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🏙️ Development 2025: New Rules and Opportunities

 

What are the latest analytical data on the residential and office real estate market, the prospects and opportunities for social rental housing, and the challenges of taxation on transactions involving future real estate projects? These questions were discussed during the second block of the Business Day of the Confederation of Builders of Ukraine (CBU) on March 11, 2025.

 

Oleksandr Chervak, Executive Director (CEO) of CBU, moderated the discussion, outlining the key topics and inviting participants to engage in an active exchange of views.

 

🌆Olena Unanyan, Development Director of LUN, presented an overview of the residential real estate market. In 2024, 9.76 million square meters were commissioned, marking a 32% increase compared to 2023.

 

In terms of primary market prices, the most significant growth since January 2022 was observed in Ivano-Frankivsk (+63%), Uzhhorod (+44%), Lviv (+40%), Rivne (+40%), and Chernivtsi (+33%).

 

At the same time, the total number of primary market sales across Ukraine in 2024 declined by 15% compared to 2023.

 

💰 Ms. Unanyan provided statistical insights into secondary market housing prices, comparing listing prices with actual transaction values. In Kyiv (March 2025), the average purchase price of an apartment was $54,000, whereas the average listing price stood at $62,500.

 

She also touched on the speed of sales and rentals, noting that it takes an average of 7 days to rent out an apartment.

 

🏢Anastasiia Kachan, Senior Consultant for office real estate at CBRE Ukraine, presented an analysis of Kyiv’s office real estate market for 2024, highlighting a 22% vacancy rate (down 2.7 percentage points since the beginning of the year).

 

Additionally, new supply doubled over the year, reaching 34,000 square meters.

 

🏗️ Ms. Kachan discussed office space demand, noting that the trend of space reduction and optimization has subsided, as evidenced by positive net absorption of 86,000 square meters. Office spaces ranging from 200 to 500 square meters have remained the most popular rental format in recent years.

 

As the expert pointed out, future office supply remains limited, and construction progress on existing projects has slowed. At the same time, demand for coworking spaces has increased, particularly in response to power outages.

 

📜 Volodymyr Anushkevych, Sectoral Project Manager of the Reform Support Team at the Ministry for Communities and Territories Development of Ukraine, provided information on the development of the concept for the draft law "On Social Housing."

 

It is expected that the concept of the future draft law will soon be presented, allowing for discussions with all stakeholders, including businesses. The Reform Support Team is open to proposals and initiatives from businesses. According to the Ukraine Facility plan, the law is expected to be adopted in the 4th quarter of 2026.

 

Key objectives of the future draft law:

✔️ Creation of a social housing register;
✔️ Creation of a register of individuals in need of such housing (as an alternative to the current housing waiting lists);
✔️ Creation of a register of operators who will manage such housing.

 

Mr. Anushkevych also emphasized the need to digitize all processes and registers within the Unified Information and Analytical Housing System.

 

In addition, it is planned to review the criteria for individuals eligible for social housing, which may include: property criterion (individuals who do not own housing, or whose housing has been damaged, destroyed, or is located in temporarily occupied territories); financial criterion.

 

👤 Anna Laievska, Head of the CBU Committee on development, Commercial Director of Intergal-Bud, noted that the initiative to introduce social rental housing is extremely important, as only about a quarter of internally displaced persons (IDPs) meet the necessary criteria to participate in the eOselia program.

 

Ms. Laievska described international experience in the functioning of similar initiatives, using Germany as an example. She presented three possible scenarios:

 

🔹 First scenario. The land plot is municipal or belongs to a developer. Zoning is in place, and the designated purpose is set for residential construction. The municipality negotiates with the developer to purchase a certain percentage of square meters in the project at a price that includes the construction cost and the developer’s minimal margin. As a result, the local government acquires a certain pool of apartments for its ownership and management. Then, the local government itself rents out this housing. The advantage for developers is the guarantee of working capital availability at the start.

