Housing sales in Crimea have decreased by 50%

Prices for construction projects in Crimea already do not grow

Photo: Ukrinform

Russians have lost interest in Crimean real estate. In September 2014, the number of transactions on the housing market decreased by half compared with the same period last year. Deputy Director of the Crimean agency Status Eduard Kiss said in September the company received up to a dozen down payments from future buyers. “The total number of transactions is comparable with the same month of the previous year,” he explains. Over the year, the prices of real estate on the peninsula rose on average by 50%. His words are confirmed by other realtors. “The fact is that the realty market froze, which is a typical situation for this time of the year,” said Vice President of the Association of Real Estate Specialists Anatoliy Topal.

Registration nuances

The key reasons for the decrease in the number of deals are the rise in price and problems with registration. As a reminder, after the referendum in March on the annexation of Crimea by Russia the demand for housing sharply increased. Since Ukraine closed the register for Crimea, where real estate is registered, many buyers signed preliminary buy/sell agreements for housing and made down payments. The apartments in new buildings located on the southern coast of Crimea were in greatest demand. The huge demand for them spurned the owners of property to jack up their prices by 50%. At the moment, housing in a new building in Yalta is up for sale for US $2,500-3,000 per square meter and in an old building – for US $2,000 per sq m.

The apartments were mainly purchased by Russians. Then many realtors forecast the growth in demand for housing up until the end of 2014. “Some potential buyers are waiting for the start of the process of registration and after that they are ready to purchase housing on the peninsula,” assures a realtor of the Yalta City Agency, who requested anonymity.

In August, the State Committee for State Registration and the Cadastre of Crimea (State Registry Committee) began operating on the peninsula. This, however, did not help the situation, as the registration process remains slow and long-winded. “After the committee began functioning, many clients lined up in its offices. This is natural,” informed the press service of the State Registry Committee. At the moment, the process of registration of documents takes at least six weeks, while last year it took only three to five days, says a representative of Yalta City.

Swindlers on the comeback

The legal chaos also scared off potential buyers. The lack of access to the Ukrainian register does not allow for checking the history of a piece of property, which swindlers use to their own benefit. “On behalf of the owner of real estate, buy/sell agreements were allegedly drawn up,” says Managing Partner of the Status Law Firm Artem Pepa. Unlike Ukraine, such agreements need not be certified in Russia, which is why swindlers can forge Ukrainian property titles and use them to effectuate transactions, he added.

“The market sobered up. Many understand that it is risky to invest money in housing on the Crimean peninsula,” assures President of the Unions of Real Estate Specialists of Ukraine Oleksandr Rubanov. If the status of Crimea changes, all transactions performed under Russian law will be deemed null and void, concludes the expert.

The party did not last long

Real estate specialists do not dare to forecast the development of events in Crimea. This year, there may be two times fewer transactions compared with 2013. “Registration is a long process and the State Registry Committee is unlikely to satisfy all applications by the end of the year,” admits Topal.

The press service of the SRC informed that it is planning to expand and another office will be opened in addition to the six that already operate on the peninsula. “The time of registration should be reduced from 18 to 5-6 days,” confirmed the press service. The lack of demand will force owners of apartments to reduce their asking prices. The first signs of this have already been observed: potential buyers are being offered 5-10% discounts.