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Construction sector in Russia H2 2013

  • Published:
  • 199 Pages
  • PMR

This publication keeps industry professionals current on activity and conditions in the overall Russian construction market and the non-residential, commercial, civil engineering and residential segments of the market.

The report offers the latest market news and trends analysis, macroeconomic developments and investment outlooks, gathered from a diverse range of regional and international sources.

Forecasts for the period 2013-2016 are provided, along with full profiles of companies leading the Russian construction market in size, earnings and activity.

This report delivers business information on a well-rounded selection of topics, including

  • Detailed descriptions of current conditions in all segments of Russian construction
  • Reliable forecasts for all market segments to 2016
  • The impact of trends on market growth, project selection and labor and materials prices
  • The competition: projects, finances and prospects of the largest companies active in Russian construction
  • Production: total residential units slated for completion by 2016.

This document answers key questions about current market conditions, such as

  • What is the current value of the entire market? Of each main segment? How are these numbers expected to change by 2016?
  • How many construction companies are currently competing in the Russian market? Which are their most noteworthy projects?
  • In which direction will prices move in the months ahead?
  • What is planned in terms of new road, railway and residential construction projects by 2016?
  • Overview of major construction initiatives to be implemented under preparation for the 2018 FIFA World Cup
  • Which developments are making market news in terms of regulation in Russian construction?
  • Which are the most influential trends in the non-residential segment?

Did you know

  • About 1.5tr (€35bn) will be spent to develop Sochi as a mountain resort, including RUB 214bn (€4.9bn) on sporting venues for the 2014 Winter Olympics.
  • In Q3 2013, the industry's business confidence index reached its highest level for five years.
  • In 2012 cement production totalled 61.5 million tonnes, the highest level seen since 1992.
  • Only 41% of federal and 37% of regional roads in Russia meet regulatory compliance requirements.
  • About 21% of the fixed assets at hydroelectric power plants were put into operation more than fifty years ago.
  • Housing stock per capita in Russia is only 23.4 m2.
  • Only 41% of the country's transmission lines and substations are within useful life limits.
  • Construction cost of a 5.9 km long Formula 1 circuit, which is being developed at Sochi Olympic Park, is estimated at RUB 11bn (€255m).

Selected companies analysed in this report include

Adamant Holding, AFI Development, ARKS, Brisa, Crocus Group, DSK Avtoban, Engeocom, Eurocement, KM Group, Knauf, Mostotrest, NPO Mostovik, O1 Properties, PIK Group, PNK-Group, Raven Russia, Renaissance Construction, Renova Group, Russian Grids, RZhD, SGK-transstroyYamal, SK Most, Stroygazconsulting, SU-155, Tashir Group, TPS Nedvizhimost, Transstroy, Unitile Holding, Vinci, ZAO VAD.

This publication is a useful asset when

  • Initiating new construction operations in the Russian market
  • Expanding into a new segment
  • Building a successful business strategy
  • Engaging in mergers and/or acquisitions
  • Conducting competition research
  • Searching for reliable investment opportunities
  • Calculating corporate market shares
  • Estimating current and potential demand for building materials
  • Compiling market reports for manager and shareholder use.

It is targeted to meet the informational requirements of

  • Construction materials and machinery manufacturers
  • Foreign and domestic construction companies involved in the Russian market
  • Government agencies and embassies
  • Academics, researchers and business consulting specialists
  • Financial services specialists
  • Business consultants, analysts and research specialists.

Extract from this report

  • Deficient transport infrastructure in Russia will continue to urge federal and local authorities to increase spending on transport infrastructure construction projects across the country. In 2013, the World Economic Forum's 2013-2014 Global Competitiveness Report ranks Russia 93rd among 148 countries in terms of the quality of overall infrastructure (86th out of 133 countries in 2009). The quality of the country's roads took 136th position, down 18 places in four years; the quality of air transport infrastructure held 102nd place; and the quality of port infrastructure took 88th. Only the quality of railway infrastructure was placed higher at 31st.
  • At the end of Q2 2013, quality retail GLA per 1,000 inhabitants reached almost 110 m2 in Russia, significantly lower than the figures recorded in most EU countries. In 2010 this parameter had expanded to 128 m2 in Central Europe. The significant discrepancy between saturation levels in shopping centre space in Russia and those in Europe highlights the huge potential for the retail real estate market in Russia.
  • Only slightly more than 22% of Russia's housing stock has been put on the market since 1995. A significant share of housing has been in use for more than 50 years and requires repair or extensive modernisation.

