Labor shortage and rising prices: how the war slows down the construction of real estate in Ukraine

As Iryna Mikhalova, marketing director of the Alliance Novobud company, told during an interview with Focus, the demand for reliable housing does not decrease even in conditions of war and economic instability. According to her, in the new project of the company "Forest Quarter" in Brovary, even before the official start of sales, investors have already booked ten apartments, and a queue has formed for commercial premises.

In the "Kronapark" project, at the start of sales, the fifth house was sold out within the first month, even when the objects were at the excavation stage. In addition, Mikhalova explains that the main factor of investors' trust is the developer's reliability: those who hand over objects on time, even during the war, receive a high level of trust. That is why investors are ready to invest at the initial stages, where prices are usually lower.

At the same time, she advises investors who are not familiar with the developer to consider investments at later stages, where deferment or the state program "EOsel" is available. In particular, in the interview, the expert outlined in detail the key problems that the construction industry is currently facing: The lack of qualified builders and repair crews complicates the construction of new facilities.

Iryna Mikhalova notes that construction is physical work, it cannot be done online or involve workers from abroad. "Small and medium-sized businesses especially feel this deficit," she noted, adding that because of this, even the market for ready-made apartments with repairs is limited, and the services of crews during construction are much more expensive.

The woman also said that inflation, salary increases, rising prices of materials and a lack of workers lead to the fact that new houses sometimes cost more than almost finished objects. The new legislation regarding the start of construction complicates the sale of property rights under the old scheme and increases the financial burden on developers. Most developers are financed with their own funds or advance payments from customers.

Government programs cover only part of the demand, and this slows down the launch of new houses and the increase of facilities on the market. In Ukraine, the number of land plots for construction is limited, and the lack of available loans and project financing makes the start of new projects slow and expensive. In addition to all of the above, according to the expert, the labor market is greatly affected by the war.

In particular, the mobilization and outflow of workers, the increase in prices for building materials and the lack of specialists are slowing down construction — negatively affecting the pace of construction of new facilities and meeting the demand for housing.

Despite the problem, according to her, the market shows new trends: short-term investments in mobile homes and glamping, income real estate in the form of hotels or residential complexes, which allow the investor to make a profit after only 2-3 months. "People want the result here and now, even if the profit is lower than that of long-term investments," Mikhalova said. She also emphasized that the shortage of housing and the limited resources of developers will only grow.

"Prices will rise, and the shortage of housing will accumulate. The housing market will remain difficult and will require investors to be careful and take a balanced approach," summarized the marketing director of Alliance Novobud. You can read the full version of the interview "Who buys real estate in Ukraine and at what price. Which housing is the most reliable in wartime" here.