Opportunities in Ukraine, and three other promising building markets
Published on 07/11/2014
For exporters and investors in the building sector looking for new markets and new growth, there are plenty of countries around the world offering fresh opportunities - including Ukraine, which is seeing international investment in housing and communal services despite a tough year. Here are some reasons to think about the country, as well as three other building markets around the world:
Ukraine
When it comes to new markets, Ukraine might not be the first place that springs to mind. However, an energy efficiency drive in residential buildings is bringing cash, opportunities, and increased activity to its construction sector.
Desperate to reduce its dependence on Russian gas, Ukraine’s government is funding a range of programmes to boost energy efficiency by renovating apartments and replacing old heating equipment. Initiatives include 250 million UAH ($18.5 million) for new boilers announced last week, and 440 million UAH ($32.5 million) more to help apartment block owners fund modernisation of their heating systems.
International organisations are weighing in, too – the World Bank, the EU and the European Bank for Reconstruction and Development have all begun multi-million euro programmes in the country this year, providing cash for housing repair and modernisation of utilities systems and helping to make the residential construction market a bright spot in Ukraine’s economy.
India
India has been heavily courting international investment for some grandiose projects recently. The government relaxed its rules on foreign direct investment in construction last week, easing capital requirement and exit norms and cutting minimum land requirements. The main motive is to bring international funding to the 100 Smart Cities plan – a billion-dollar scheme to create eco-friendly, technologically advanced urban areas, for which India is actively seeking investment from France, Singapore, the USA and other countries.
Another spending drive in need of foreign cash is in an area less headline-grabbing but just as important – sanitation and new bathrooms. Announced last month, the Clean India Mission will see $10bn spent over five years on, among other health and general tidiness initiatives, building 800 million new toilets to improve India’s appalling diarrhoea mortality rate.
The project has gone down well with investors so far – major Indian firms such as Tata and L&T have pledged to build some of the planned new toilets, and the US Agency for International Development has committed $20m to launch a campaign addressing sanitation issues.
Indonesia
Another new government, another plan to boost house building – Indonesia’s new president Joko Widodo has wasted little time in pledging to ramp up construction and increase state support for low-income mortgages and affordable housing.
Government statistics predict that Jakarta’s metropolitan area population will pass 35 million by 2020, which is one reason for Indonesia’s need for 700,000 new houses per year. The sector is at full capacity trying to provide them – more than a thousand apartment blocks are planned for Jakarta over the next five years, and the capital’s satellite towns such as Bogor are attracting developers spending millions on new houses, apartments and facilities.
The construction market is booming and projects are multiplying, but with a reported backlog of 15 million houses still required, Indonesia needs more.
Kazakhstan
As Kazakhstan’s GDP rises, so does its need for more and better housing. The country’s total housing stock rose 11% in 2013, and that year $2 billion was spent on residential investments, a 17% increase and the largest jump for five years. A bid for the 2022 Winter Olympics and a $1bn spend on hosting the Universiade world student games in 2017 is not doing demand for construction any harm either.