 

🔹 Second scenario. The developer allocates a certain percentage of apartments in the project for social rental housing and receives compensation from the state for part of the cost per square meter. This allows the developer to free up additional funds and reduce the financial burden of the project's construction. In return, the developer is obligated to keep the state-funded apartments within the pool and rent them out at a fixed rate to preferential categories of the population.

 

🔹 Third scenario. This is possible due to an active institutional investor market, as seen in Germany, where investors purchase housing designated for social rental. Accordingly, the developer can later transfer a pool of rented apartments. These rights can then be sold to an institutional investor at a value closer to the market rate.

 

💰 Anna Laievska emphasized several issues that require regulation: determining the source of funding for the construction of social rental housing, regulating rental rates, and developing territorial development plans.  

 

👤 Anatoliy Berkuta, Vice President of the CBU, stressed the need to develop comprehensive territorial development plans for local communities. However, this requires indicative indicators, funding, specialists, and time.  

 

📜 Mr. Berkuta highlighted the necessity of establishing a legislative and regulatory framework for the construction of social rental housing. It is essential to develop project documentation for a pilot project, which will serve as the basis for preparing proposals for the regulatory framework, later to be transformed into state construction standards.  

 

🏡 Olga Sydorchuk, Head of the CBU Committee on normative and legislative activities, Head of the law firm Sempra Law, shared information on the CBU survey based on the initial concept from the Ministry for Communities and Territories Development of Ukraine regarding social housing.  

 

According to this concept, the tenant receives housing for use and makes monthly payments that include rent and a contribution toward future ownership. Once the full cost is paid, the housing becomes the tenant's property.  

 

As Ms. Sydorchuk emphasized, a key advantage is the fixed housing price at the time of contract signing and the possibility of early buyout.  

 

✔️ This approach also offers significant benefits for developers and financial institutions:  

- Increased sales volume;  

- Stable income from rental sales;  

- Establishment of long-term relationships with clients.  

 

Olha Sydorchuk also described the features of the Kyiv initiative "DOMIVKA+ Rent & Buy."  

 

Overall, experts predict further development of the rent-to-own market. Legislative changes are also expected to support this trend.  

 

📊 Dmitriy Mikhailenko, Chairman of the Supervisory Board at Crowe Mikhailenko, addressed key taxation issues related to transactions involving future property rights (MON).  

 

Mr. Mikhailenko outlined the issue of determining personal income tax (PIT) when assessing MON in case of its sale (assignment). In particular, the database containing property valuation information does not account for its degree of completion and limits the ability to improve valuation through a professional appraiser, as it sets a 20% range that cannot be exceeded.  

 

The calculation of income from the sale of a future real estate object follows the same algorithm as for other real estate objects, meaning it is based on the price stated in the purchase agreement but not lower than:  

🔹 The appraised value of the object, calculated by the electronic valuation module of the Unified Database of Valuation Reports;  

🔹 The market value of the object, determined by an appraisal entity (appraiser) in accordance with the legislation and specified in the valuation report registered in the Unified Database of Valuation Reports.  

 

There is also an issue concerning VAT at the level of the first sale by the developer, where the degree of completion of MON must also be considered when determining the price.  

 

Representatives of development companies actively participated in the discussion, exchanging views on pressing issues in development.  

 

✔️ At the end of the event, participants had the opportunity to discuss current topics and receive answers to their questions.

 

🌐 Read more about what was discussed during the CBU Business Day at the following link:

https://kbu.org.ua/en/news/latest-trends-and-prospects-of-ukraine-s-construction-market-at-the-cbu-business-day 

 

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Organizer: Confederation of Builders of Ukraine

Financial Partner: Globus Bank

 

Strategic business-partners of the CBU: East Office of Finnish Industries Oy, SKAKO Concrete A/S

 

Information partners: ProfBuild, Build Portal, PRAGMATIKA.MEDIA, ICC Ukraine, RBC-Ukraine, Property Times, ZPP, Business gloss Chas Pershykh, Vidbudova.Zaporizhzhia, StroyObzor, Ukrainian pohliad, Marketer, Delo.ua, BIZRELIZ.

 

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