Card houses: how and why a collapse is planned in the real estate market in Ukraine?

During the war, real estate development companies found themselves in a difficult situation in the face of falling demand for real estate and rising construction costs. What awaits market players?

After a shutdown in Kiev in February 2022, work has resumed away from all construction sites. Focus “Housewarming party delayed. How are developers delaying deadlines for new home delivery?”

In particular, on the Internet portals where information about new buildings is collected, at the beginning of the winter of 2022, “Construction has been stopped. No work has been carried out since February 2022.” Among them are residential complexes of large, respected metropolitan developers. Some of these projects have been discontinued. However, on real estate forums, investors are outraged that in some cases the developer is raising prices and continuing to sell frozen properties.

As Irina Lukhanina, a real estate expert, explains, some developers are already on the verge of going into internal default in a situation where they must raise prices for investors as it is impossible to continue construction due to rising prices for building materials, fuel and logistics. At the same time, the developer is unlikely to attract new investors in the face of a virtual lack of demand by raising prices.

But so far we do not see any high-profile scandals in the market regarding the collapse of the developers. According to Vladimir Sementsov, co-founder and managing partner of INSPI Development, most developers are trying to avoid official bankruptcy and are looking for ways to find funding to continue construction. Maybe it’s just a matter of time before some of them collapse.

“How frustrating to say this, but There will be bankruptcies. Already some developers understand that they will not be able to continue their activities and other companies will finish building their facilities after the war.he said in a comment. Focus Anna Murashenko, commercial director of Really Building. “I am confident that there will be government programs to complete such construction projects, as the country will be interested in increasing the housing stock and accordingly putting the houses into operation as soon as possible.”

By the way, Victoria Bereshchak does not foresee a major collapse in the real estate sector, but does not exclude a reshaping of the market either. That is, the loss of position or the withdrawal of some players from the market and the increase in the power of others.

“I believe that neither years in the market nor a brand built before the war can save companies that are currently backfires and that for one reason or another do not build or build. Therefore, probably before the end of the war a few big names may lose their leadership, at least in the Kyiv region, At the most, it may face oblivion,” he said. Focus Bereshchak.

Learn more about the problems in the real estate market during the war in a new review. Focus “Housewarming party delayed. How do contractors delay deadlines for new home delivery?” Previously Focus He explained what dangers the economy would bring in 2023.

Source: Focus

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