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How small-scale privatization and leasing are revitalizing Ukraine
Four stories of property getting a fresh start
How small-scale privatization and leasing are revitalizing Ukraine
Four stories of property getting a fresh start
How small-scale privatization and
leasing are revitalizing Ukraine
Four stories of property getting a fresh start
Partner project
Real benefits for society from auctions for the sale and lease of state and municipal property.
Small-scale privatization in Ukraine has a long and complicated history, dating back to 1992. However, only the current stage of this process can be called fair and transparent. In the past, state property was sold by regional offices of the State Property Fund of Ukraine (SPFU) at auctions or even without them. The situation has changed dramatically with the launch of the Prozorro.Sale system, which has opened up access to participation in auctions for the sale and lease of state and municipal property to everyone and made the bidding process completely open.
Prozorro.Sale is an electronic trading system that operates on the principle of “everyone sees everything”, which ensures maximum transparency of the process and protection against corruption. This makes it possible to effectively use available resources and create new opportunities for business development.
Since 2018, online auctions for small-scale privatization of state and municipal property in the ProZorro.Sale system have replenished the state and local budgets by more than 18.5 billion hryvnias ($448 million). The tenders since February 24, 2022, amounted to more than 7.8 billion hryvnias ($189 million).
Serhii But
Serhii But
Since 2018, online auctions for small-scale privatization of state and municipal property in the ProZorro.Sale system have replenished the state and local budgets by more than 18.5 billion hryvnias ($448 million). The tenders since February 24, 2022, amounted to more than 7.8 billion hryvnias ($189 million).
The state budget for 2024 approved a plan for the SPFU: 4 billion hryvnias ($97 million) from privatization and 800 million hryvnias ($19 million) from lease. As of the end of August, the total economic effect of privatization auctions of state property reached almost 3.37 billion hryvnias ($82 million), including 2.4 billion hryvnias ($58 million) in sales revenue, 447.1 million hryvnias ($11 million) in VAT payments, and 517.6 million hryvnias ($13 million) in debt repayments.
Statistics show the active development of small-scale privatization in Ukraine. In 2024, an average of 3.24 bidders took part in auctions for the privatization of state and municipal property, while in 2019 there were 2.6 bidders.
Due to high competition at auctions, the value of assets at auctions increases by an average of 2.6 times the starting price. Today is the time to turn state ‘liabilities’ into ‘assets’, to reboot the economy and replenish the state budget, which finances the Ukrainian Defense Forces.
Ivanna Smachylo
Ivanna Smachylo
Due to high competition at auctions, the value of assets at auctions increases by an average of 2.6 times the starting price. Today is the time to turn state ‘liabilities’ into ‘assets’, to reboot the economy and replenish the state budget, which finances the Ukrainian Defense Forces.
Since 2020, the lease of state and municipal property in accordance with the law has also been carried out through electronic auctions at Prozorro.Sale. Since then, almost 36,500 auctions have been held. As a result, the country receives about 2.5 billion hryvnias ($60 million) a year. In particular, since the beginning of the full-scale invasion, new lease agreements have been concluded in Ukraine for more than 91.3 million hryvnias ($2 million).
How the reform of state and municipal property management changes people’s lives and develops communities is best illustrated by the personal stories of participants in privatization and lease auctions.
01 / Medical clinic instead of a derelict café in Novomoskovsk
The building of the Uyut cafe in Novomoskovsk, Dnipropetrovsk Oblast, had not been used for more than 10 years and was in a state of disrepair. The building was purchased by local businessman Oleh Sydorchuk for 931,000 hryvnias ($22,527). He is the owner of the medical center Olimp.
The entrepreneur was planning to expand his business. In addition, he had some tension with the management of the Novomoskovsk Polyclinic, where his previous office was located.
There was a problem that local doctors were jealous of a commercially successful business located on their premises. They saw that our center was successful, generating income and not requiring subsidies, and began to create conditions for us to move out of the old building.
Oleh Sydorchuk
Oleh Sydorchuk
There was a problem that local doctors were jealous of a commercially successful business located on their premises. They saw that our center was successful, generating income and not requiring subsidies, and began to create conditions for us to move out of the old building.
Oleh Sydorchuk’s Olimp medical center in the old hospital expanded significantly, so it was necessary to move to a new location.
