Crimean real estate no longer of interest to buyers

21 January, 04:15 PM
After the annexation, about 800,000 citizens of the Russian Federation illegally settled on the peninsula (Photo:Andrey Nekrasov/Alamy via Reuters)

After the annexation, about 800,000 citizens of the Russian Federation illegally settled on the peninsula (Photo:Andrey Nekrasov/Alamy via Reuters)

Over the past year, apartments in new buildings on the Russian-occupied Crimean peninsula have fallen in price by 14%, and the number of transactions has halved. Crimea is no longer inaccessible to the Armed Forces of Ukraine, and this motivates Russians to sell their homes.

According to the Restate platform, apartments are sold for an average of RUB 169,000 per square meter ($2,300 at the official exchange rate). This is still more expensive than apartments in new business-class buildings in Kyiv, which are subject to drone attacks and missile strikes by the aggressor. According to the LUN real estate monitoring service, in January, it was possible to buy an apartment in the capital for an average of UAH 72,400 ($1,800) per square meter.

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Real estate in Crimea is likely to get even cheaper this year, due to a sharp drop in the number of transactions. The Ukrainian Armed Forces intend to de-occupy Crimea, and the United States is providing Ukraine with GLSDB missiles with a range of 150 kilometers, which will allow it to strike military targets on the peninsula.

Apartments getting cheaper

Over the past few years, housing on the peninsula has been rising in price, bought up by Russians who have always dreamed of an apartment by the sea and moved to Crimea after its occupation in 2014. Volodymyr Zelenskyyt's representative in Crimea, Tamila Tasheva, says that about 800,000 Russian citizens reside illegally on the peninsula. The growth of price was also observed in the first half of 2022. For example, in January 2022, according to Restate, housing in new buildings cost RUB 197,000 ($2,660), but in May it stood at RUB 199,000 ($2,690) per square meter. The market was preparing to overcome the psychological mark of RUB 200,000 per square meter in the fall when demand traditionally increases.

But instead, prices went down. A 27% drop in the fall compared to the beginning of the year was recorded by analysts of the Crimean real estate consulting company REM Navigator. Russian statistics are lying, as the former Minister of Resorts and Tourism of Crimea, Oleksandr Liyev, has said many times before. But even Russian data has to admit that the peninsula is facing problems and real estate has started to fall in price.

The number of people willing to buy an apartment in Crimea has plummeted. According to the consulting company Idem, cited by Radio Liberty, in June last year, the number of transactions decreased by 52% compared to January 2022 and by 72% compared to the same month the year before. Obviously, this trend is still observed today. According to the Mir Kvartir website, there are currently about 33,000 properties for sale in Crimea. The same number was recorded in September last year. Usually, not only demand but also the number of offers decreases out of season. Serhiy Stepenko, managing partner of SV Development consulting company, says that no one wants to buy apartments in Crimea.

Time to go home

The Crimean real estate market stopped growing in May-June last year, just when the Russian occupation forces were forced to withdraw from the Kyiv suburbs under pressure from the Ukrainian Armed Forces. In the spring of 2022, it became clear that Russian dictator Vladimir Putin's plan to seize the capital and change the country's leadership had failed. Besides, later the Ukrainian army managed to de-occupy Kharkiv Oblast and the west bank of Kherson Oblast. But most importantly, attacks on military and infrastructure facilities, including the Crimean Bridge, began on the peninsula, which was previously considered inviolable.

"Crimea will be de-occupied, so some Russians intend to move to other regions of their country," says Vasyl Yurchyshyn, director of economic programs at the Razumkov Center think tank.

“Real estate on the island is being put up for sale. Increasing supply and decreasing demand leads to lower prices.”

The Kravets & Partners Law Firm cites another reason for the drop.

"Russians realize that they may lose their real estate,” says Rostyslav Kravets, senior partner at the firm.

“All purchase and sale agreements, construction of new buildings and their commissioning during the occupation of parts of Donetsk, Luhansk oblasts and Crimea may be declared null and void. Those who will buy apartments for a penny appreciate all the risks.”

He adds that buyers and sellers will probably have to re-register all the properties in accordance with Ukrainian law.

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