By KYIV. Nov 10 (Interfax-Ukraine) – The delay in completion of construction of up to 70% of new buildings may be more than one year, Volodymyr Sementsov, co-founder and managing partner of INSPI Development, told Interfax-Ukraine.
"The delay of up to a year will concern those facilities which degree of readiness for the start of a large-scale war ranged from 30% to 60%. Construction of facilities that were in the initial stages from December to February has been suspended indefinitely," Sementsov said.
The expert added that during May-November 2022, about one third of residential facilities were put into operation, the degree of readiness of which by the time of the invasion was more than 80%. However, this is only 2-3% of the total number of new buildings.
Volodymyr Sementsov noted that the critically difficult situation in the primary housing market, of course, was caused by the war and two groups of objective circumstances derived from it. First of all, demand dropped to almost zero due to a lack of funds from potential buyers, inflation, the impossibility of affordable mortgage lending, the unpredictability of the consequences of the war, etc.
On the other hand, the developers themselves faced difficulties. The implementation of projects is hampered by a sharp increase in the cost of construction, the lack of sufficient capital or the possibility of attracting loans, the destruction of domestic enterprises producing construction materials and the complication of their work due to power outages, disrupted logistics supply chains, lack of skilled labor, etc.
The expert noted that any analytical reports on the number of objects in which construction work has been resumed do not take into account either the dynamics or compliance with construction deadlines. However, as the specialist noted, most developers are struggling to avoid "official" bankruptcy, looking for ways to find the necessary funding to continue construction and are ready to find a common language with investors-buyers who rightly demand to complete construction of one or another residential complex they have invested in.
In his opinion, by the end of 2022 one should not expect any positive developments in the primary housing market. And vice versa: the longer the war goes on, the greater the damage to the Ukrainian economy is, the lower the chances of developers to quickly recover and resume their activities.
According to him, in order to restore the primary market after the victory in the war, it will be necessary to develop a comprehensive state program that, on the one hand, would contribute to the relatively rapid recovery of the construction industry (over a period of one to three years), and on the other hand, introduce new principles of work of developers and interaction with the buyer.
"The main directions of this program should be the provision of loans to developers for the implementation of projects at 3-5% with the establishment of bank control over the use of funds provided and compliance with construction deadlines; as well as the development of flexible mortgage programs from 0% to 5-7% for various social groups," Sementsov says.