Purchased premises for expansion of a private medical center
Property:
Former cafe Uyut — attached between two dormitory buildings, Novomoskovsk, Dnipropetrovsk Oblast
Acquired for:
931,000 UAH ($22,527)
Starting price:
13,571 UAH ($328)
Area:
329,2 m²
Number of bidders:
14
When choosing an asset for privatization, Oleh Sydorchuk also considered its location: the former Uyut café is located right next to the polyclinic building.
After acquiring the facility, Oleh Sydorchuk invested heavily in its reconstruction. Major repairs were made, modern medical equipment was installed, and comfortable conditions were created for patients and staff. Now, a team of highly qualified doctors of various specialties works in the new premises of the Olimp medical center, which allows it to provide a wide range of medical services to residents of Novomoskovsk and the surrounding area.
02 / Renting premises to expand an IT education network
Bohdan Bohush is a co-owner of the WebSkill programming school. He uses Prozorro.Sale to rent premises in various schools where he creates classrooms for a private computer science school.
WebSkill started operating in 2019. After five years of work in Lviv, it became clear that they needed to expand.
At the auction, Ivano-Frankivsk City Council offered to rent school classrooms on an hourly basis exclusively for studies. So Bohdan Bohush rents a municipal room for IT courses. Under the terms of the lease, he uses the school room twice a week.
After launching these schools, WebSkill entrepreneurs start making a profit from the first month of opening, as they rent a renovated room, so the classrooms are immediately ready for use.
In Lviv, WebSkill operates at 44 schools in the city. Bohdan Bohush notes the convenience of renting a space on Prozorro.Sale, as it reduces bureaucracy. Bohdan Bohush’s network of computer science schools plans to expand further using auctions on Prozorro.Sale. In the near future, they plan to take part in lease auctions in Rivne and Khmelnytskyi.
Rented premises for IT courses for children at a school
Property:
room on the second floor of a lyceum building, Ivano-Frankivsk
Rented for:
251.20 UAH ($6) / month
Starting price:
251.20 UAH ($6) / month
Area:
69,6 m²
Number of bidders:
1
Our goal is to make high-quality IT education accessible to children and teenagers in different parts of Ukraine. Renting premises in schools allows us to effectively expand our network. We see the growing demand for IT education among young people. Our students not only gain practical programming skills, but also develop logical thinking, creativity, and teamwork. This is an investment in the future of our children and the Ukrainian economy as a whole.
Bohdan Bohush
Bohdan Bohush
Our goal is to make high-quality IT education accessible to children and teenagers in different parts of Ukraine. Renting premises in schools allows us to effectively expand our network. We see the growing demand for IT education among young people. Our students not only gain practical programming skills, but also develop logical thinking, creativity, and teamwork. This is an investment in the future of our children and the Ukrainian economy as a whole.
The courses are designed for groups of children aged 10-11 and 16-17. The curriculum includes programming basics, web development, game creation, robotics, and other areas.
03 / A café with historical restoration in a rented university building
Anastasia and Denys Zazubek leased premises on the first floor of the Chernivtsi College of Lviv National Agrarian University. The building of this college was constructed in the late 1930s, and the educational institution was founded in 1945. The couple opened a coffee shop in the century-old building, which they called Café Mathieu.
Despite the fact that the building does not have the status of a heritage asset, the owners still wanted to preserve its authenticity.
In fact, we were immediately looking for a place that would be special with its entrance and interior space. We wanted to do everything right, because we are architects ourselves. That’s why we wanted to set an example for our customers on how to work with the city center.
Denys Zazubek
Denys Zazubek
In fact, we were immediately looking for a place that would be special with its entrance and interior space. We wanted to do everything right, because we are architects ourselves. That’s why we wanted to set an example for our customers on how to work with the city center.
A couple of architects and restaurateurs rented premises for a café in a century-old building
Property:
premises on the first floor of an educational building of a college, Chernivtsi
Rented for:
24,979 UAH ($604) / month
Starting price:
10,160.26 UAH ($246) / month
Area:
130.4 m²
Number of bidders:
1
According to Denys, he and his wife sought to highlight all the features of the old building. “We restored old elements, wooden doors. And for new glass elements, we developed modern solutions. The positive point was that the city quickly agreed to everything.” The works were coordinated with the city’s cultural heritage protection department. For example, the entrepreneurs were allowed to implement their architectural solution and install windows with guillotines. Now they and the almost century-old doors are one of the attractions of Oleksandra Dobroho Street in Chernivtsi.
