The potential growth of steel construction is based on the multistory housing and industrial construction. These areas have the greatest regulatory burden in the sector. This topic was a key motive of the presentation of the BRDO (Better Regulation Delivery Office) Construction Sector Head Olena Shulyak at the V National Conference of steel construction market participants. The event takes place in the Kosmopolit Congress Hall in Kyiv.
The Minister of Regional Development, Construction and Housing and Communal Services Hennady Zubko, the Deputy Minister Lev Partskhaladze, the First Deputy Chairman of the VRU Committee on Construction, Urban Development and Housing and Communal Services Dmytro Andriyevsky, experts and construction sector representatives presented the reports on the situation and prospects of the sector and specific steps to improve the investment environment to the conference participants. The event was organized by the Ukrainian Steel Construction Center.
The speakers highlighted a lack of investments and the obstacle and ineffective regulation of the sector among the main problems that currently hinder the development of the construction market in general and the steel construction in particular.
According to the results of 2015, the total construction costs in the amount of little more than 42 euro are accounted for one Ukrainian citizen. For comparison, in Germany this figure is almost 2700, and in Poland – 944 euro. In this context, the housing per capita in Ukraine is one of the lowest in Europe with an average age of residential buildings in 42 years – 90 percent of housing have been built before the 1990s.
“Our experts have analyzed the ratio of incomes of the population in different regions to construction costs and found an interesting pattern. The national average figure is 1.83%. At the same time, it reaches 4-5% in the Western region due to low-rise buildings and it barely reaches 2.3% even in Kyiv, which is a leader in construction. This imbalance exists not least because of the overregulation of the multistory housing, which not only creates the excessive administrative burden on developers and investors, but also significantly increases the price of multistory buildings. Taking remedial actions against ineffective regulation can at least double the potential construction market,” Olena Shulyak said after the conference.
Currently, Ukraine takes the lowest position among all countries of the region in terms of “Dealing with Construction Permits” in the World Bank Group’s Doing Business ranking. Only the cost of permitting procedures is 15.2% of the estimated construction costs that is almost twice as large as an average rate of our neighbors.