Ukraine moved to the 35th position among 190 countries in terms of the component “Obtaining construction permits” in the Doing Business index – that is, its ranking grew by 105 points. According to the BRDO Construction Sector Head Olena Shulyak, improved Ukraine’s positions in the component of obtaining construction permits is a good news. However, she stressed out that the analysis of the procedure was carried out only in Kiev, and this fact affected the results.
“In Kyiv, the procedure for calculating the share participation in infrastructure development was changed. Last year, this figure amounted to 10% for commercial real estate, and in 2016, a new procedure was approved, and the developers paid 2%, taking into account a decreasing coefficient of 0.5 adopted for 2017,” Olena Shulyak said in the “Rankova Svoboda” radio program. She argues that the reduction of expenses on share participation payments has made life easier for real estate developers in the capital. However, the expert adds that if the Doing Business rating took into account the situation in Lviv, Odesa or other Ukrainian cities, the indicator would remain low.
Olena Shulyak agrees that changes in the legislation affected the Ukraine’s position and specifies that not all of them were taken into account this year and will still affect the next rating. But, in addition to the cost of share participation, she also pays attention to the cost of technical inspection.
“Last year, this figure was 5% of the cost of all construction works, and this year, when we were included in the Doing Business rating, this figure was 1%,” she explains.
Olena Shulyak also believes that the Ukrainian real estate market faces with enough challenges. One of them is a low housing affordability index for buyers. “According to the rating conducted by the Bloomberg international agency, Kyiv is the second worst among the world’s cities in terms of the criterion of housing affordability. This suggests not only that we have very expensive housing, but also that the population has very low incomes,” she says. In the expert’s opinion, the reason for this situation is virtually no access to credit resources for potential real estate buyers.