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Developers "freeze" new projects due to Russia’s possible external aggression—expert

Author
Lesia Solovchuk

Most investors in the real estate market in Kyiv took a wait-and-see attitude amid possible external military aggression from Russia.

The outflow of investors will lead to the fact that the delivery of many new projects in various real estate segments will be put on hold, Volodymyr Sementsov, Co-founder and Managing Partner at INSPI Development, notes in a comment to The Page.

Quote"In the next two months, the real estate market may experience a temporary vacuum in the development of new projects. Powerful investors are in no hurry to put up the capital in solving the problem of possible military aggression. But the projects whose implementation began much earlier than the geopolitical crisis will be continued," he explains.

According to Sementsov, the slowdown in investment primarily concerns the projects of a number of new development companies operating according to modern European and world models.

In particular, this refers to the urban and suburban residential complexes of various formats, service apartments (apart-hotels and tenement houses), logistics complexes, modern business and office centers.

"The market is frozen up": How real estate reacts to external threat from Russia
Quote"The projects of new developers are of great interest to private investors who are determined to get not instantaneous, but steady profit from their investments that, depending on the real estate segment, can reach up to 12-15% per annum in foreign currency. By the end of 2021, the share of the "new developers", for example, in the Kyiv market, is no more than 3-5% of the total number of developers. However, it is these companies that "absorb" new investors interested in making a profit from the liquid sector of the domestic economy," the specialist says.

Sementsov notes that there is already an effect of a "compressed spring" on the market: the demand from the investors for putting up the capital is quite high, but the decision is being delayed, which creates a large "investment" pent-up demand.

Quote"The wait-and-see attitude of the investors is understandable and quite balanced: now few people can predict what will happen even in the next week. However, we can say that after the issue of external aggression is obsolete, a certain spike in investor activity should be expected on the market," Volodymyr Sementsov says.
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