“Of course, restoration is expensive. But I think the result is worth it, the city is worth it. On the whole, entrepreneurs can afford it,” says Denys Zazubek.
The coffee shop, opened by Anastasia and Denys Zazubek, became not just a place where you can drink coffee, but a real cultural space. The interior of the cafe, which harmoniously combines historical elements with modern details, creates a special atmosphere that attracts locals and tourists. Various events are regularly held at Café Mathieu — for example, charity garage sales, where funds are collected for tactical medicine for the Ukrainian Armed Forces.
04 / Heritage.UA — buying ruins and looking for investors for restoration
The non-governmental organization Heritage.UA is actively working to preserve Ukraine’s architectural heritage. It buys up houses of significant historical and cultural value at Prozorro.Sale auctions and actively works on their restoration and adaptation to modern needs. For this, it attracts both private investors and international grants.
This initiative is an example of how small-scale privatization can contribute to the preservation of national cultural heritage.
Heritage.UA engaged the investment company EFI Group, which last year became the owner of the Rzewuski-Lanckoroński Palace after winning the privatization auction of the State Property Fund and began the restoration of the landmark.
Investor and owner of the palace in Rozdil, chairman of the supervisory board of EFI Group Igor Liski notes that the task of EFI Group is not only to restore the palace, but also to create a profitable project.
As part of the partnership agreement with EFI Group, Heritage.UA administers the restoration project of the Rzewuski-Lanckoroński Palace. The organizations will work together for three years until the restoration and adaptation of the palace and the arrangement of the surrounding area are fully completed.
The Rozdil Palace is not just a building, it is a living history of our region. When we first saw this asset at the auction, we realized that we could not allow its further dilapidation.
Hanna Havryliv
Hanna Havryliv
The Rozdil Palace is not just a building, it is a living history of our region. When we first saw this asset at the auction, we realized that we could not allow its further dilapidation.
Bought the building of the former noble palace for restoration
Property:
Rozdol sanatorium, Lviv Oblast, Stryi district, Rozdil
Acquired for:
16 million UAH ($387,140)
Starting price:
13.320 million UAH ($322,294)
Area:
6,263.2 m²
Number of bidders:
5
“Over the past three years, we have participated in more than 30 privatization auctions of state and municipal real estate. Among the assets we purchased on the Prozorro.Sale platform are the Hershhorin Palace in Khmelnytskyi Oblast, the Dolynsky estate in Chernihiv Oblast, and a number of historical buildings in Lviv and Volyn oblasts. There are already investors for some of them, and we are engaged in the restoration of buildings for new functions. For the rest, we are looking for efficient and caring new owners, whom we are ready to assist in every way,” says Hanna Havryliv.
According to her, work with cultural heritage requires significant financial investments and a large amount of restoration work. This problem is especially acute in conditions of war and limited state funding. That is why the attraction of private capital through the mechanisms of small-scale privatization becomes a key factor in the preservation of historical landmarks.
“We see tremendous potential in cultural heritage sites, and based on our own experience, we can confidently say that with proper restoration, a smart choice of new function, and effective management, they can be made economically viable and attractive for investment,” asserts the director of Heritage.UA.
All these examples show that after privatization, assets are transformed and given new life. Owners invest in development, modernize production, expand capacity, and create new ventures. Investments, in turn, mean new jobs and tax revenues, providing the much-needed boost for our country’s development, especially in light of the ongoing war.
Oleksiy Sobolev
Oleksiy Sobolev
All these examples show that after privatization, assets are transformed and given new life. Owners invest in development, modernize production, expand capacity, and create new ventures. Investments, in turn, mean new jobs and tax revenues, providing the much-needed boost for our country’s development, especially in light of the ongoing war.
This project is made possible by the support of the American and British peoples through the United States Agency for International Development (USAID) and the Foreign, Commonwealth & Development Office (UKaid). The views of the authors expressed in these materials do not necessarily reflect those of USAID, the US Government, UKaid or the UK Government.
Publication date: 09.13.2024
Editor: Iryna Denisyuk
Design and layout: Yuliia Tepliuk
Chief editor: Yevhenii Frolov
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