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Ukraine Seen as Hot Market For Building Products

Ukraine seen as hot market for building products

One of Europe's hottest markets: Building products and construction in Ukraine

The rising demand for residential housing in Ukraine combined with many new infrastructure developments presents opportunities for suppliers of construction and building materials. Ukraine's local construction sector was valued at approximately US$2.6 billion in 2001, accounting for 4.7% of the country's GDP.

Market overview

Construction - The construction sector output (commercial and residential) exhibited estimated growth rates of 4%, 1.9%, 5.5%, and 8.8% for the years 1998, 1999, 2000, and 2001, respectively. This upward trend in output has been driven largely by the construction and renovation of private, single-family dwellings. In 2001, US$717 million was spent on residential construction throughout Ukraine - some 5.8 million square metres - 59% of which were built by private companies.

In 2000, the market for general construction work (individual, non-contracted) was estimated at US$2.8 billion; the contractors' market was estimated at US$2.4 billion; and the renovation market for residential property generated approximately US$900 million in annual sales. The value of the building materials market reached an estimated US$0.7 billion. (These estimates do not include the "shadow' construction industry which can add 40-60% to the figures.)

Only 14 million individual residential units are available for Ukraine's population of 49 million people; there is an urgent need for 5 million new units, either apartments or single-family dwellings. This demand is mostly concentrated around Ukraine's larger cities, such as Kyiv (population 2.8 million), Kharkiv (pop. 1.5 million), Dnipropetrovsk (pop. 1.5 million), Donetsk (pop. 1.1 million), Odesa (pop. 1 million) and Lviv (pop. 800 000). In Kyiv alone, one million square metres of new housing are needed now.

Building materials - Although new projects in private residential and office construction offer significant opportunities for suppliers, renovation is the most prevalent undertaking in Ukraine. This is largely due to the aging housing stock, and the general poor quality, layout and energy-efficiency of most Soviet-era housing. This has caused a surge in demand for affordable building materials, with high-quality materials becoming popular as well.

Building materials alone can account for up to two-thirds of the cost of a general construction project. With the decline in domestic production, most (80-90%) of the building materials used in renovations are now imported.

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