Sponsored content by CPA Alex Sutovsky
When the war in Ukraine will be over, the global race to restore the country will begin. According to various estimates, including those of the World Bank and the European Commission, the investments required for the restoration of the country are expected to exceed 350 billion dollars. Most investments will come from international funding programs, and huge sums of money that will flow into the country. According to CPA Alex Sutovsky, an Israeli CPA specializing in financial management and business development in Ukraine, it is still unclear as to who will oversee those huge sums: the Ukrainian government, or the institutions, international funds, and the countries that will flow the funds, doing so through objective professionals specializing in operations in Ukraine. However, as someone who has been operating in Ukraine for many years, and having represented Israeli and international companies in various fields there, including real estate and finance, CPA Sutovsky says "the Ukrainians will require international assistance to carry out the reconstruction itself. The local companies will not be able to handle this on their own. This is an exceptional opportunity for foreign companies, including Israeli companies in various fields, including real estate, energy, infrastructure and healthcare".
Residential real estate - a transition from Soviet construction to modern planning and construction
According to recently published E&Y research data, the extent of the destruction of real estate in Ukraine as a result of the war is equal to the amount of construction that took place in the country in the last 7 years. As of September 2022, 74.1 million square meters of residential real estate were destroyed or damaged. According to data Kyiv School of Economics, more than 17,000 buildings and about 130,000 private houses were destroyed during the fighting, up until now.
Beyond the enormous damage and destruction which necessitates accelerated construction, most entrepreneurs in the country stopped work as soon as the war broke out, and some have not yet returned to work. According to the data, in the first three quarters of 2022, only about 68,000 homes started being constructed in the country, about half of the scope of construction in the corresponding period in 2021.
"In fact, with the war ending, parts of Ukraine will be rebuilt." Says CPA Sutovsky. "According to surveys conducted, about half of the refugees who left Ukraine are expected to return to their country when the fighting ends. The return of millions of refugees to the country will require providing them with housing solutions, and quickly. And it is already clear today that the Ukrainians will not be able to meet this requirement on their own, but will require assistance from entrepreneurial companies and foreign construction companies . The renewed construction is an opportunity for advanced modern construction, instead of the existing Soviet construction in parts of Ukraine, and will create a lot of demand for companies operating in the fields of planning, engineering and architecture as well".
CPA Alex Sutovsky / Credit: Assaf Lev
Profitable real estate: Comprehensive assistance in the reconstruction of thousands of educational institutions, shopping centers, and various other institutions
According to the data, as of the end of November 2022, more than 2,690 educational institutions in Ukraine, including kindergartens, schools, and higher education institutions, were damaged to varying extent. 27 shopping centers. 880 cultural institutions, and 94 religious institutions. In addition, more than 150 hotels were damaged to varying extent, and close to 600 local and national government buildings. "As in the field of residential real estate, the reconstruction is an opportunity to upgrade the public buildings and commercial real estate in the country, adapting them to the standards accepted in Western Europe, while transitioning to modern and advanced construction." says CPA Sutovsky. "Furthermore, the extensive destruction is an opportunity to alter centers of cities. According to estimates, this will lead to accelerated construction of shopping malls, even in cities where trade was mainly carried out via street shops. The transition to shopping malls will allow the various cities a dedicated construction of modern shopping centers that are adapted to shopping and recreation in the cold winter of Ukraine." This too will require extensive an infrastructure, which local companies will not be able to provide, as well assistance from foreign companies specializing in the fields of air conditioning and ventilation systems, advanced electrical systems, computer infrastructures, control and monitoring systems, fire detection systems, and more. This goes beyond everything related to the construction itself and the advanced materials it will require.
Accelerated restoration of national infrastructures
One of the main areas affected by the war in Ukraine, are the infrastructures. In terms of the energy and electricity sectors, the relatively warm winter and the temporary solutions, such as generators, allowed Ukrainians to "survive" the winter, and allowed businesses in the country to continue operating under the frequent power outages. This is with the exception of the real estate sector, where many entrepreneurs stopped their activities due to the inability to work regularly. In terms of communication, Ukrainians benefited from Elon Musk's assistance and access to the Starlink satellite network, though Musk has already made it clear that he will not be able to continue financing the Ukrainians' access to high-speed internet for a long time. Hence, it is clear that these are the first areas that will require large international investments and rapid restoration. "Here also", assesses CPA Sutovsky, "the need for restoration, sometimes from the ground up, will allow Ukrainians to switch to smart and advanced infrastructures, as well as the use of greener energies". According to Sutovsky, this represents a great potential for companies operating in the fields of energy and electric infrastructure, including battery farms, conductivity, renovation, construction and management of power plants, electricity splitting, communication, internet, optical fibers, and more. This is in addition to other infrastructures such as water and filtration systems, traffic light systems, urban control and monitoring systems, deployment of cameras in public places, and others.
Construction of hundreds of hospitals and clinics, and rehabilitation of thousands of wounded
According to data from the Kyiv School of Economics, over 330 hospitals throughout Ukraine were damaged and destroyed during the fighting. This is in addition to an unknown number of smaller community clinics that were damaged. The huge sums of money that are expected to flow into the country, as well as the international plans of restoration that are already being drawn up, will go into the restoration of the country's healthcare system, which concerns over 40 million people. "As in other areas", says CPA Sutovsky, "the great destruction, and the large money sums expected to flow into the field, will allow for an opportunity to build public hospitals and clinics according to the latest standards, and introduce advanced medical equipment. For this purpose, Ukrainians will require international assistance from companies specializing in the construction and entrepreneurship of healthcare institutions, companies specializing in healthcare infrastructure and the necessary engineering systems, such as electrical systems, oxygen, control and monitoring, and more. This is in addition to companies specializing in the field of medical equipment and devices. Additional potential also exists for companies engaged in the treatment and rehabilitation of tens of thousands of Ukrainians, soldiers and civilians, who were injured during the fighting."
The government of Ukraine is open to any initiative that will westernize and modernize the country
As we have seen in many cases, an end of a war, combined with the many international investments, constitute an opportunity to take advantage of the restoration process, to develop the country in various aspects, and to make it more modern and advanced. It is likely that this will also happen in Ukraine in light of the huge sums of money that the western countries are expected to pour into it. CPA Sutovsky, who works extensively in representing Israeli companies, among others, in front of the official institutions in Ukraine, and in front of the government offices, says that beyond the real estate, infrastructure, and health sectors, the huge sums of money that will be invested in Ukraine constitute a huge potential for Israeli companies, in almost every field. "Ukraine's government has already announced that it is open to receiving proposals and ideas in any field, that will allow for developing, and for turning Ukraine into a modern, western country. International companies in general, and Israeli companies in particular, who knew how to enter Ukraine as early as possible, and how to conduct themselves correctly in front of the Ukrainian government, in front of the municipalities, and in front of the business entities in the country, will be the first to realize this potential."
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