During the three months of the war, the construction industry of Ukraine has decreased by more than 70%, despite the point resumption of work at construction sites in Ukraine, while the cost of construction has increased by 20%, said Sergey Pilipenko, general director of the Kovalska group.
“I can state that, despite the statements of individual developers about the resumption of work, including Kovalska, the market has declined by more than 70%. This is if we consider the volume of construction work, the consumption of building materials,” Pilipenko said during online conference “Marshall Plan” and urban prospects of Ukrainian cities after the war: economic and urban strategies” on Thursday.
According to him, the cost of construction of facilities has increased by more than 20%, including due to a significant increase in the cost of building materials, logistics, inflation and the growth of the exchange rate.
The expert pointed out that the primary real estate market has actually stopped. “So far there are no signals for a quick exit from this state,” he said.
Pilipenko believes that the increase in the discount rate to 25% actually made it impossible to finance the business, so investment in new projects is in question. In addition, there are still no mechanisms for financing restoration projects by foreign states and investors.
In his opinion, in the near future the main construction activity will be projects of emergency repairs, dismantling, erection of temporary structures.
“Really assessing the situation, the state, in the context of ongoing hostilities, cannot fully and large-scale finance any restoration projects. It does not have the funds for this, and now the priorities are different. Therefore, from the point of view of construction activity, maximum developers can count on emergency repairs, dismantling or construction of temporary engineering structures, bridges,” he said.
PSG “Kovalska” has been operating in the construction market of Ukraine since 1956. It unites more than 20 enterprises in the field of extraction of raw materials, production and construction. The products are represented by the brands “Beton ot Kovalskaya”, “Avenue”, Siltek and others.
Enterprises of “Kovalska” work in Kyiv, Zhytomyr, Lvov, Kherson and Chernihiv regions. The total number of employees is 5 thousand people.
In addition, the group includes Kovalska Real Estate, which is engaged in the construction of residential facilities in Kyiv. Her portfolio includes 20 completed residential projects.
A cost of raw milk produced in Ukraine is constantly rising under the influence of a number of factors, while the purchase prices for it have fallen since the beginning of Russia’s military invasion of Ukraine, the Association of Milk Producers (AMP) said.
In its analysis of the milk market, published on the website of the association, it is noted that although this situation creates pressure on the market, however, since the second decade of April, it has been developing “in the tones of very restrained optimism.”
According to it, the average purchase prices for milk as of April 20 are: extra-class – UAH 10.13/kg, top-class – UAH 9.88/kg, and first-class – UAH 9.40/kg (excluding VAT). At the same time, in the country they fluctuate in the range of UAH 9.5-10.7 /kg (excluding VAT) for extra-class raw milk.
The association notes that the cost of milk production is constantly growing, which is influenced by several reasons at once. Since the beginning of Russian aggression in Ukraine, prices for fuel and veterinary drugs have increased significantly, and the blockade of the export of agricultural products from Ukrainian seaports deprives agribusiness of working capital, the report explains. In addition, in March, due to the war, the cost of milk was affected by a forced revision of the feed ration of cows, changes in the structure of the payment of wages to staff, as well as the transfer of part of milk free of charge in the form of humanitarian aid.
According to AMP, the issue of raw milk cost “so far looks like a snowball that accumulates in the absence of a sufficient level of purchase prices.”
The association assumes that in the near future the milk market in the country will develop under the pressure of the following factors: the nature and intensity of hostilities, the possibility of unblocking seaports and resolving issues of exporting dairy products.
“The market began to feel the demand for dairy products and improved sales conditions in the occupied areas. With the increase of demand and sales, we see an increase in the supply of raw milk. Of course, these are not pre-war prices, but not the prices of the first weeks of UAH 8,” AMP said.
Increased demand for high-quality housing projects, rising prices for basic building materials and finishing work, an increase in the salaries of specialists led to an increase in the cost of housing construction in August by $100-120 per square meter compared to July 2021, Commercial Director of Intergal-Bud (Kyiv) Hanna Layevska said.
