” and what could change after the war?
Recently, my clients from Israel called me to say they were considering investing approximately USD 10 million in Ukrainian real estate. They believe that Ukraine currently presents a “window of opportunity” and that it makes sense to invest now in order to generate additional returns after the war ends. At the same time, they are targeting an annual return of around 7-8%.
I tried to explain that, despite the bombs flying overhead, it is quite difficult to find real estate with a payback period of less than 14-15 years (i.e., 6-7% annually). Many existing offers promise investment properties with the desired yield; however, they often fail to account for construction periods, tax liabilities, and, not infrequently, the actual income figures turn out to be significantly lower. Moreover, it is very difficult to acquire property with a reputable chain tenant that consistently pays official rent. It is also important to separately highlight the issue of “clean” title documentation for such properties.
Unfortunately, when conducting due diligence for our clients, we regularly encounter problematic issues relating to ownership rights or the acquisition history of such assets. Furthermore, practices that 5-10 years ago were not even considered improper in our legal circles are now interpreted by law enforcement authorities as criminal offenses (including allegations of unlawful land seizure, forgery, fraud, etc.). Special thanks should be given to the Law of March 12, 2025, “On Amendments to the Civil Code of Ukraine Regarding Strengthening the Protection of Bona Fide Purchasers,” which has allowed good-faith long-term owners to feel more secure.
At present, a number of regions (particularly those near the front line) have extremely low property prices, often close to or even below construction cost. Nevertheless, despite all these challenges, my Israeli clients have decided to invest in Ukraine. I hope their investment proves successful and serves as a positive example for many other investors.
