Source of Funding: Federal Ministry for the Environment, Nature Conservation and Nuclear Safety
Since the start of this decade, the Ukrainian construction sector can be characterised by an extreme boom-and-bust cycle. Average housing prices in Kiev jumped from USD 360 per sqm in April 2000 to USD 4,230 in August 2008. With the arrival of the global financial crisis in Ukraine, the price bubble burst and construction activity decreased sharply. Consequently, housing prices in Kiev dropped from their peak in August 2008 by more than 35% to USD 2,740 per sqm in August 2009.
The study examines the development of the Ukrainian construction sector, analysing the main reasons for both the boom in 2000-2008 as well as the subsequent crisis. Based on a model of the Ukrainian economy and the analysis of main drivers of the Ukrainian real estate market the short- and medium-term prospects of the construction sector are deduced. Finally, policy measures to support the construction sector are discussed.