The outflow of capital and human resources: how foreign real estate becomes a new home for Ukrainians

The full-scale invasion of Ukraine by the Russian Federation forced a change in the usual course of life of Ukrainians, and the majority, in general, began to try to arrange their lives abroad. According to sociological surveys, due to the unstable economic and political situation in the country, as well as the loss of a sense of security, almost 50% of Ukrainians do not plan to return home.

Currently, the trend of buying real estate abroad is becoming increasingly popular among Ukrainians. The uncertainty of the economic situation forces Ukrainians to look for safe options for investing their savings, which is why real estate abroad is perceived as a reliable asset that can protect against political and economic troubles.

Let’s consider which countries Ukrainians prefer and what the consequences of buying real estate abroad will be for the country’s domestic real estate market.

Reasons for purchasing real estate abroad

The tendency to purchase real estate abroad by Ukrainians is determined by a number of factors:

• economic instability;
• political uncertainty;
• security situation in the country;
• asset diversification;
• type of residence

For several years in a row, Ukrainian investors have been expanding their horizons, buying real estate in various parts of the world.

“80% of our clients are Ukrainians who went abroad and decided not to return. They sell apartments in Ukraine and buy abroad”, – describes the situation, director of the KDU Realty Group agency, investment consultant Olena Malenkova.

If at the beginning of the full-scale invasion, Ukrainians were looking for temporary shelter, now, when the war has dragged on, the following reasons for purchasing real estate abroad are observed:

• for permanent residence;
• for rest or temporary stay;
• for resale or rental.

If in the first two cases, investors are looking for ready-made real estate, then in the last case, they invest money at the construction stage.

“Someone in Ukraine has two apartments. One of them was sold, real estate in Poland was bought, which offered good conditions. For example, if a person lived there for 6 months and was employed, with official income, he could get a loan at 2%, both on the secondary and on the primary market – these conditions were only for Ukrainians. The Czech Republic also gave us very profitable programs for buying real estate.”, – comments Olena Malenkova.

Which countries do Ukrainian investors choose?

The most affordable countries include Romania, Bulgaria and Georgia. But the Czech Republic, Poland, Germany and Slovakia are considered countries with rather high housing prices. And in Great Britain, in general, only wealthy Ukrainians buy housing.

The top most popular destinations among Ukrainian investors:

• Portugal (from 200,000 euros);
• Spain (from 170,000 euros);
• United Arab Emirates (from 150,000 euros);
• Poland (from 180,000 euros);
• Turkey (from 100,000 euros);
• Northern Cyprus (from 90,000 euros);
• Bulgaria (from 80 thousand euros)
• Indonesia (from 75 thousand euros).

In Portugal, Ukrainian investors are mainly interested in Lisbon and resort towns in the south of Portugal. The Portuguese “Golden Visa” program is an additional incentive that allows you to obtain a residence permit for investments in real estate of 500,000 euros or more.

Inflation affected many areas of life, including real estate prices.  Over the past two years, the price of 1 square meter has increased from 60-80 thousand euros to 100 thousand euros.

“Prices in European countries have risen sharply. For example, currently in Slovakia, which can be considered one of the most promising markets today, the cost of a square meter in newly built housing is 6-7 thousand euros. One-room apartments in a high-rise building of 35-36 square meters cost from 120,000 euros. A studio of 25 square meters can be bought for 100-105 thousand euros. And two years ago, the prices were about a third lower.”, – Ms. Malenkova explains the situation with prices on the market.

According to Numbeo statistics, we have the following top prices for 1 sq m in European countries as of August 2024:

• Zurich (Switzerland) – 27,094 euros;
• London (Great Britain) – 16,880 euros;
• Paris (France) – 12,360 euros;
• Munich (Germany) – 12,097 euros;
• Luxembourg (Luxembourg) – 11,428 euros;
• Amsterdam (Netherlands) – 10,317 euros;
• Stockholm (Sweden) – 9,476 euros.

It is not for nothing that they say that demand creates supply. Thus, Ukrainian investors were among the top 3 foreigners who most actively purchased housing in Turkey. According to the data Sovereignties In Turkey, in March 2024, Ukrainians bought 129 houses, which is 9% of the total number of concluded real estate deals in the country. It is likely that such demand caused real estate prices to more than double. So, 1+1 apartments, which used to cost 50-60 thousand euros, now cost 110-130 thousand euros. That is why Turkey is already losing its leadership position.

