(Re)building Ukraine

Ukraine’s real estate sector is ready to play a major role in the country’s reconstruction.

Three days of lively discussion last month at EXPO Real in Munich, the largest European investment and real estate trade fair, offered the international business community a chance to assess the current situation on the real estate market in Ukraine, as well as look at its potential beyond the war.

With over 20 million square metres of residential and commercial space destroyed across Ukraine since Russia launched its full-scale invasion in February, it is self-evident that  country will need to be rebuilt on a large scale.

“For us, it is important that multi-disciplinary experts with local and international backgrounds have an opportunity to exchange opinions, visions, and practical solutions. Such discussions are the right way to find the best plan for building back a better Ukraine”, said Anna Nestulia, principal at Invest in Projects, a coordinator of the Rebuild Ukraine stand that was the centre of Ukraine’s presence at the event.

Stefan Rummel, CEO of Messe München, added that he would like to see the exchange with Ukraine continue in the future and Rebuild Ukraine become “an integral part of EXPO Real”.

Simeona Manova from the European Commission confirmed the EU’s commitment to rebuilding Ukraine, balancing short-term accommodation needs with long-term reconstruction efforts, in line with the New European Bauhaus principles of sustainability, inclusiveness and aesthetics.

“In addition to financial investment, it is imperative to rebuild local communities around common values, putting the Ukrainian people at the centre and ensuring participatory approaches to revitalising war-torn places across the country. The European Commission will work with representatives of government, civil society and the private sector to on housing urgencies, circular housing and capacity building,” she said.

Khrystyna Kurganska, founder and managing partner of Ol.factory, a Ukrainian aroma branding agency, emphasised the importance of investing in mental and emotional health as an integral part of a prosperous country’s rebuilding.

“It is not only about construction but first of all about the people who are living in Ukraine and will return home after the war,” she said.

Sustainability and ESG

Lisette Van Doorn, chief executive at ULI Europe, believes that in the current circumstances, Ukraine’s strategy and priority to build temporary housing, modular, and prefab is evident and understandable. But at the same time, she underlined that the industry can not waste this opportunity to think long-term.

“I hear a lot about the digitalisation of Ukraine. Given that the biggest hurdle in the building process is getting permits, this could be digitised.

Wolfgang Gomernik, CEO at DELTA Group and DELTA Ukraine, sees a solution in developing entrepreneurship hubs in Ukraine, providing different needs for new developments.

“The priority is to deliver housing, adjust logistics chains and reconstruct critical infrastructure in Ukraine. At the same time, fostering digitisation efforts are essential to reduce bureaucracy and make rebuilding faster,” he said.

Maksym Maksymenko, partner and the head of real estate and infrastructure at AVELLUM said that the government continues to work on simplifying and improving Ukrainian laws, prioritising investment projects, and supporting business operating in the country.

“Parliament passed several bills to simplify land allotment and housing construction for IDPs, infrastructure, and other real estate projects. In August, it also passed an important bill that significantly improved the legal framework for residential real estate construction and provided much-needed guarantees for investors. Much work is also being put into PPP legal framework improvement, which is planned to be used for large-scale residential real estate reconstruction.”

Tamás Polster, partner and co-founder at Urbanite Advisors, said that in terms of housing, the most sustainable approach is not to build new residential units but to renovate or restore old or damaged buildings.

Opportunities and bottlenecks

Marta Kostiuk, former head of research and development consultancy in Cushman & Wakefield in Ukraine and now based in the company’s office in Prague, spoke about the current situation on the commercial real estate markets.

“Despite the current uncertainty, and in line with global trends, the investment potential of the warehousing and logistics property market across Ukraine remains particularly high and will start to be realised once the security situation improves,” she said.

Roman Yemets, general director of the real estate investment company Smart Urban Solutions, shared his company’s plans and commitment to continuing operations in Ukraine. With several major commercial projects in the pipeline and several shopping centres destroyed by shelling, the team is now putting all the effort into being ready with the projects to start their construction.

“Most Ukrainians, who are IDPs or have moved abroad, are waiting for when they will be able to return home safely. It is a strong statement for real estate investors and developers about Ukraine’s potential,” he said.

Ukraine did not stop

Representing the transportation and logistics business, Anna Lugovskaya of Corcel Group supported the view that Ukraine has high potential, while Colin Ross, director of Gleeds Ukraine, shared his views on the current situation: “There is a misconception among a lot of people that Ukraine stopped when the war started, and that is just not true.”

According to LUN, the Ukrainian PropTech company which monitors the residential market, 1,300 residential complexes were under construction, and 1,770 projects had launched sales in Ukraine as of February 2022; after six months of the invasion, 65 per cent (800 complexes) had renewed construction work, and 1,350 projects had relaunched sales.

Illya Velychko, CCO at NEST, a Ukrainian development company with a diversified portfolio of projects in many sectors, expressed his views that the residential property sector, along with prime offices in Kyiv’s central business district, “is the most attractive real estate sector for investments because of its generally stable nature and high-income yielding potential.”

Lars Karb, director of reconstruction at OneUkraine, presented his long-term initiative of fast-delivery of residential space with a building system based on 3D container modules, which get assembled on-site. He explained that the programme is highly scalable and ensures the delivery of high-quality permanent housing at high speed and low cost because it allows the manufacturing of the input parts by multiple partners.

“End-to-end, including the permitting process, we can build permanent housing with 30 apartment units fully fitted out and ready to move-in in six months. We are now evaluating several land plots for suitability to have the first building standing by the end of spring 2023 and then building a thousand apartments in two years.”

During wartime, there are many opportunities to donate and support humanitarian and other needs of Ukraine and its population. To rebuild the country, however, investment will be needed. EXPO Real was a good opportunity to start the kind of conversations that will make that investment happen.

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