Kyiv’s Building Boom Cools…$1 billion in New Foreign Investment…Real Wages up 15%...PayPal’s Xoom Allows US-Ukraine Money Transfers…Kyiv Tourism to Top 2013 Record
By James Brooke
Kyiv’s residential building boom is over – or at least taking a breather. In the first half of this year, 334,000 square meters of new apartments were commissioned -- 64% below the level of the same period last year, according to statistics released by the State Statistics Service. In Kyiv region, commissioning of new housing was down 28%, to 594,000 square meters. The drop came after “last year’s big construction boom," Lev Partskhaladze, deputy minister of Regional Development, Construction and Housing writes on Facebook.
Across Ukraine, residential construction was down 29% during the first half of the year, to 3.3 million square meters, according to the State Statistics Service. With the migration of construction workers and tradesmen to Poland, construction costs are rising at 20% a year – double this year’s inflation rate. Lack of mortgages depresses sales. Victor Gleb, a former deputy chief architect of Kyiv tells UNIAN: “In Kiev, almost half of the newly built residential real estate is empty. Drive through blocks of multi-story buildings in the evening. See how many windows are lit up. You will be unpleasantly surprised: most houses are half empty. Meanwhile, thousands of families need better housing conditions."
Despite the downturn, there are regional hotspots -- and dachas. So far this year, the two big building areas are: Kherson city, where commissioning of new apartments and single family homes is up 2.4 times - to 36,700 square meters; and Kharkiv region, where construction is up 1.6 times - to 202,000 square meters. Through June, the commissioning of dachas – officially ‘summer and garden houses of new construction’ was up 7%, to 195,200 square meters. This year, the government cut some red tape for building a dacha on land owned by the builder.
Capital investment in Ukraine increased 26.5% yoy during the first half of this year, slowing from 37% yoy for the first quarter, the State Statistics Service reports. Most of the investment - 75% - is financed from companies’ working capital. Bank loans made up only 7.5% of total capital investment. The highest growth was in industry and trade - 34% yoy and 46%. Investment in agriculture rose 10%. Investment in construction declined 12%. Within industry, the highest growth was in mining, up 50%. Investment in manufacturing increased 31%.
Concorde Capital’s Evgeniya Akhtyrko writes: “The low share of banking loans in the structure of capital investment points to limited access of Ukrainian enterprises to external financing due the high cost of loans. At the same time, companies’ working capital can’t be viewed as a sustainable source of investment that could cause an essential shift in Ukraine’s economic structure.”
During the first half of this year, Ukraine attracted $1 billion in net new foreign investment, the State Statistics Service reports. The top country sources were: Netherlands -- $452 million; Cyprus $258 million; and Germany -- $49 million. Cyprus money is largely Ukrainian money coming home. The top sectors were: finance and insurance – 60%; wholesale and retail trade – 10%; and industry -- 8%.