“We calculated that over the past month, the cost of housing construction has increased by $100-120 per square meter. And this is facilitated by the increase in prices for basic building materials and work,” she said during a discussion panel at the RED x LUN summer camp.
The increase in prices is also influenced by the intensification of demand for high-quality and modern projects, including in the form of investments in real estate. According to the director, developers are investing in the development of interesting concepts with a developed infrastructure, including additional comfort and service.
In addition, developers are more careful in choosing plots for complex development, says Intergal-Bud.
Intergal-Bud has been operating in the residential real estate market since 2003. Its portfolio includes 74 completed projects with a total area of over 3 million square meters. The company has built 158 houses (Kyiv, Kyiv region, other regions of the country).
Experts estimate the average cost of 1 hectare of agricultural land after the opening of the land market on July 1 at $2,200, by the end of the year its cost will reach $2,500/ha, co-founder of the Land Club association of land investors Oleksandr Kolotilin has told Interfax-Ukraine.
“The start of the market is on average planned at the level of $2,200 per ha. But at the same time, it must be clearly understood that the agricultural land market existed before July 1, 2021. Still, 5 million hectares of land allocated within the framework of free privatization for private farming for all the years of Ukraine’s independence is also a sufficient amount of land. Thus, the price of land that was under the moratorium correlates with the market that has existed all this time,” Kolotilin, who in 2017-2019 was the acting head of the State Service of Ukraine for Geodesy, Cartography and Cadastre, said.
He clarified that the opening of the land market will be beneficial primarily to its sellers, since at the first stage of the land reform implementation there will be no more than 10% of the total number of interested parties who want to sell their shares.
“Since there are many more people who want to buy or invest in agricultural land today than offers, this will gradually push the price up. I do not think that by January 1, 2022 the situation will change dramatically, but it is definitely worth expecting an increase in prices. On average, the price will reach the level of $2,500/ha,” the expert noted.
According to him, in different regions and even different districts of the same region, the cost of land differs quite strongly.
“If, for example, in the north and center of Ukraine land prices are high and growing, in the south, in the zone of risky agriculture, in the zone of difficult access to moisture, where there is the need for serious investments in land reclamation, they are lower. Today the average price in central Ukraine is $2,000-2,500, in the north – $1,700-2,200, and in Kherson region I’m not sure that someone will pay more than $1,000 per hectare without access to moisture,” he noted.
The expert said that he does not expect a rush to buy land in specific regions. According to him, the greatest demand for agricultural land will remain in the central, northern and western parts of Ukraine.
The cost of agricultural production in Ukraine in January-March 2020 decreased by 7.3% compared to the same period in 2019. According to the State Statistics Service, the cost of crop production in the first quarter decreased by 8.3%, livestock products by 6.6%, material and technical resources of industrial origin used in agriculture by 9.8%.
At the same time, according to the service, the cost of agricultural production in March increased by 0.6% compared to the previous month. Thus, the cost of crop production rose by 0.1%, livestock products by 0.2%, but at the same time, the cost of material and technical resources decreased by 1.3%.
As reported, the cost of agricultural production in Ukraine in 2019 decreased by 0.64% compared to 2018.
The Economist has published updated data on the rating of world currencies, the so-called Big Mac Index, according to which the cost of the hryvnia is underestimated by 61.3%, and the real rate according to purchasing power parity should be UAH 9.93 per U.S. dollar, the Ukrainian Dzerkalo Tyzhnia (Mirror Weekly) ezine said. Early this year, the Ukrainian currency was underestimated by 65.2% according to the Big Mac Index.
The Big Mac Index is an index created by The Economist based on the theory of purchasing power parity (PPP). Over the long-term, PPP theory states that currency exchange rates should equal the price of a basket of goods and services in different countries.
The official forex rate set for Ukraine’s hryvnia on July 12 is UAH 25.8 per U.S. dollar.