How to simplify the lives of investors ... and just people with money

How to simplify the lives of investors ... and just people with money

Ukrainians “invest in real estate”, “an association of injured investors”, “invest in the early stages of construction” – I am sure that you have seen these and similar phrases on the pages of Ukrainian media more than once. But let’s be honest, if a person does not know how ROI differs from IRR, then he is not an investor. The buyer, the owner of the property – anyone, but not an investor. Therefore, to buy one apartment is not an investment, to buy two apartments is also not an investment.

A professional investor understands perfectly well that the market is harsh and can punish, therefore, investing XXX money, but not making a profit, he simply writes off these losses and gains expensive experience. Buying at the stage of a fence, a pit or even an almost finished box is a high-risk investment, but it is only for a person who buys the floor of a house at once or at least three floors. For everyone else, it’s just a purchase. Though very significant.

It does not take a month for the so-called affected investors not to strike at the KSCA or not to block the movement of highways of the capital. People demand that city authorities solve their problem. Of course, they can be understood, only the city has nothing to do with it.

In fact, this issue is resolved quite simply – by a direct ban on the sale of real estate prior to commissioning, and in case of violation – a harsh inevitable punishment. This is the only and reliable way to prevent such situations in the future. Too radical? Indeed, in the Ukrainian realities this method is still difficult to implement. After all, most developers want to build for buyers’ money and until bank loans at 1.5-2% per annum in dollars appear in Ukraine, developers will continue to raise money from the public.

A less radical way is compulsory insurance of all risks of a developer by a large insurance company. Prior to construction, the developer will be required to obtain an insurance policy and in case of non-compliance with the terms, quality or other parameters, the insurance company may withdraw the project and, depending on the implementation stage, return the money to buyers or complete it with the assistance of third-party companies. This is a purely financial mechanism, which has nothing to do with politics, only normal insurance companies are needed, which will carry out their immediate tasks, and not be used by financial groups for money laundering.

For me, as a developer, every excitement in the market, every disadvantaged buyer, every new unfinished business is a threat to the market and freezing of my investment. Therefore, the more stable the market and the clearer the rules, the more knowledgeable the buyers, the more attractive it will be for people with money – big and small. Everyone will benefit from this – both buyers, because they will acquire real estate from a reliable developer, and developers, because they will make a profit.

Andriy Ryzhykov, CEO and managing partner of DC Evolution

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