Changes in construction market of Ukraine in wartime

Author ANDRIY OZEICHUK

Andriy Ozeichuk, Director of the Rauta engineering and construction company, Chairman of the Board of Directors of the Ukrainian Steel Construction Center association

In 2022, due to the full-scale Russian invasion, the volume of the construction market of Ukraine in hryvnia equivalent more than halved. Despite state support for orders for the reconstruction of infrastructure and the eRecovery and eOselia programs, as well as increased interest from investors, the volume of the construction market still lags significantly behind the level of 2021, when it reached UAH 258 billion (EUR 8 billion).

Demand

In 2024, the Ukrainian construction market grew by 20% compared to the previous year, reaching approximately UAH 200 billion (EUR 4.6 billion).

Demand for new housing grew by 7%, largely due to the state program eOselia, about a third of the loans issued for which fell on new buildings.

In the commercial real estate sector, the largest investments were made in the construction of warehouses, production and retail facilities. In particular, warehouses became the leader among new commercial developments, occupying half of the market and doubling the volume of demand compared to the previous year.

The segment of reconstruction and protection of critical infrastructure accounted for about 20% of the total market.

With further growth, the construction industry of Ukraine may return to the level of 2021 within the next 4–5 years.

Prices

Since the start of the full-scale war, the cost of construction in hryvnia equivalent has increased by 70%. In 2024 alone, the cost of construction materials and services increased by 24%.

Personnel

Over the past three years, the shortage of qualified construction workers has only intensified, and the search for specialists for some vacancies lasts up to six months.

The personnel shortage, together with high inflation, is forcing companies to raise wages and implement loyalty programs. From 2022 to 2024, salaries in construction grew by approximately 20% annually.

Construction companies are more actively recruiting women and older people for positions that do not require heavy physical exertion, in particular, engineers, construction equipment operators, drivers, welders, etc.

Some Ukrainian companies are considering inviting construction workers from Asian countries to cover the shortage of personnel.

Changes in legislation

On July 29, 2022, law No. 2486-IX came into force, which establishes requirements for the mandatory installation of bomb shelters in new buildings. This will have a positive impact on safety, but will increase the total cost of construction by 1-7%.

From September 1, 2022, the updated state construction norm V.2.6-31:2021 "Thermal insulation and energy efficiency of buildings" has been in effect, which has increased the requirements for the energy efficiency of buildings by an average of 28%.

From January 1, 2023, the law on the provision of construction products on the market came into force, which is an adaptation of the European Regulation EU 305 and significantly increases the requirements for the quality and safety of construction materials.

Rebuilding the country

The World Bank, the European Commission and the UN estimate Ukraine's reconstruction needs at $524 billion over the next decade.

The reconstruction will cover areas such as demining, energy, housing, agro-industry, defense, transport, logistics, trade and industry.

Despite the expectation of an end to the war, many investors are already calculating the cost of construction and preparing to launch new construction projects. At the same time, some companies are already investing in the restoration of facilities whose operation is critical to business.

International construction corporations and financial institutions are gradually entering the Ukrainian market, forming partnerships with state structures and local contractors to participate in the post-war reconstruction of Ukraine.