Actual demand for apartments in new buildings in Ukraine up to 10% of pre-war – expert

KYIV. Sept 14 (Interfax-Ukraine) – Current demand for apartments in new buildings in Ukraine is up to 10% of the pre-war level, developers are concentrating on the completion of facilities in which more than 60-70% of apartments have been sold, Volodymyr Sementsov, co-founder and managing partner of INSPI Development, has told Interfax-Ukraine.

"Amid rising construction costs, which average 20-25% in US dollars and in conditions of almost zero demand, Ukrainian developers stopped the implementation of new projects, focusing on residential complexes in the final stages of construction, in which more than 60-70% of the apartments have already been sold," Sementsov said.

The expert noted that at the beginning of September, actual demand was only 7-10% of the pre-war level. He believes that any jumps in demand are unlikely before the end of the year, because investors are well aware of all the risks associated with investing in construction.

"The primary housing market completely depends on the intensity of hostilities, on the level of security in a particular region or regional center. At the same time, the consequences of enemy missile attacks on energy infrastructure facilities on September 11-12 call into question the prospects for increasing demand in the autumn-winter period," Sementsov said.

In his opinion, most potential buyers will postpone the purchase of housing at least until the end of the heating season. At the same time, a partial revival of buyers is possible with the launch of a new state mortgage program for certain segments of the population at 0-7% per annum from October 1.

"Subject to the effective implementation of the new preferential mortgage program, in the coming months, the interest of buyers in the primary housing market may increase somewhat, but mainly in the western regions of Ukraine. However, we are not talking about some kind of breakthrough. Demand growth could potentially amount to only additional 2-3%," Sementsov said.

According to him, the vast majority of potential buyers are interested in objects at a readiness level of 80% and above (residential complexes at the stage of interior finishing, connection to engineering networks, arrangement of the adjacent territory, etc.) with an expected commissioning period of up to six months.

Sementsov noted that in fact the primary market lives in conditions of two prices: there is a price declared by developers, announced in advertisements, as well as a price for a real buyer. "The hyped increase in value in the face of almost no demand is nothing but a means of psychological influence, so to speak, preparation for future price realities, the formation of a price environment for the period after the end of the active phase of the war. However, under the conditions of 100% payment of the cost of the apartment, potential buyers have the opportunity to get a discount, sometimes more than 15-20%," he said.

According to his observations, the real price of new buildings is significantly lower than before the start of a full-scale invasion, and this trend will continue at least until the end of 2022.

INSPI Development is an investment and development company established in December 2020. The company plans to develop a network of service apartments in Ukraine, develop new real estate formats and iconic real estate objects. By 2025, more than ten objects are planned in the company’s portfolio, including a network of service apartments, commercial and residential real estate.