Page 67 - UKRRptSept23

internal migration. In addition, Ukrainians are returning from Europe, and business is revving up in the capital, which needs to accommodate workers. Therefore, the demand for rent increased in Kyiv by 30%, Lviv by 25%, Ternopil by 20%, and in Dnipro, Ivano-Frankivsk, Vinnytsia, Kropyvnytskyi by 15 to 35%. Since the beginning of the year, Kyiv apartment rents have risen by 15-18%. In Lviv and Dnipro, prices are at the same level as in Kyiv. The average rental price in Kyiv is UAH 9,000-15,000 for one-room apartments, UAH 12,000-18,000 for two-room apartments, and UAH 18,000-26,000 for three-room flats.
Recovery in the construction industry: investments for reconstruction began to arrive. This summer, the Center for Economic Strategy reports that the Ukrainian construction business has become significantly more active for the first time since the beginning of the full-scale Russian invasion. This was facilitated by expanding the eOselia preferential state mortgage lending program. It’s noted that more significant restoration investments have begun to flow into construction activity. These funds come from various sources, including the state budget, international partners, and private companies. Financing is directed at restoring housing stock, schools, medical institutions, and other important infrastructure. The state also began paying compensation for destroyed private real estate. It is reported that construction has resumed on 75% of residential complexes that were in progress at the beginning of the invasion. Construction of 189 new facilities has also begun. In addition, rental rates and employment are increasing in all segments.
Kyiv’s commercial real estate vacancy will increase. At the Ukrainian population's current income and spending levels, the vacancy rate in Kyiv's shopping malls may reach 17% by the end of 2024, UTG reported. It is noted that the vacancy rate in the capital's shopping malls decreased from 16.5% at the end of 2022 to 14.7% at the end of the second half of 2023. Also, international clothing brand stores are temporarily closed, and 21.1% of the space is vacant. Before the war, 10.3% of commercial premises were empty. Considering the population's current income level, solvent demand can ensure the successful operation of 2.3 million square meters of retail space. However, as of August 2023, 2.4 million square meters are already operating in Kyiv. And the 2024 inclusion of additional declared projects with a total area of more than 250,000 square meters will increase the surplus of retail space even higher and stimulate the gradual redistribution of consumer flows between objects. All this will lead to an increase in vacancy to 17% and a downward correction of rental rates," the analysts said.
The cost of construction in Ukraine has risen sharply. In the first half of 2023, the price of a square meter in Kyiv's residential complexes increased by almost a quarter, depending on the demand level for specific units, and the prices were driven up by the high demand placed on enterprises producing building materials, reported a DIM group of companies. In the first half of 2023, the weighted average price per square meter in residential complexes in the capital increased from 15% - 23%, depending on the level of actual demand for the particular object. And the cost of construction increased by 33%. Prices are primarily being driven up by the constant growth in the cost of construction, particularly the costs of building materials as well as construction and installation work. In the first half of the year, according to market analysts, the average price per square meter of concrete has already risen an average of 6% -10%, glass – 46% -53%, fuel and lubricants – 15% -20%. Also, there has been a significant increase in delivery times, and complications in logistics
67 UKRAINE Country Report September 2023 www.intellinews.com