Ruins of a railway in Kharkiv, September 2022 (Photo: GettyImages)
The war in Ukraine, which is still in progress, marked last Friday (12/24) one year since it started.
According to data from the Kyiv Calcutta School, over 17,000 buildings and 130,000 private homes were destroyed during the fighting, as of the end of the third quarter of 2022. This is in addition to massive destruction to public buildings such as hospitals, factories and infrastructure.
According to estimates, as of today, the scope of investments for the rehabilitation of Ukraine in the field of real estate and infrastructure, will reach about 100 billion dollars.
How
much will the total rehabilitation of the country cost, including compensation for residents and investors who lost their homes? 3 times or more. The full details are further on in the article.
Foreign Minister Eli Cohen visiting Ukraine February 16, 2022 (photo: official website, Shlomi Amsalem to the Ministry of Foreign Affairs)
During his visit to Ukraine about two weeks ago, Foreign Minister Eli Cohen announced that Israel will provide guarantees of about 200 million dollars to a group of Israeli women who will operate in Ukraine, mainly in the field of civil and health infrastructure.
Later, according to the reports, the cooperation will be expanded and the possibility of providing a credit line of about 3 billion dollars to Israeli companies that will operate in the country will be considered.
According to CPA Alex Sotovsky, an expert in financial management and business development in Ukraine, "According to publications in the local media, as of the end of November 2022, more than 2,690 educational institutions, including kindergartens, schools and higher education institutions, have been damaged in Ukraine, to one degree or another.
27 shopping centers.
330 hospitals.
880 cultural institutions and 94 religious institutions.
In addition, more than 150 hotels were damaged to varying degrees and close to 600 buildings of the local and national government," says Sotovsky.
According to him, with regard to the field of energy infrastructure, "the Ukrainians announced at the beginning of the month that they have already received, as a first step, assistance in the amount of approximately 150 million euros from various Western countries. However, the Ukrainians need international cooperation more than anything in order to deal with the deliberate destruction by the Russians caused in the last months".
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About 350 billion dollars for the reconstruction of the country
According to data from the Kyiv School of Economics, as of last November, the amount of immediate investment required in the field of real estate in Ukraine is over 52 billion dollars. These funds are expected to come from international organizations and funds and from various rehabilitation programs planned for the country.
Other estimates, by the World Bank and the European Commission, speak of much higher amounts of investment that will be required: about 350 billion dollars.
One third of the amount, as mentioned, will be invested in infrastructure and real estate, including housing.
According to CPA Sotovsky, as of today, there is still no central body or regulated plan of who and how compensation will be paid to residents and investors who lost their properties and there is no mechanism to regulate the payment.
"Actually, there are two approaches in regards to the entities that will manage the infusion of billions for the reconstruction of the country. One approach claims that all funds must go through the government of Ukraine and it is the one that will manage all the reconstruction procedures. This, apparently through the establishment of a fund that will concentrate all the activities and receive the funds from To.
The second approach, the approach of the Western countries, claims that the funds should go through an international mechanism that will supervise them and prevent acts of corruption. In practice, we will probably see a combination of the two approaches: it is expected that some of the tenders will be managed by the local government and at the same time rehabilitation programs and international tenders will be implemented.
CPA Alex Sotovsky, expert in financial management and business development in Ukraine (Photo: Asaf Lev)
Even at the municipal level, it is likely that we will see a difference between the different cities.
"More established cities, such as Kyiv, where the extent of the damage is relatively small, will be able to carry out part of the rehabilitation work, using the municipal budget. Other cities in the east of the country, such as Kharkiv, which suffered most of the damage, will not be able to meet the rehabilitation costs," says CPA Sotovsky
. However, as mentioned, it is also clear that once the funding sources are found, local companies will not be able to handle the expected scope of work.
The Ukrainian real estate market will need the cooperation of foreign real estate companies."
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