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9.3% increase to UAH 12,000 ($328). Kyiv's rent rose by 2% to UAH 7,793 ($213), leaving the city in third place. The rent prices are higher in the west and some central regions. At the same time, the lowest prices are at the front-line in the Zaporizhia, Kherson, and Sumy regions. Last year, when inflation was 26.6%, the average monthly rent for a 1-room apartment increased by 32.7% to UAH 5,699 ($155). Before the war in 2021, when inflation was at 10%, rental prices increased by 10% to UAH 4,294 ($117), and in 2020, the increase was 5.5% to UAH 3,903, with inflation at 5%.
Ukrainians whose home was destroyed by war can now apply for compensation online. Infrastructure Minister Oleksandr Kubrakov announced on Aug. 1 that Ukrainians whose homes had been destroyed by Russia’s full-scale war can now apply for compensation.
Remote work could erase up to $800B in commercial office real estate value. Work from home risks losing $800B from the value of office buildings in major cities, highlighting the potential losses landlords face from post-pandemic changes in employment trends. Covid-19’s push toward hybrid work has depressed the need for office space, and vacancy rates are rising, the McKinsey Global Institute said. The consultancy firm said that the $800B estimate in valuation losses represents a 26% decline compared to 2019, with the blow potentially deepening to as much as 42%. A conservative scenario predicts losses of $800B, which is a 26% drop in the market to 2019 levels. The worst-case scenario is the market falling by as much as 42%. The impact may be greater due to the impact of high-interest rates. In the best-case scenario, the demand for office space will fall by only 13% by 2030. Currently, office space attendance is 30% lower than it was before the pandemic, and only 37% of workers have returned to offices.
9.1.5 Retail sector news
Due to a 20% drop in the market, the new Philip Morris factory will be smaller than the one in Kharkiv, said the head of the Ukrainian office, Maksym Barabash. "The Kharkiv factory, built in 2006, can produce 40bn cigarettes annually. At that time, the Ukrainian market was larger and had large exports," he stated. The company's representative noted that before the war, the factory worked at half capacity, producing 10mn cigarettes for export. The remaining 10bn was intended for the domestic market. But because of the war, production decreased by almost 20%. In addition, Philip Morris's share shrank compared to competitors whose businesses were in safer locations and continued to operate. Currently, the company's market share is 20%, while before the invasion it was 28.5%. The sales volume in Ukraine fell to about sevenbn cigarettes per year, so the new factory requires less production capacity.
9.1.6 Agriculture sector news
Ukrainian farmers will be forced to sell their grain below cost at $40/ton.
As a result of the closed Black Sea ports and the current cost of logistics through the Danube, farmers will face the reality of selling grain at $40 per ton, which is below their production cost. This will prevent agrarians from completing next year’s sowing and could result in an overall 30% reduction in grain production in Ukraine, equivalent to 15mn tons. The European Business Agency (EBA) predicts that the closure of the grain corridor may lead to a 33%
55 UKRAINE Country Report August 2023 www.intellinews.com