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House building a bright spot in Ukraine’s economy

Ukraine’s residential construction sector is providing some good news for the country’s economy, with new housing for the first half of 2014 up on last year’s figures and the EU and the European Bank for Reconstruction and Development (EBRD) announcing investments of over €30 million in separate projects in recent weeks.

The money is being spent in two opposite regions of Ukraine – last week the EU set aside €17 million for construction and repair projects in the east of the country, while the EBRD, along with the Clean Technology Fund and the EU-funded E5P organisation, is spending €14 million on modernising residential heating systems and improving energy efficiency in the western city of Lutsk.

This international investment is a further boost for house building in Ukraine, which is performing well across the country – according to a report from the research company PMR, 4.1 million sqm of housing was finished across Ukraine in the first half of 2014, 28.7% more than in the same period the year before. All in all, full year levels are expected to be 3-4% up on 2013 figures.

Energy efficiency drive

The new EBRD scheme for Lutsk, which complements a six-year, $382 million (€300 million) programme launched this year in Ukraine by the World Bank called District Heating Energy Efficiency, is particularly welcome. Ukraine is the fourth most energy-intensive country in the world – the ratio of energy consumed to GDP is 16 times higher than in Germany – and the country is prioritising cutting energy use in buildings to reduce dependence on imported gas.

This focus is supported by companies in the sector – Yuri Gosudarskiy, head engineer of the Kyiv-based Arkhimatika architecture firm, told a Ukrainian news site that there are many more builders interested in using renewable technology to heat their buildings, attracted by the potential to save 60% on energy costs. However, the feeling in the market is that expertise from abroad will be needed. This May, a group of 35 Ukrainian cities, represented by the Association of Energy Efficient Cities of Ukraine, appealed for European help in improving energy efficiency in buildings.

International organisations have answered the call for investment. Developers now have more money to look for more efficient ways to heat their buildings, and a growing residential market should increase demand for new, cleaner technologies still further. With almost €1 billion of EBRD funds earmarked for the country this year, potentially more to come, and good house building performance, there are signs that Ukraine’s construction sector could be on the verge of recovery.

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