UKRAINE Trends and Developments Contributed by: Timur Bondaryev, Maryna Sharapa, Andrii Pidhainyi and Olena Yurets, Arzinger
Challenges for the Real Estate and Construction Market in 2023: Full-Scale Russian Invasion The real estate market has suffered significant losses due to Russia’s full-scale invasion of Ukraine. As well as a general drop in demand for all types of real estate, market operators have faced other challenges, such as regarding the safety of visitors and staff. In addition, many assets have been damaged or destroyed, and significant investments are needed to restore them. According to the Kyiv School of Economics (KSE Institute), direct documented damages inflicted upon Ukraine’s infrastructure due to the full-scale invasion by Russia, as of January 2024, stands at USD155 billion (at replacement cost). The increase in the total amount of damage is due to a growth of damaged and destroyed infrastructure, housing, industry, energy, edu - cation and healthcare facilities. The number of damaged and destroyed residential buildings is increasing every day – as of January 2024, there were almost 250,000 damaged and destroyed buildings. Direct damage to these facilities is estimated at USD58.9 billion. As of the beginning of 2024, the damage to infra - structure has reached USD36.8 billion, and the direct damages to industry and businesses have already reached USD13.1 billion. According to the latest data, 78 small, medium and large pri - vate enterprises, as well as 348 State-owned enterprises, have been destroyed or damaged. Therefore, business and government represent - atives are faced with finding solutions that would help to stabilise the economy quickly during the invasion, and to ensure effective development in the post-war reconstruction period.
Market Trends Residential property construction and price increases As a result of the Russian invasion, the residen - tial property market in Ukraine virtually came to a standstill in 2022. New developments were on hold, with only projects started before the war being completed. However, after the shocking year 2022, the main indicators began to level off, and a positive dynamic was outlined. According to statistics, 7.38 million square metres of housing was built in Ukraine in 2023. Most of this comprises two-or-more dwelling buildings (3.88 million square metres). In terms of the total area of residential buildings put into operation in 2023, there were five leaders: Kyiv City, Kyiv, Lviv, Vinnytsia and the Ivano-Frankivsk regions. In 2023, there was a new trend of perceiving shopping centres not only as a place to purchase goods but also as an opportunity to change the focus of attention, and to relax (cinemas, restau - rants, concerts, etc). This gave impetus to the construction of new shopping centres, especially in the western regions. Among the new projects that were opened in 2023, the shopping centres in Kolomia, Lviv, Truskavets, Drohobych and the Ivano-Frankivsk and Kyiv regions are worth not - ing. All have a new community-centre format with many Ukrainian brands. One new area of activity is the construction of temporary housing for displaced persons, especially in the western and Kyiv regions of the country. Procedures for such construction have been simplified. Usually, such projects are implemented with the funds of donors. Another concern is the repair and restoration of housing that has been damaged and destroyed
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