Number of industrial parks in Ukraine in 2024 may grow from 15 to 20, to 30 in 2025 – expert

The number of operating industrial parks (IPs) in Ukraine by the end of 2024 could increase to at least 20 (currently, there are 15), and in 2025, the number could rise to at least 30, according to Valeriy Kyrylko, CEO of the Industrial Parks of Ukraine group of companies.

"The trends indicate that the number of operational parks will increase significantly. Therefore, it is not entirely correct to say that out of 86 registered parks, only 15 are operational, as their history should be divided into the period before and after the full-scale invasion. By the start of the war (first quarter of 2022), only four out of the registered 62 parks were operational, and now there are already 15," Kyrylko told Interfax-Ukraine.

He said that a park is considered operational if it has networks, at least one constructed facility (warehouse or industrial), a management company, and at least one operating enterprise. Kirilko said that before the war, despite the existence of a law on IPs adopted in 2013, there were essentially no stimulating factors for their development and no financial or technical support from the state. For example, with a need for 4.5 billion UAH for networks over eight years (since the law's adoption), only UAH 6 million were allocated for the reconstruction of one network, and UAH 96 million in investments reported by the Ministry of Economy were private investments in two parks.

"The four parks that developed before the war were private: Bila Tserkva, Korosten, Solomonovo, and Vinnytsia Refrigeration Cluster. They had constructed facilities and residents. And here's the paradox: the number of residents there was even higher than registered with the Ministry of Economy because many operating enterprises were not interested in registering as residents," the expert said.

He also noted that the creation of IPs was planned to be initiated by local communities, which would attract a management company with investments and residents. However, no professional management companies emerged, and the communities lacked budgets – 70% of them are dependent on subsidies that are allocated even before they receive them. "There were no resources, no people, no understanding of marketing or promotion. The only thing communities could do was register an industrial park, but without the interest of private business, this topic did not progress," Kyrylko said.

The first impetus for the development of IPs, according to him, was the full-scale invasion by Russia, as more than 1,500 relocated enterprises began seeking not just plots but ready industrial facilities. "For example, 11 parks were registered in Lviv, but by March 2022, they did not have a single ready facility; only a few were under construction, and most enterprises settled in old industrial zones. Some relocated to industrial parks in other regions, like the Prypravka company relocated from Kharkiv to the Bila Tserkva IP, but there were few such cases because there were no built facilities," the expert said.

At the same time, the demand "stirred" park owners, who began to act, and relocated enterprises started looking for plots and registering IPs. The second impetus for the development and creation of truly operational parks was the adoption of a large package of laws in mid-2022, which sparked interest primarily from residents. "As practice has shown, creating a park is not a problem; the problem is filling it. And these preferences finally appeared: 10 years of profit tax exemption, VAT and duty exemptions on equipment – now there is a huge demand from this side. Finally, in 2023, the state allocated financial assistance for the first time for 2024, amounting to UAH 1 billion," Kyrylko said.

According to him, these factors have sparked interest among residents, who either started looking for a park or creating them independently. "Currently, 70-80% of the parks we register have a plant where a specific project is being implemented. Therefore, many relocated companies are forming their parks. Or some holdings, like Epicenter – in their park in Horodok, the master plan is fully ready, with investments and biogas plants and factories," UAH said.

Based on the nature of applications received for site selection for production, he notes a sharp increase in demand for ready-made facilities – companies are less interested in building themselves and prefer ready facilities over land plots. Among the parks that are already operational today, besides those that operated before the war, he mentioned: Riasne-2/E-10, Sparrow Park (both in Lviv), iPark (Odesa region), Novorozdilsky, YadroIndustry (Lviv region), Kronospan Rivne (Rivne region), Kalush Industrial HUB (Ivano-Frankivsk region), L-Town Park, and FastIndustry (Kyiv region), Uzhgorod (Zakarpattia region), Western Ukrainian Industrial HUB (Ternopil region).

In terms of specialization, the favorites of requests are the agricultural sector and food industry, building materials, warehouses and logistics, dual-use facilities. "For example, the Western Ukrainian Industrial HUB is one of the few examples where the park is completely filled with relocated enterprises. Almost 80% of the residents there are agriprocessing companies. The Bila Tserkva IP is generally the most exemplary and high-quality project, including in terms of the number of residents – there are now six, and the same Prypravka plans to add another 4,000 sq m to the existing 4,000 sq m," the expert said.

According to estimates, as of the third quarter of 2024, a little more than 61% of registered parks have roads, 26% have electricity, 29% have water supply, 25% have gas supply, and only 17% have railway tracks. "This year, management companies have finally started to appear that can be called networked, managing and developing various industrial parks – these are Dragon Capital, Alterra Group, UParks, IMC, Concept Real Estate, Bureau of Investment Programs," Kyrylko said.

However, he emphasizes that already this year there may be a problem with a colossal shortage of ready industrial premises in IPs with about 80-100% of free land in greenfield-type parks. "Therefore, it is time to stimulate the construction of ready-made infrastructure and facilities. And although there is already UAH 1 billion from the state, with the active development of accelerated construction (6-12 months), preferential financing in the form of long-term and cheap loans (2-5% per annum) or budget investments of the advance type is needed," Kyrylko said.

Summarizing the main trends in the development of IPs, Kyrylko named the overall rapid growth (more than 20 new ones created per year), the decrease in municipal parks, and the increase in private ones (30% to 70%), almost no parks with "dead" prospects, the presence of future "quality" participants with investments in half of the created parks, the emergence of specialized cluster industrial parks, and demand from small and medium-sized businesses.

As reported, currently, 86 parks are listed in the Register of Industrial Parks, including 18 in 2024.