New Construction research report from Business Monitor International is now available from Fast Market Research
Boston, MA -- (SBWIRE) -- 08/05/2013 -- Although we expect the Ukrainian construction sector to return to positive growth territory from 2013, we see little likelihood of a complete recovery to 2007 levels anytime during our forecast period to 2022. Weak government finances, uncertain macroeconomic environment, absence of private sector investments and completion of 2012 tournament-led projects will be the major factors holding back construction spending in the country. We, however, see the infrastructure sub-segment performing better than the residential and non-residential construction segment and leading to an average annual growth of 3.5% year-on-year (y-o-y) during the forecast period.
Eduard Brazas, the head of the Information Technologies, Services, Analytics and MLS Committee at the Association of Ukrainian Realtors estimates that rents of residential properties in Ukraine grew by only close to 5% during Q113. Indeed, this acts a further discouragement for foreign buyers to re-enter the market. The result was that the number of property sale and purchase deals agreed in major cities fell by a hefty 30% - 40% y-o-y between January-March 2013. The bright spots in the construction industry are the transport and the energy infrastructure segments. Key developments that helped shape our relative more optimistic outlook for the infrastructure sector include:
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- Growth potential in the airports and ports sub-sectors will help the overall transport industry to maintain strong growth. In January 2013, Ukrainian Prime Minister Nikolay Azarov revealed that the country will start construction of high-speed railways by the end of the year. Plans are also underway to modernize local railway fleet. This will be in addition to the UAH16bn (US$1.99bn) likely to be spent by Ukrainian rail operator Ukrzaliznytsia on electrification of 1,467km of railway track by 2016, as announced in May 2012.
- In March 2013, Prime Minister Nikolay Azarov announced plans to spend UAH7.2bn towards construction and repair of roads during the year, which will bring some much-required investment into the sub-sector. Vice Prime Minister of Ukraine Oleksandr Vilkul revealed that the investment is a part of a broader plan involving renovating over 9,000 km of roads over the next two years. He also revealed that some funds will also be allocated towards building a bridge over the Dnipro River in Zaporizhia, reconstructing the Kyiv-Kovel-Yahodyn and the the Stryi-Ternopil-Kirovohrad-Znamianka highways, and on the Sevastopol bypass.
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