The Ukrainian real estate market main problems of 2020

Victoria Bereshchak

Real estate market columnist

In addition to the coronavirus, this year was landmark in terms of quality transformations, serious challenges and threats, akin to a gut-punch for the construction sector.

The year passed under the banner of "miraculously have lasted" for some, but for others it became an opportunity to strengthen their positions, confirm hypotheses and demonstrate the value of the product.

The main challenges of the outgoing 2020 for the residential real estate market, of course, will be the lack of an adequate system of controls and rules of the game in the market, due to which all developers become the current chaos hostages.

Kyiv never received an adequate master plan. SACI (State Architectural and Construction Inspection), judging by the results of its work for the year, did not get rid of the corruption hydra.

Meanwhile, the so-called activists, who most often defend the interests of individual business structures and political forces or simply work in favor of their profit, continued to storm developers indiscriminately, having taken over part of the inactive control bodies’ responsibilities.

Who gave them such a right, of course, remains a mystery, but this is a completely different story.

According to my observations, at least five systemic Kyiv players have faced attacks from pseudo-activists this year, and a couple more companies have confirmed such precedents off the record.

As a result: broken or damaged equipment, property, a plume of negativity around the site and additional investments to finally start or continue work.

And all this—in the conditions of business insecurity from economic terrorism. If the issue is not addressed in 2021, there may be a serious threat to the market development.

As well as the issue of permits. Due to the paralysis of SACI, the number of objects in 1.5-2 years may decrease by a third or more, while the demand for housing is steadily high.

Moreover, the buyers for the most part count on purchasing at the initial stages in liquid residential complexes in order to save money or earn money on the square meter price growth.

It is unlikely that they will be delighted to learn that they have to choose, firstly, from what is left on the market, because there are no new offers, and secondly, as the complexes are ready, prices are much higher than expected.

And I’m not even talking about the fact that the issue of the problematic objects completing has not been solved. Neither the mechanism, nor the financing possibilities, nor the procedure for fulfilling obligations and guarantees for defrauded investors are clear.

I cherish the belief that the city will consider opportunities to attract business and implement a public-private partnership with a system player. It is important that this company does not have its own unfinished objects, and also has sufficient expertise and financial stability.

There are also a number of pressing issues, among them: the outdated housing and utilities renovation, the industrial zones renovation, the social facilities creation, and Kyiv urban planning policy.

All this is not just a subject of demagoguery, but challenges that we take with us in 2021.

If they are shifted all the time from year to year, soon, I'm afraid, the real estate market and Kyiv local authorities will be buried alive under a heap of problems and obligations many of which cannot be delayed.