The war significantly affected the real estate market in Ukraine/Korrespondent
< strong _ngcontent-sc88="">Over the past two months, the housing market has been reviving, and at the same time, the process of building new apartments in Ukrainian cities is also being restored. Read more in the exclusive blog for the Channel 24 website.
We analyzed what is happening on the market now and talked with developers about how they work in a war, who is now ready to buy housing and what will happen next with apartment prices.
The farther from the front, the bolder developers resume work
The potential danger of air strikes still exists in all regions of Ukraine. However, the primary real estate market is reviving, and the sounds of construction work have returned to the construction sites of many Ukrainian cities. As the developer Rostislav Melnik told us, now active housing construction is underway in nine central and western regions, as well as Odessa.
Of course, in the west of Ukraine, the restart of construction is going faster, because these regions are the most remote from the zone of active hostilities. For example, some companies restarted the construction of the first residential complexes two to three weeks after the start of the war. At the end of March, construction was resumed in Lvov, and in May construction was continued in Kyiv.
But in the Kyiv region, not all developers have resumed work. According to Artem Tomin, who builds in Irpin, the companies are still afraid that an enemy missile could hit one of the facilities.
But, despite the cautious attitude towards the restoration of development, they still carry out office work to the fullest and prepare for the upcoming start of construction. So, the teams are now forming a schedule to start as soon as it becomes safe.
For their part, some developers in the Kyiv region have returned to work in the office by 70%, but construction has resumed at full capacity. As our business client Nikolai Ilnitsky says, they work because they have everything they need, because they ordered and received all the materials before February 24.
A shortage of fuel and building materials may affect prices, but so far there is no sharp rise in prices
How has the current situation affected prices in the primary real estate market? Looking ahead, I will say that the most significant factor for the growth in the cost of apartments can be an increase in the cost of construction: building materials, fuel, etc.
According to one of our clients, the biggest challenge is that Russian shells have destroyed smelters, and this has created a shortage of resources. At the same time, the fuel crisis complicates logistics.
For our part, we have followed the dynamics of prices per square meter since the restart of the market and did not notice sharp jumps. During April – May, prices fluctuated, however, they reached a certain “starting point”, from which one should build on in the coming months.
So, for example, in Kievskaya, Lviv, Transcarpathian and Dnipropetrovsk regionsthe most profitable offers were at the end of April – the first weeks after the opening of the registries. By the end of May, the cost per square meter crept up: from 3% in the Kyiv region to 22% in the Lviv and Dnipropetrovsk regions.
But in Poltava region, Ternopil region and Prykarpattyahousing became more affordable. Thus, the most price per square meter for the month decreased in Poltava and Ternopil regions – by 18% and 10% respectively. In the Ivano-Frankivsk region, the cost decreased by 3%, while a square meter of housing in the region remains the cheapest in Ukraine and costs a little more than 17.5 thousand hryvnia.
How the price per square meter changed in the regions of Ukraine from late April to late May/Photo by Igor Syrovatko
The “portrait” of a real estate buyer is being transformed in accordance with new realities
Market players unanimously respond that demand from buyers is slowly recovering. Despite the fact that most developers have resumed the work of sales offices, interest in housing is just beginning. For example, some of our business clients receive approximately one to two inquiries per week. Meanwhile, others take 5-6 calls a day and already have several agreements at the stage of concluding a contract.
However, most Ukrainians now call just to ask about the conditions, and the bulk of potential buyers are people who planned to move in their own housing even before the war and consider budget housing as one-room apartments or new apartments costing up to 25-28 thousand. dollars.
And although the main target audience has been preserved since peacetime, because of the war, the “portrait” of the buyer is still being transformed. According to the president of the Association of Real Estate Specialists of Ukraine, Yuriy Pita, the market has probably lost foreign customers who have invested in premium housing. At the same time, a new category of Ukrainian buyers has appeared – these are migrants who have lost their homes or moved from dangerous regions.
Ukraine's victory, the restoration of affected cities and a stable income of Ukrainians will contribute to the flourishing of the new-build market
Full recovery of the primary real estate market depends on many factors. First of all, it is important that the country was safe, and investors were calm, investing in housing construction.
In addition, developers cannot draw up a work plan and calculate the cost of apartments until prices for the resources necessary for construction stabilize. Another non-obvious factor can be called the situation on the labor market, because while most Ukrainians without a stable income it is difficult to talk about a sufficient increase in demand for the purchase of real estate.
These theses are supported by experts. So, according to Yuriy Pita, the timing of the end of the war and economic recovery will affect the “flourishing” of the market.
For their part, developers in the affected cities believe that it is also important to restart construction rapid restoration of destroyed infrastructure. They say that the demand for housing should increase as soon as the settlement is put in order, schools and kindergartens are reopened.
Government programs, affordable mortgages and profitable bank lending will help restore the market, which will allow more Ukrainians to invest in their own housing.
Finally, I will add that for the rapid revival of the real estate sector, it is important to develop the economy as a whole, which depends on each of us. Keeping working and filling the state budget with taxes or being responsible for the timely delivery of the necessary building materials is all a common thing.
