News Article economy rebuilding reconstruction report Ukraine war
by Property Forum | Report

The war launched by Russia on February 24th is still going on in Ukraine. Infrastructure facilities are being damaged every day. The cost of damages that experts share changes daily. According to the Centre for Economic Policy Research, the total expenses for reconstruction will range from $220 billion to $540 billion, writes Anna Nestulia, Principal at Invest in Projects for Property Forum.

The possibilities and challenges of rebuilding Ukraine will be discussed during a dedicated session co-organised by Invest in Projects at Property Forum’s upcoming European ESG Property Forum 2022 in Warsaw on June 1st.

Anna Nestulia

Anna Nestulia

Invest in Projects

  Anna has ten years of experience in business communications across real estate and related sectors. Over six years of experience as a top manager of the largest real estate business association in Ukraine helped her to dive deep into long-term strategic partnerships and B2B marketing; to explore and implement all marketing & business strategies for real estate companies. In 2017, Anna launched Invest in Projects, a business development agency focused on real estate, technology and investments. Her clients are developers, investors, service providers and proptech companies operating across CEE.  More »

In coordination with international organizations, the state has already started working on a plan called U24 to renew the country's infrastructure. According to the Prime Minister of Ukraine, Denys Shmyhal, it includes three stages.

  • The first one is an emergency response to restore temporary objects and infrastructure.
  • Second, fast recovery after the end of military actions on the territories.
  • Third, sustainable rebuilding of cities and infrastructure lays the foundation for the country's economic growth and ensures conditions for citizens. The last stage will go in line with the EU policy.

Business under war conditions

The war has impacted Ukrainian businesses from the very beginning. Some companies put their activities on hold immediately and refocused on social needs, the army and the safety of their people. Some keep working in new realities. According to a survey by Gradus, 55% of Ukrainian businesses stopped their activities or decreased operations to the minimum, 3% closed forever and 13% of companies are working on adapting to new conditions. 18% of companies declared no resources to pay employees.

Using Kyiv as an example, once the opportunity comes, specifically in the case of low risk of hostilities, businesses are ready to get back to work immediately. A promising sign for them might be the reopening of embassies in the capital. At least 17 states have already returned their diplomats to Kyiv.

The critical role of the construction sector

The construction sector will be among the most important ones for the country's rebuilding. According to the Managing Director of UkraineInvest, Sergiy Tsikvach, international investors from the construction, construction waste and service sectors are interested in entering the market once the war ends.

Large local investors also admit they have been focusing on the property sector. A founder of UFuture, Vasyl Khmelnytsky, believes that industrial parks will become the critical driver of Ukraine's economy which ensures the fast and safe relocation of local businesses within the country. Such projects will allow renewing work and offer more jobs to the local people.

The CEO of Dragon Capital, Tomas Fiala also shares this position, declaring during his interview with Forbes about the company's plans to develop an industrial park in Lviv after the war. He also believes that shopping malls and warehouses will recover fast while the office sector will face the post-war effect longer.

Social responsibility and unity around the country's interests are part of Ukrainian business as well.

According to United Nations' refugee agency, over five million people fled Ukraine since the beginning of the invasion. Over six million Ukrainian have relocated from the country to safer places. Thousands of people have had their houses destroyed or damaged.

The construction of new residential projects is an urgent question and will remain such for a longer time.

Thus, Fiala says that the company is considering launching social projects, specifically residential development in the Western part of Ukraine for people who lost their homes or left the country.

"Local authorities help us to find owners of incomplete constructions. We want to buy them, finish the construction, build ready-to-move-in apartments and lease them to people under favourable conditions. We have identified around 1000 such apartments and are now looking for co-investors,” says Fiala.

Similar projects are provided by other entrepreneurs as well. The CEO of Concorde Capital, Ihor Mazepa told Forbes that the company had placed 120 orphan kids in its private countryside neighbourhood Shelest, turning it into an orphanage. Part of the expenses is beard by the investor, part by international charity funds.

Mazepa also attracted international charity funds such as Direct Relief International, Children of War Foundation and University of Miami Global Institute to support the chain of clinics Dobrobut, which were closed after the launch of the war. Today they started to reopen. Without the support of funds, the clinics would not be able to operate. Now the situation is different. The company launched free healthcare services for residents of Irpin, Bucha and Hostomel. It also opened new branches beyond Kyiv and the Kyiv region, mainly in Lviv and Ivano-Frankivsk, with further plans to scale around Ukraine.

Developers expect that the industry will require several years to bounce back. But it depends on the specific sector and region. While the western part of Ukraine will reach the pre-war level faster, the most damaged cities in the east should be rebuilt from scratch. At the same time, Ukraine still needs to win the war first, which requires vast international military aid, unprecedented sanctions against the aggressors, and according to Shmyhal, at least $5 billion per month to support the country’s economy.