FINANCIAL STRATEGY FOR REAL ESTATE DEVELOPMENT: AN ANALYSIS OF THE RATIO APPROACH AND KEY INVESTMENT ENTITIES

Abstract

Introduction. This article examines the issues surrounding financial strategy in real estate development through the lens of a ratio-based approach to assessing a developer’s financial stability. The author also notes that a financial strategy can be achieved through the implementation of strategic goals in real estate development. The key financial stability ratios for a construction developer are identified: the current ratio, quick ratio, and absolute liquidity ratio. Formulas for calculating autonomy and financial dependence ratios are provided. Ratios for calculating a construction developer’s profitability—return on assets, return on equity, and return on investment—are systematized. A key condition for investors has been identified: maintaining a positive financial leverage ratio—that is, the ratio of borrowed funds (loans) to the profitability of the construction project. The characteristics of key joint investment institutions—as the primary investors in construction development—are presented. In particular, the asset structure of closed-end joint investment institutions and venture capital firms as of 2025 is analyzed. Methods. Logical, analytical, and synthetic methods—in examining a scientific approach to explaining the current shortcomings in the functioning of construction development finance. The coefficient method – in determining key formulas that assess the financial condition and financial stability of a construction developer; the statistical method and the grouping method – in systematizing and calculating the dynamics of annual performance indicators of construction companies in Ukraine, 2022–2025; Induction and deduction – in determining the financial strategy for construction development. Results. In 2025, capital investment in the domestic economy totaled 669 billion hryvnias. Of this amount, 70% came from enterprises’ own funds, 7% from state finances, 6% from local communities, 5% from private individuals, and 5% from bank loans. Foreign investment accounted for 0.1% of total capital investment. Within the structure of tangible assets in which investments were made, investments in machinery, equipment, and inventory (warehouses, production facilities, and retail premises) account for 40%, non-residential buildings for 17%, civil engineering structures for 14%, residential construction for 10%, and transportation for 9%. Thus, the volume of construction output increased from UAH 114 billion in 2022 to UAH 258 billion in 2025. The construction output index stood at only 35% in 2022 compared to 2016, which served as the base year for comparison; however, in 2023, the construction output index rose by 25%, in 2024 by 18.6%, and in 2025 by 11.3%. The asset structure of closed-end mutual funds consists primarily of accounts receivable and cash in current accounts (57.28%); real estate assets account for 18.14%. Conclusion. The author has identified the following key strategic objectives: ensuring that the construction developer has sufficient equity capital; ensuring the financial stability of the construction developer; attracting sufficient investment for construction projects (case studies); maintaining a diversified portfolio of savings; cooperation with investment funds and other professional participants in the financial and stock markets; a wide range of completed construction projects of various types—for civil and industrial use, as well as urban infrastructure facilities.