Investors Retreat — Why Apartments in New Constructions Have Lost Demand.

The Ukrainian housing market has changed dramatically over the past year. Despite high construction costs, investors, who previously formed the bulk of demand for new housing, are massively 'taking a pause'. Developers are changing strategies, and the market is being reformatted. Instead of a race for scale — the focus is on targeted, niche projects with a real value reserve.

Construction costs have risen by 10-30%, explains the junior partner of the DIM group of companies, Arseniy Nasikovskiy.

'And this is with a significant shortage of qualified labor. For example, we are completing a 33-story building and are forced to involve several companies for finishing work,' he says.

The significant increase in the cost per square meter did not yield the expected profits. On the contrary, apartment prices are rising more slowly than construction costs. For an investor, this is a signal: the risks are high, and profitability is unclear.

Investors Have Exited the Game — Why This Happened

Before the war, up to 60% of sales in new constructions were accounted for by investors. They invested funds at early stages of construction, planning for resale or rental. Today, however, the final buyer, who purchases housing for themselves, has come to the forefront.

'The reason is not a lack of funds, but rather financial logic. New housing often costs more than secondary housing in the same area. The developer cannot lower the price below the cost price,' emphasizes Nasikovskiy.

In other words, even if there is demand, it is not ready to pay more for an object that is still under construction. Underpriced properties would lead to losses, while increased prices would result in even lower demand.

Risks Outweigh the Benefits

For an investor, new housing is always a long-term game. However, today’s realities have significantly complicated the rules:

• Long construction times: war, mobilization, and a shortage of labor affect the pace of object handovers.
• Legal and bureaucratic complexities: permits, approvals, restrictions.
• High competition in the secondary market: the number of ready-to-move-in apartments with renovation and documents is increasing.

As a result — even if an apartment in the new construction is ultimately delivered, its price may not outweigh all the risks.

Developers Are Adapting

The new construction market has not stagnated. However, it is rapidly changing its face. Developers are forced to rethink approaches to design, target audiences, and locations. The main trend is a shift to the economy segment.

'Many developers have moved to the suburbs — Irpin, Bucha, and others. They are building economy-class housing with prices up to $1,000 per square meter,' Nasikovskiy notes.

This allows sales to be maintained at a minimal level but does not guarantee high profits. Especially against the backdrop of inflation, unstable hryvnia, and political risks.

Central Kyiv — An Exception to the Rules

However, there is also an opposite trend. In central Kyiv, the number of free plots is limited, while the demand for quality, niche housing is steadily high. This opens up prospects for the premium segment.

'In the central districts of the capital, prices can rise to $7,000-8,000, and sometimes even up to $10,000 per square meter. Because demand is present, and there will be no new plots,' forecasts the expert.

Thus, investors with a long-term horizon can still consider elite housing complexes in the center as a prospect. But this is a completely different type of investment — with different funds, different risks, and levels of entry.