The ongoing war has significantly transformed various aspects of life in Ukraine, with the real estate market being no exception. Despite the challenges posed by active hostilities, economic instability, and demographic shifts, the resilience and adaptability of Ukrainian businesses are noteworthy. This overview, based on a survey conducted by the Ukraine Real Estate Club among members of the business community, outlines the primary issues, trends, and prospects within the real estate sector during wartime.
Human resources challenges
The human resources crisis in Ukraine's construction sector predates the war but has escalated to critical levels. A survey from last year indicated that only 35% of companies maintained stable employee numbers in 2022. Conversely, 62.8% reported a workforce reduction ranging from 10% to over 50%. However, a recent study for 2024 reveals a shift: 64% of companies have not altered their employee count, with nearly 20% increasing their workforce. Only 17% have downsized this year.
Looking ahead to 2025, plans for workforce expansion are optimistic: 51.4% of companies intend to increase staffing by 10-30%, while another 3% plan increases exceeding one-third. Conversely, 44% foresee no changes, and merely 1% anticipate staff reductions.
New projects and investment opportunities
The survey indicates that in 2023-2024, over 61% of companies resumed new project initiatives, with an additional 22.2% partially re-engaging in such efforts. Residential real estate firms completed complex projects and initiated new phases in 2024, primarily for projects planned before the full-scale invasion.
In contrast, commercial real estate has faced deteriorating conditions across most segments except logistics real estate. Office centres are grappling with increased vacancies and declining rental income, leading to demands for discounts from major tenants. While retail performance has shown steady growth over the past two years, shopping centres face challenges due to air raid closures, power supply issues, reduced foot traffic, declining rental rates, and the exit of foreign brands.
Hotel real estate representatives acknowledge that occupancy and profitability are heavily influenced by project location. The logistics real estate sector is currently viewed as one of the most stable and investment-attractive segments. Notably, 77.8% of respondents expressed readiness to embark on new projects in 2025; only 9.7% reported no plans for new initiatives.
Expansion of Ukrainian development abroad
Since the onset of the war, Ukrainian developers have actively sought opportunities in foreign markets. In 2022-2023, 72.5% explored market entry options to sustain operations and retain staff; however, only 17.6% established offices abroad in 2023. By 2024, interest in foreign market entry declined slightly to 66.7%, while those opening offices abroad increased to 22.2%. Notably, an emerging trend is the growing number of companies planning to establish offices abroad by 2025 (13.9%), with an additional 15.3% still undecided.
Key destinations for expansion include Poland, the Czech Republic, and Germany, as well as more tourist-oriented regions like Spain and Portugal.
Prospects and trends for 2025
Participants in the real estate market exhibit optimism about future developments. A significant majority (77.8%) are prepared to launch new projects in 2025, with promising areas identified as residential real estate, warehousing, reconstruction of damaged facilities and infrastructure projects.
In light of Ukraine's post-war recovery efforts, the real estate market is poised to play a central role in economic growth. Nonetheless, addressing challenges related to human resources, demographic changes, and access to finance remains crucial for successful development.
