What prevents the Ukrainian real estate market from developing

What prevents the Ukrainian real estate market from developing

A human child is born in nine months, and what has changed for the construction and real estate market during the same period? They abolished equity participation, introduced parametric rationing, launched an electronic office of the developer and even adopted 305 regulations. Prior to the corona crisis, the McKinsey Global Institute estimated that construction accounted for 13% of world GDP, making it the largest industry in the world. At us – a little more than 2%. So that this difference was reduced, it is necessary to break all obstacles further. What prevents us?

Master plans

The development of Ukrainian cities in general and Kyiv in particular is hampered by master plans, the very concept of which was invented in Soviet times as a kind of essence that determines development. Ukraine has been an independent country for almost 30 years, and this soviet instrument is still alive.

In Kyiv, there was an attempt to move from a master plan to a strategy that the whole developed world is moving in, but it is still there. Moreover, the capital’s master plan has “become obsolete” this year, but will continue to operate until a new one is approved, which has been going on for more than 10 years. For example, your baby has grown out of his sliders, but you don’t buy new ones because the old ones are still nothing. How do you like this story? Kyiv has long since grown out of its master plan, but what is important is that it does not need a new one, it needs a strategy that corresponds to the new realities.

The fate of the new unapproved master plan is very uncertain, but due to the fact that it does not exist – good, bad, any – urban development has stalled because officials can not authorize it. The situation is especially difficult when it comes to changing the functional purpose. In the capital, thousands of hectares of industrial zone cannot be revitalized just because there is no approved master plan. Therefore, it is necessary to either approve this master plan or finally move to strategic planning.

Social infrastructure

So far, there are three mechanisms to finance the creation of social infrastructure: from the city budget, at the expense of the developer and through the payment of equity participation. The latter, I hope, will still disappear in 2021, as defined by the law passed last fall. This is a completely non-working tool – money was collected, but no infrastructure appeared.

The first two points remain. In any city, the budget is always limited, so it is often not up to kindergartens and hospitals. And what about developers? Large developers are already creating infrastructure for their (and not only) residents, but what to do with it then? For any developer, this is a non-core business, his task is to build and exit the project, not to operate it. And the city authorities are very reluctant to take on the balance of new facilities and sometimes for the developer, this process turns into a real epic.

For a construction company, the creation of infrastructure is a very serious burden on the budget, so if the city offered some comprehensive partnership programs, it would stimulate the development of infrastructure.

Infrastructure networks

Electricity, water and gas supply, heating, sewerage, garbage removal – from 47 to 83% of housing in Ukraine is equipped with these “benefits” of engineering infrastructure. But even these small percentages are in a terrible state – every day something breaks through or shuts down.

Creating new projects, the developer is forced to build all the new highways with his own money. And what does the city do? Nothing – except that patches the holes. Throughout the civilized world, the city itself lays all the necessary communications to the site so that the developer can implement his project without being distracted by such moments. We have exactly the opposite, in addition, the developer is forced to pay for these networks in fact twice – the first time when making a connection to them, the second, when directly building them. As a result, the networks become golden. And besides, it is a terrible corruption component. It should not be so.


We have two types of activists: right and wrong. “Right” are fighting with developers for the idea, “wrong” – for money. But both the first and the second make life very difficult for many projects – and even those that are almost crystal clear in terms of legitimacy. Whatever you build – housing in the industrial zone, a high-rise in the center, low-rise housing near Kiev, green, purple, round or square – there will always be a group of activists who will come and say that they are against and their interests must be taken into account. But Ukrainian law does not require any approvals from any neighbors or public figures.

A professional activist is a separate story. Blocking construction is already an industry: specially hired people, under the guise of good intentions and pretending to be residents of a neighboring yard, can stop any project if they receive such a team or they see a financial benefit. It is always very difficult to work in the “baba-yaga against” format.


Trying to improve the non-improved always creates even bigger problems – this is just about the Ukrainian DBN. For example, DBN Gas Supply. A gas boiler exploded in a city – it was forbidden to install gas boilers in buildings above the third floor. Then they received a hundred lawsuits, because half of Ukraine is designed with such boilers. After that, they made another “improvement” and allowed to put boilers up to the 10th floor. That’s what to call it?

DBN, written by jurors of institutes, not trade unions, creates some problems. Therefore, all developers who want to build at least as much modern and comfortable project “go to the deviation.” What is a deviation? This is a procedure for reconciling all non-compliance with the DBN by the ministry with the registration of all necessary compensatory measures.

But the sadness of the situation is that most of the deviations that go to normal developers in the entire civilized world is MUST. At us to make it, it is necessary to “break” DBN.

Therefore, most DBN, in addition to constructive and fire, should be recommended, not mandatory. If the developer does not know how to design, let him design according to DBN. He knows – he designs as he wants.

Andriy Ryzhykov, CEO and managing partner of the development company DC Evolution