International defence companies have overtaken the IT sector as the main source of demand in Ukraine’s office property market, according to a new analysis by real estate consultancy UTG, reported Ukraine Business News.

The study found that the number of representative offices of international companies in Ukraine continued to decline in the third quarter, falling to 616 from 627 in 2021, before the war began. The contraction reflects an ongoing exodus of foreign firms since the war began, particularly in non-defence sectors.

Once the engine of the country’s white-collar economy, the IT industry has seen its contribution to Ukraine’s GDP fall from 5.42% in 2022 to 3.42% in 2024. IT service exports also dropped from $7.52bn in 2022 to $6.38bn in 2024.

By contrast, Ukraine has become an increasingly important hub for international defence firms seeking to co-develop and test weapons systems. Global manufacturers including Germany’s Rheinmetall and KMW, Turkey’s Baykar, Britain’s BAE Systems, and US-based Northrop Grumman are either launching or negotiating new production facilities, research centres, and administrative offices in Ukraine.

Companies from Norway, Latvia, Denmark, France, Italy, Spain and Poland are also participating, creating new jobs and driving demand for modern office and industrial space. Analysts say the shift marks a structural transformation in Ukraine’s commercial real estate market, reflecting the country’s growing role in Europe’s defence supply chain.