“However, for some investors, the market still remains attractive. Even now in Turkey, you can buy an apartment 500 m from the sea, with a view for 80-100 thousand dollars – this includes repairs, furniture, infrastructure, a swimming pool”, – says Yuriy Grushetskyi, realtor of Deniz Estate Foreign Real Estate Agency.

The most sky-high are considered prices for housing in the United Kingdom. The price per 1 sq m varies between 10-15 thousand pounds. A townhouse in London is worth about 1.5 million pounds. The cost of an apartment with an area of ​​300 square meters reaches 7 million pounds. At the same time, the growing markets of Indonesia (the island of Bali) and Thailand are currently becoming the most welcoming for Ukrainians.

“Developers offer very ambitious projects in Bali. Not only Ukrainians – many Americans and Europeans invest specifically in Bali. Thailand offers state-of-the-art projects – on the island of Phuket, the average price per square meter is 2.5 thousand dlrs, that is, for 80 thousand dlrs you can buy a fully ready-to-live-in apartment”, – explained the director of the Academy of Sciences Yuriy Hrushetskyi.

Nevertheless, it is a budget option, where Ukrainians can buy an apartment on the picturesque coast of the Black Sea for only 30-50 thousand euros.

Pitfalls of the real estate market abroad for Ukrainians

Ukrainians are used to paying for an apartment or house in cash. Instead, abroad, preference is given to the cashless purchase and sale procedure. Many countries require documents confirming the origin of the funds. Also, Ukrainians experience difficulties when transferring funds to foreign banks due to restrictions set by the NBU. The National Bank has set a daily withdrawal limit of UAH 100,000.

However, in a number of countries, there are certain relaxations for Ukrainians. For example, some banks in Spain allow you to deposit up to 80,000 euros and do not require any reporting documents. In Great Britain, the allowed amount is 100,000 pounds. But at the current prices there, it is too small to use.

Austria and Switzerland generally do not accept large amounts of cash.

“You can put several tens of thousands of euros into an account in Poland, Slovakia, Bulgaria, but you will have to provide a bunch of confirmations about the origin of the funds. In Portugal, for example, you need to provide a certificate that the legal entity transferred the funds, from the bank — that they were credited and then withdrawn from the account”, says Olga Cherevko, managing partner of GLS law firm.

They are not interested in the origin of the money and take cash in Turkey and the UAE. However, you need to think about how to take cash abroad. After all, the amount must not exceed the allowed maximum of 10,000 euros in equivalent, and everything that exceeds this amount must be declared.

There are several ways to take cash abroad:

• export to the union – if a family crosses the border, then each family member can export the equivalent of 10,000 euros without declaration;
• funds from a Ukrainian bank card – you can pay with such a card for any amount. But it is allowed to withdraw only UAH 100,000 equivalent per month. However, the problem can be solved if you open such a card for each family member.
• cryptocurrency brokerage – purchase of stablecoins in Ukraine and resale abroad.
• making exceptional payments – according to NBU Resolution No. 18 of 02.22 (as amended), it is allowed to purchase and transfer foreign currency for goods that belong to critical imports, to pay the costs of treatment in medical institutions of a foreign country, to carry out currency transactions by residents and non-residents for mobilization and other measures, etc. However, it is worth getting the support of experts due to certain legal and economic nuances.
• purchase through a legal entity – the transfer from Ukraine will be made to a subsidiary company opened in another country.

However, the above-mentioned methods do not guarantee the absence of problems during operations of transferring funds abroad.

The purchase of real estate abroad by Ukrainians creates a certain security cushion for them, which makes it possible to diversify assets and thereby protect savings and investments. Also, investing in real estate becomes a source of passive income for Ukrainians, especially in places of tourist recreation. It is likely that such an active participation of Ukrainians in the international real estate market can significantly contribute to the image of Ukrainian investors on the world stage.

Given the growing interest of Ukrainians in purchasing real estate abroad, it can be seen that this trend reflects not only the desire to ensure stability for oneself and one’s family in times of economic and political uncertainty, but also the desire for global integration. However, along with this phenomenon, there is also an alarming trend — the outflow of capital from Ukraine. Citizens, investing in foreign real estate, demonstrate a decrease in confidence in the possibilities of saving and increasing capital in their native country. Even more threatening is the fact that a large part of Ukrainians who buy housing abroad do not plan to return. This can have serious consequences for the economy and demography of Ukraine, because the outflow of capital and human resources weakens the economic potential of the state and creates additional challenges on the way to its recovery and development.