What will happen to the real estate market after the war and how will government support revive the reconstruction process?
Despite Russia’s war against Ukraine, which has been going on for more than five months, certain positive changes are beginning to appear on the real estate market — gradually recovering from the enemy invasion and adapting to the martial law, the market is slowly reviving.
And even these first steps to resume construction in the so far “safer” cities of our country are extremely important for supporting the national economy, which is already adjusting to new realities, and in the future will continue to be structurally rebuilt for future recovery.
State support of the main sectors of the economy will contribute to this, and legislative initiatives in the field of urban planning activities and new housing restoration programs will help to adapt and bring the construction industry to a new level of work during the period of martial law with further post-war development of the country.
Also, the opening of the long-awaited Real Estate Register will facilitate the conclusion of new deals on the market.
State support for the recovery of the real sector of the economy.
Currently, there are positive messages from the authorities regarding the launch of the mortgage program, various types of bank lending and the appearance of mortgage funds, which have been waiting for more than 10 years.
All this will enable people to get cheap hryvnia loans at 3 or 5%. And it will also contribute to the recovery of the market itself, but it will be completely different, because the demand for certain types of apartments will change.
For example, if earlier in a residential complex 50% were occupied by one-room apartments, 30% by two-room apartments and 20% by three-room apartments, now this will be changed because there will be more people who need not just one-room apartments, but for family living.
There are a lot of them in Ukraine and they can take advantage of state programs, market players will have to adapt to them, which is not a problem in the end. This process will take about a month.
State programs will start working within 2-3 months after the Victory of Ukraine in the war, and the state will reimburse these interests, then banks will be able to lend, and the real estate market will work in full.
Once our economy recovers or shows signs of recovery, then we can predict a return of investment in our industry. In my opinion, housing investing can only recover when investors have stable and regular income in the future.
According to experts, there are several possible options for the development of Ukraine’s economy in the post-war period. First, it will depend on when wartime ends.
Secondly, will we have access to the sea and ports. I will give some figures: 60% of Ukraine’s exports and all export earnings were sent from Mariupol ports: rolled metal and other metal products.
Another 30% are agricultural products, which were exported through the ports of Odesa: Illichivsk and Odesa. A small part of 10% was sent by road and rail.
Therefore, if, for example, we do not have access to the sea, then our economy must change, that is, move from the export of raw materials by steamships and sea routes to the processing of all these raw materials and the export of already finished products.
It is not yet known whether Europe and the World Trade Organization will allow us to change quotas and all other export conditions. Therefore, depending on what the economic model of Ukraine will be, it will be clear how quickly the economy will recover, and our industry will be able to continue its development.
However, already today the state has announced not only for builders, but also for all enterprises of various industries that will work and have collateral available, the opportunity to take up to UAH 60 million in loans to replenish working capital.
In addition, the state offers various models for reducing the tax burden. All for the sake of making the business work. And these are very positive steps.
New government initiatives that will help support the construction industry.
As for the proposal of the authorities, under which the state will start buying apartments from developers, thus supporting the construction industry, it is not quite the right step, because the regulation or setting of prices by the state is a direct intervention in the entire sector of the economy.
As for the coefficients for lost housing, the government is developing options for establishing and calculating coefficients that will allow receiving housing or compensation for it equivalent to the lost one.
That is, if a person has lost an apartment, for example, in Brovary, then he will not be able to buy it in Kyiv, let’s say, on Solomyanska Square or in the center of the capital.
The same applies to Lviv and Ternopil. These are different in their, let’s say, liquidity of the city, and because of this, such nuances must be properly regulated.
I can assume that if a person has lost their home and it is possible to calculate this cost, the person should be given the opportunity to receive this amount in order to make a further decision and choose a new place of residence, although there are probably some points that we do not know about.
For example, many people from Kharkiv will want to take money and leave it and never return, then such a metropolis as Kharkiv will be lost.
That is, if all residents want to leave, this city may cease to exist, in this sense, the state will be right.
There is also one more initiative – after the war, all houses in Ukraine will be built like in Israel – with mandatory bomb shelters or special rooms equipped in each apartment.
This will significantly increase the cost of a square meter for developers, accordingly, significantly reduce the number of potential buyers simply because the apartment will have a bunker.
If the house has basement or basement rooms, underground parking, then you can provide these bomb shelters there and equip them with everything you need (two exits/entrances, places for rest, bathroom, light, drinking water), instead of building a bunker in each apartment.
Moreover, being in an apartment during rocket attacks is also dangerous. But so far there are no final innovations with their interpretations.
Reconstruction of Ukraine.
A government program to restore housing, which will take years, will soon begin.
In my opinion, in about 2 years, the Kyiv region can be restored to the state of the pre-war period.
As for such cities as Kharkiv and Mariupol, of course, their reconstruction will take more time. We see that the British, the Danes and the Norwegians want to take on a large part of the work of rebuilding these cities.
First of all, it seems to me that we will not be talking about residential buildings, but about the restoration of electricity and gas supply systems, sewage systems.
Roughly, in 4-5 years, these metropolises can become completely new modern cities, which will be made in a new way, using the latest technologies. And after that, they will start building roads and housing.
Regarding high-rise buildings in Kyiv or Odesa, which were hit by a cruise missile and have damage to 2-3 floors, from a technical point of view, their restoration is possible.
Here, a correct expert assessment by specialists will be needed, and then it will be clear about the possibilities of their recovery. For example, if it is a monolithic frame building, such as in Kyiv, near Sevastopol Square, then it can be restored in about 2 months.