Although the reconstruction of the housing stock is currently not a priority for the Ukrainian authorities in the face of the urgent need to protect critical infrastructure, it is ultimately an attractive offer for Polish business, which may prove to be competitive, especially in supply of construction materials and interior furnishings.
During the two years of full-scale aggression, Russia has destroyed or damaged more than 250,000 residential buildings, Prime Minister Denys Shmyhal announced on 3 May, citing a report prepared by the Kyiv School of Economics based on data collected by Ukrainian state administrations of Ukraine. Residential buildings accounted for the largest share (37,5%) of the total value of damages. The wartime damage to the housing stock was estimated at $58.9 billion.
During the hostilities, the occupiers fully destroyed or damaged 188,000 houses and nearly 27,000 apartment blocks. In addition, more than 35,000 houses were destroyed by flooding after Russia blew up a dam on the Dnieper River in Kakhovka. During the two years of the war, 1.4 million households with 3.4 million people (one in ten Ukrainian citizens) who lived there before 2022, - were fully or partially destroyed.
The reconstruction of the housing stock in Ukraine, due to its dispersion, may turn out to be more attractive for Polish companies than large, highly competitive infrastructure projects being the center of attention of international corporations.
Polish business can be particularly competitive in the supply of building materials, including interior furnishings, such as sanitary and electrical installations, ceramic equipment, windows and doors. Polish companies operating in the green technology sector, which can offer heating, photovoltaic panels, or waste management systems, can also potentially benefit. The reconstruction of housing is also an opportunity for Polish architecture firms.
The report by the Kyiv School of Economics indicates that, apart from the housing stock, the biggest losses are in infrastructure. The devastation in the education and health sectors is severe. During the first two years of the war, up to 4,000 schools and more than 1,000 hospitals were fully or partially destroyed. The Russians destroyed 344 bridges, as well as nine airfields, and damaged another nine. The damage to the railway infrastructure reached $4 billion.
Among the cities that are currently under Ukrainian control, the greatest damage was recorded in Irpin near Kyiv. Its reconstruction from the damage inflicted in the spring of 2022 is well underway. The next most damaged city is Kharkiv, a city that had a population of over a million before the war, and due to its location in the vicinity of the Russian border, it is invariably the object of intense shelling with limited air defence potential. Chernihiv, located north of Kyiv, which was besieged by Russian troops in the first stage of the war, has also suffered extensive damage.
The report by the Kyiv School of Economics indicates that the total amount of damage to residential and non-residential properties and other infrastructure after two years of armed conflict amounted to over $157 billion, counting only the value of worn-out but still socially used infrastructure before the war. The actual cost of restoring Ukraine's infrastructure and economic stock (while modernizing it, in the spirit of the 'build back better' concept) will be much higher. The Ukrainian government, together with international partners, has estimated the financial need for post-conflict reconstruction at $486 billion.
The report by the Kyiv School of Economics, whose estimates cover only the first two years of the war does not consider the adverse situation of the last three months, when Russia intensified its shelling of Ukrainian cities, especially energy infrastructure, inflicting very heavy damage to energy generation and transmission capacity.
Ukraine's urgent need to rebuild critical infrastructure, especially energy, and the growing needs of the armed forces, especially in the face of delays in providing Western support, are reducing Ukraine's potential to finance projects of rebuilding residential infrastructure and other public facilities.
This problem was pointed out on 3 May by the head of the regional military administration of the Mykolaiv region, Vitaliy Kim. The governor acknowledges that the pace of reconstruction in his region has slowed down in recent months. So far, about 30% of the destroyed buildings have been restored to working order, including 99% of critical infrastructure facilities, 44% of schools, 15% of kindergartens and only 8% of residential buildings. This is not only a regional trend, but also a nationwide one – the reconstruction of residential infrastructure, although it accounts for the largest part of the damage, must give way to more urgent current needs.
The report by the Kyiv School of Economics is available at: https://kse.ua/wp-content/uploads/2024/05/Eng_01.01.24_Damages_Report.pdf.
