Exclusive Andriy Ozeychuk: «Construction can reach the level of 2021 in 4-5 years»

Director of Rauta on the state and trends in the construction and steel structures market

Despite the positive dynamics of the last 2 years and large-scale recovery programs, the volume of the Ukrainian construction market remains almost half of its pre-war level. Last year, the construction of warehouses, hotels, agricultural and industrial buildings was quite active, as well as the restoration and protection of infrastructure. Market operators expect that the demand for steel construction and steel structures will increase significantly as part of the post-war recovery.

Andriy Ozeychuk, Director of Rauta Engineering and Construction Company and Chairman of the Board of Directors of the Ukrainian Steel Construction Center Association, told GMK Center in an interview.

What is the overall current situation in the Ukrainian construction market and its individual segments?

– Demand in the construction market of Ukraine remains at a stable low level. In 2024, the market grew by 20% in national currency compared to 2023 and amounted to about UAH 200 billion (€4.6 billion), but is still significantly lower than in 2021, when the volume of construction products produced reached UAH 258 billion (€8 billion). With positive growth dynamics, the Ukrainian construction market will be able to reach the level of 2021 in 4-5 years.

In the commercial construction market, the hotel real estate segment showed the highest growth, up 182%. This is primarily due to the active development of resort real estate in western Ukraine. In turn, demand in the primary residential real estate market increased by 12% in 2024. One of the important factors behind this was the introduction of the eHouse program, which accounted for a third of loans to new buildings.

Between 2019 and 2024, the cost of construction in Ukraine doubled. At the same time, the cost of construction materials and services increased by about 24% over the past year.

In 2024, the restoration and protection of critical infrastructure facilities accounted for about 20% of the construction market. However, when working with government orders, there are high risks of funding delays, which requires the contractor to have significant working capital, as receiving the final payment can be significantly delayed.

What drives demand in the steel construction market?

– In 2024, the main consumers of steel construction were customers of warehouse, agricultural and industrial buildings, as well as the government for the restoration and protection of infrastructure. Kyiv and Lviv regions remain the most attractive for the construction of new buildings, as they have a large population and a good location relative to major transport routes. In 2024, the total area of new commercial projects increased by 65% compared to 2023. The warehouse segment grew by 111% and the retail segment by 22%.

The full-scale aggression of the Russian Federation has led to many problems for Ukrainian business. What are the challenges of the construction market that you could mention?

– One of the challenges for the entire construction industry in Ukraine this year is the transition to work in accordance with the Law “On the Placement of Construction Products on the Market”, also known as EU Regulation 305, which radically changes the requirements for the safety and quality of construction materials. The law came into force on January 1, 2023, and by the end of 2025, Ukrainian building materials producers are obliged to fully switch to working under the new regulations.

Every year, the shortage of qualified specialists is becoming more pronounced. Some positions take up to 6 months to fill. The shortage of qualified personnel and high inflation are forcing employers to raise salaries and introduce new employee loyalty programs. On average, from 2022 to 2024, salaries in the construction industry grew by 20% annually. Today, construction companies are actively recruiting older people and women to perform work that does not require significant physical activity: engineers, foremen, construction equipment operators, drivers, welders, etc.

Last year, downtime due to power outages was also a significant problem for construction materials producers, which further increased production costs.

Even though the war is still ongoing, we need to think about how to rebuild the economy and infrastructure now. How do you see Ukraine’s post-war recovery? What role can steel construction play in this?

– In the post-war period, we expect the demand for building materials to increase significantly, as most investors are already actively calculating the cost of construction and waiting for the end of hostilities to launch new projects.

Metal structures have a great potential for use in the restoration of infrastructure structures, primarily bridges, and the protection of energy facilities. Ukrainian steel producers can also be engaged by foreign companies looking for local producers to jointly implement construction projects, as steel is the preferred material for construction in most EU countries. The development of logistics and production clusters in Ukraine could significantly increase the size of the steel structures market.

Ukrainian steel producers have sufficient potential to rebuild and are already at the level of European producers, working according to EN standards and using BIM technologies.

As demand for construction materials increases during the recovery process, producers may face challenges from shortages and rising prices for raw materials, limited access to financing to increase production capacity, and a lack of energy resources. An additional risk for national producers may be an increase in imports of building materials from the EU and China.

What are Rauta’s plans for 2025?

– In 2025, we continue to work on two large construction and installation projects in Kyiv and Mykolaiv, plan to increase the supply of Ruukki sandwich panels by optimizing the cost of production, and launch a new brand of European-made sandwich panels in the middle price segment.