The transition to a regime of managed exchange rate flexibility has not yet affected housing prices in the primary market, but it may change the behavior of potential buyers, and the rise in the dollar in the future may affect construction costs, according to Ukrainian developers interviewed by Interfax-Ukraine.
“We do not expect any sharp price fluctuations in the primary market. Pegging to the current US dollar exchange rate is a standard practice among developers. That is, in case of a significant depreciation of the hryvnia against the dollar, prices for square meters in the national currency equivalent will indeed increase. However, we do not see any reasons for this at the moment,” Anna Laevska, Commercial Director of Intergal-Bud, told the agency.
According to her, in the short term, the cost per square meter will be mainly influenced by the dynamics of real demand and the cost of construction.
At the same time, the rise in the dollar may lead to higher prices for contractors’ services and construction materials, said Dmytro Novikov, marketing director of City One Development.
“At present, we do not see any prerequisites for a rapid rise in prices in the primary real estate market. Even if the dollar rises in value, there will be no significant changes in the primary market in the near future. But it may have an impact in the future: if the cost of construction materials, which are directly tied to the currency, rises, the cost of construction will certainly increase,” he said.
Daria Bedia, Marketing Director of DIM Group, expressed a similar opinion.
“The pricing policy in the primary market is always closely linked to exchange rate fluctuations, as a large percentage of contractor services and the cost of construction materials, for example, are tied to the US currency. If the exchange rate rises significantly, it will create an additional burden on the cost of construction, which will push the price up,” the expert said.
At the same time, the rhetoric about the “rise in prices” against the background of a flexible exchange rate is nothing more than a marketing ploy and an attempt to persuade buyers to buy, she noted.
“There will be no rapid growth in this case, taking into account the constraining factors,” Bedia believes.
In case of a dollar appreciation, developers will be able to slow down the growth of costs only with the help of previously purchased stock of building materials, said Irina Mikhaleva, marketing director of Alliance Novobud.
“We can say for sure that with the further growth of the dollar, the cost of primary materials will also increase, primarily in hryvnia equivalent. The cost of construction will also increase, as manufacturers and suppliers of services and building materials will raise prices. The only way to slow down the growth of costs may be the stocks of building materials that were purchased earlier and are now at the disposal of builders,” she said.
Ms. Mikhaleva noted that the market reaction can be predicted only if the dollar gradually rises, without sharp jumps.
For their part, KAN Development believes that even a sharp fluctuation in the exchange rate will have a minor impact on the housing market.
“Even a sharp fluctuation in the exchange rate, if it affects the cost of real estate, will not significantly affect the housing market. If the hryvnia drops by 10%, it will strengthen later. Government mortgage programs will not be suspended and will continue to be issued in hryvnia. As for new housing, developers will continue to adjust to the market price in dollars. So far, we do not see any factors that could sharply collapse the hryvnia,” the developer commented.
According to the Kovalska Group’s press office, the transition to exchange rate flexibility may have an indirect impact on demand and may slow down the pace of recovery in the real estate market amid a general decline in purchasing power.
“For example, buyers who have savings in another currency and are ready to buy today may postpone their purchase decisions until the exchange rate is “better”, and buyers who are considering purchasing under government and partner programs such as eOselya, preferential mortgages, etc. may go to the secondary market in search of cheaper housing due to “uncertainty”,” the developer noted.
Susanna Karakhanyan, Head of Sales at Greenville Group, also spoke about the likelihood of changing the behavior of potential buyers.
“For those who are now thinking about buying a home, a window of opportunity is opening to invest before the exchange rate gains speed and starts to grow after the commercial one. This situation is likely to accelerate investors who are ready to pay the full price immediately,” the expert told the agency.
In addition, the situation has become unpredictable for those who planned to take out a long installment plan to buy a home.
“While the NBU exchange rate was unchanged for more than a year, investors could clearly calculate their payments. Now the situation will be unpredictable. Therefore, developers will try to take control of the situation: for example, to fix the exchange rate for a certain period in order not to lose a buyer and demonstrate loyalty,” Karakhanyan said.
As reported, on October 3, the National Bank of Ukraine switched to a regime of managed exchange rate flexibility.
Since the beginning of autumn, the primary real estate market has seen an increase in transactions for the purchase of business class apartments with an average price of $2 thousand per square meter, Daria Bedia, Marketing Director of DIM Group, told Interfax-Ukraine.
“According to our analysts’ research, business class now accounts for 25% of the sales structure, although this figure was 15% in the spring. Such signals are encouraging, so we expect an increase in demand this fall. Of course, everything will depend on the news at the front, the frequency and consequences of shelling in the capital and possible power outages. We are also well aware that this category of buyers is likely to leave Ukraine for the winter in late fall,” Bedia said.
According to her, the level of demand is directly influenced by the project itself and its concept, stage and activity of construction. Important criteria include the developer’s reputation, ability to keep its word in terms of deadlines and promises, as well as flexible purchase terms in case of 100% payment and installments. Much attention is paid to the type and quality of materials, spatial zoning, landscape design, service company, security and concierge services. People who choose business class value a sufficient number of parking spaces and an underground parking lot with an elevator to the residential floors.
According to DIM Group analysts, apartments with the correct layout are in high demand, more often either classic layout solutions or Euro-formats with spacious kitchens-living rooms and isolated private rooms.
The area of one-bedroom apartments, which are most often bought in the business segment, reaches 50-55 sq. m, two-bedroom apartments – 75-80 sq. m, three-bedroom apartments – 100-120 sq. m. According to DIM’s Marketing Director, the mandatory attributes of such apartments are a large living area with panoramic windows of 30 sq. m. or more, a master bedroom with a dressing area and a separate bathroom of 20 sq. m., and a children’s room of 25 sq. m. or more with a wardrobe.
