Construction of housing for internally displaced persons is more expensive than the market: what is the reason

In Ukraine, the cost of housing construction for internally displaced persons in some projects may significantly exceed market prices. Due to opaque procurement procedures and the lack of a unified approach to formulating the cost per square meter, the state and international donors risk spending significantly more funds than necessary. This was stated by people's deputy Yaroslav Zheleznyak, referring to a study by the Risk Assessment Center.

Housing prices for internally displaced persons vary significantly

According to the study, the war has damaged or destroyed about 14% of Ukraine's housing stock. As a result, over 3 million families have faced housing problems.

At the same time, the cost of housing construction for displaced persons varies significantly depending on the funding program.

According to Zheleznyak, the official norm set by the Ministry of Development is about 26 thousand hryvnias per square meter. However, state programs often allocate approximately 50 thousand hryvnias per square meter, while certain international projects may exceed 100 thousand hryvnias.

In some cities, the cost per square meter is up to 2 thousand euros

The deputy drew attention to specific projects where housing for displaced persons is built at significantly higher prices than those offered by private developers.

In particular, in Zhytomyr, the cost per square meter in one donor project reached 1700 euros, while in Chernivtsi it was about 2000 euros.

At the same time, private developers, who provide “turnkey” housing with repairs and necessary equipment, offer similar apartments for 700-800 euros per square meter.

In the opinion of the video author, such a difference indicates the inefficiency of certain procurement mechanisms.

Open tenders allow for significant cost reduction

One of the main reasons for high prices, according to Zheleznyak, is the lack of transparent competition in certain international projects.

According to him, some donors procure work outside the Prozorro system, which creates risks of inflated costs.

As an example, he cited the construction of housing in Kovel in Volyn with funds from the European Union. Currently, this project is being inspected by law enforcement agencies due to suspicions of inflated prices for construction materials and equipment. Initially, the potential losses are estimated at almost 6 million hryvnias.

At the same time, in Borodyanka, housing for those affected by the war is being built through open tenders in the Prozorro system. There, the cost per square meter ranges from 793 to 908 euros with repairs and plumbing.

According to Zheleznyak, open competitive procurement allows for more effective use of state and international partner funds and enables more housing to be built for displaced persons for the same money.