At the same time, the tendency to reduce the average area of purchased apartments continues.
If earlier, according to her, in the business class were interested in three-bedroom apartments in the range of 120-150 sq. m., now up to 120 sq. m.; while two-bedroom apartments are now more in demand in the range of up to 85 sq. m. against 85-100 sq. m. earlier. Only the demand for one-bedroom apartments has not changed at the level of 50-55 sq. m.
“The average area of apartments in terms of demand decreased by 10-15%. But the bulk of the sold objects were designed before the war, so developers still have large apartments that are not very interesting to buyers. After all, the total purchase receipt is more important nowadays. Therefore, developers offer more flexible terms for large apartments in terms of installments and discounts,” Bedia summarizes.
DIM Group was founded in 2014 and includes six companies covering all stages of construction. So far, it has commissioned 12 houses in six residential complexes with a total living area of over 218 thousand square meters. Six comfort+ and business class residential complexes are under construction: “New Autograph, Metropolis, Park Lake City, Lucky Land, etc.
The Eastern Interregional Main Directorate of the State Service of Ukraine for Food Safety and Consumer Protection has imposed restrictions on the import of meat products from Belgium due to the registration of bluetongue disease (ASF) in this country, the agency’s press service reports.
According to the order of the Chief State Veterinary Inspector of Ukraine dated October 13, 2023, the ban applies to the import of animals susceptible to the bluetongue virus and genetic material from them.
Bluetongue is a viral disease of ruminants (small and cattle), also called “bluetongue” or “blue tongue”. It is characterized by lesions of the mucous membranes of the mouth and nasal cavity, swelling of the tongue, swelling of the face, lesions of the extremities, and changes in skeletal muscle.
The disease spreads through insect bites, causing loss of livestock productivity and infertility. Mortality in the herd can reach 70-90%.
International Monetary Fund (IMF) Managing Director Kristalina Georgieva has announced the creation of the Ukraine Capacity Development Fund (UCDF) to provide technical assistance with a budget of $65 million over five years, and the Netherlands, Japan, Lithuania and Slovakia have become its first contributors for a total of $14.5 million.
“We are looking for $65 million over five years to expand (Ukraine’s) capacity development in the priority sectors supported by the IMF program. I am pleased to announce that donors have already pledged contributions of approximately $14.5 million. I am confident in your support for this initiative,” Georgieva said after a ministerial roundtable on Ukraine, which took place as part of the annual meetings of the IMF and the World Bank, which ended on Sunday in Marrakech.
It is specified that the Netherlands’ contribution to the fund amounted to $7 million.
The official event to launch the fund on the sidelines of the IMF and WB meetings was attended by IMF First Deputy Managing Director Gita Gopinath, Finance Minister Sergii Marchenko, NBU Governor Andriy Pyshnyi and his deputy Sergii Nikolaychuk, as well as representatives of the four countries.
“These contributions will support the efforts of the Ukrainian authorities to stabilize macroeconomic conditions and restore the post-war economy while implementing comprehensive reforms that are consistent with Ukraine’s EU accession goals,” the IMF said in a statement announcing the creation of the UCDF.
Pyshny thanked the IMF for launching the new fund. He emphasized the importance of international financial assistance for Ukraine, reforming the Ukrainian economy, and strengthening the institutional capacity of the authorities.
Capacity Development Fund, JAPAN, LITHUANIA, NETHERLANDS, SLOVAKIA
Benchmark oil prices are little changed on Monday morning after rising on Friday and throughout last week.
The price of December futures for Brent on the London ICE Futures exchange at 8:10 a.m. is $90.92 per barrel, which is $0.03 (0.03%) higher than at the close of the previous session. Last Friday, these contracts increased in price by $4.89 (5.7%) to $90.89 per barrel.
Quotes for November futures for WTI in electronic trading on the New York Mercantile Exchange (NYMEX) by this time decreased by $0.01 (0.01%) to $87.68 per barrel. At the end of the previous session, they rose by $4.78 (5.8%) to $87.69 per barrel.
Over the past week, Brent prices rose by 7.5% and WTI by 5.9%.
The sharp jump in oil prices on Friday was caused by rising geopolitical risks, FXTM’s Lukman Otunuga told MarketWatch.
Meanwhile, data from the oilfield services company Baker Hughes showed that over the past week, the number of active oil rigs in the United States increased by 4 to 501 units. The number of gas rigs decreased by 1 to 117.
The Nova Poshta Group plans to enter six more EU countries by the end of the year, opening its first offices there, said Vyacheslav Klimov, co-owner of Nova Poshta, at the Kyiv International Economic Forum held this week.
“We are expanding. There are already eight countries. There will be six more by the end of this year,” Klimov said.
The company’s press service told Interfax-Ukraine that Nova Post will open offices in Latvia, Estonia, Hungary, Italy, France, and Austria.
At the forum, Klimov noted that Nova Post offices abroad will be bilingual in local and Ukrainian.
“We have made a firm decision that two languages will be spoken in Nova Post offices in Europe. It will be the local language and Ukrainian,” said the company’s co-owner.
At the forum, he also said that the company’s group allocates about UAH 100 million per month to the needs of the army. Klimov clarified that 3,249 employees of the company are currently serving in the Armed Forces, and 99 colleagues have been killed since the start of the full-scale invasion.
As reported, Nova Post has already opened 62 branches in Poland, Lithuania, the Czech Republic, Romania, Germany and Moldova.
As of the beginning of July 2023, the Nova Poshta network in Ukraine included more than 10 thousand branches and more than 14 thousand post offices.
The Group of Companies includes Ukrainian and foreign companies, including Nova Poshta, NP Logistic, NovaPay payment system and Nova Poshta Global.