Market commentary by expert

Russia's construction industry in Russia struggled in the first half of 2013, contracting year on year by1.9%. By September, the downward trend in construction activity eased, and for the nine months a 1.1% drop in construction output was recorded in the country. According to PMR estimates, the market was dragged down solely by the civil engineering construction sector. Russia's federal budget for 2013 was set based on a projected GDP growth of 3.7%. However, according to the performances achieved in the first three quarters, this year GDP is likely to expand by 1.8% at best.

Among the key factors behind this slowdown has been the poor performance in investment activity. Russian authorities projected investment in fixed capital to expand 2.5% in 2013, a figure unlikely to be achieved considering that in the first three quarters of the year investment in fixed capital contracted by 1.4%. The decline in investment has partly come after many Russian large companies scaled back their investment programmes for 2013. Furthermore, weak macroeconomic performances have forced public authorities to slash this year's projected spending on targeted state-run infrastructure development programmes.

Vitalie Iambla, Construction market Analyst

Table of Contents

I. Methodology

II. Executive summary

III. Key macroeconomic indicators

  • 1. Macroeconomic background
    • 1. GDP
    • 2. Gross value added in construction
    • 3. Gross fixed capital formation
    • 4. FDI
    • 5. Labour market
    • 6. Wages
    • 7. Consumption
    • 8. Inflation
    • 9. Oil prices
    • 10. Market outlook
  • 2. Demographics

IV. Construction overview

  • 1. Construction market value
  • 2. Construction companies
  • 3. Employment and wages
  • 4. Construction costs
  • 5. Business confidence in construction
  • 6. Building materials industry overview
    • 1. Production
    • 2. Prices
  • 7. Major legal changes
  • 8. Forecasts p

V. Civil engineering

  • 1. Overview
  • 2. Environmental protection-related projects
  • 3. Roads
    • 1. Avtodor
  • 4. Railway construction
  • 5. Airports
  • 6. Ports and internal waterways
  • 7. Investments in heavy industry
    • 1. Power generating industry
    • 2. Oil and gas industry
  • 8. Stadiums
  • 9. Forecasts

VI. Non-residential construction

  • 1. Overview
  • 2. Office construction
    • 1. Moscow
    • 2. St. Petersburg
  • 3. Shopping centres construction
    • 1. Moscow
    • 2. St. Petersburg
    • 3. Outside Moscow and St. Petersburg
  • 4. Logistics centres construction
    • 1. Moscow
    • 2. St. Petersburg
    • 3. Outside of Moscow and St. Petersburg
  • 5. Hotel construction
    • 1. Moscow
    • 2. St. Petersburg
  • 6. Forecasts

VII. Residential construction

  • 1. Housing stock
  • 2. Completed homes
  • 3. Residential construction in the regions
  • 4. Individual residential construction
  • 5. Residential construction development programme
  • 6. Housing prices
  • 7. Mortgage market
  • 8. Forecasts

VIII. Competitive environment

  • 1. Market competition
  • 2. Financial standing
  • 3. Latest mergers and acquisitions
  • 4. Key producers of building materials

IX. List of graphs

X. List of tables

XI. About PMR

List of graphs

  • 1. Construction output in Russia (RUB bn) and real change (%, y-o-y), 2009-2016
  • 2. GDP at current prices (RUB bn) and its real change (y-o-y, %) in Russia, 2006-2017
  • 3. Share of gross value added in construction to total GVA and real change in Russia (%), 2006-2012
  • 4. GDP and gross fixed capital formation in Russia, real change (%, y-o-y), 2006-2017
  • 5. Inflow of foreign direct investment to Russia ($ m), 2006-2012
  • 6. Unemployment rate, LFS in Russia (% of labour active population), 2006-2017
  • 7. Average monthly gross wages in Russia (RUB), real and nominal change (%, y-o-y), 2006-2017
  • 8. Average monthly wages (real change, %, y-o-y), household consumption (real change, %, y-o-y), and unemployment rate (% of labour active population), 2006-2017
  • 9. CPI change in Russia (%, y-o-y), 2006-2017
  • 10. Oil prices (Brent, $ per barrel), 2006-2017
  • 11. Urban population in Russia (as % of total population in '000), 2006-2012
  • 12. Population by age group (% of population in Russia), 2006-2012
  • 13. Construction output in Russia (RUB bn) and real change (%, y-o-y), 2006-August 2013
  • 14. Construction output in Russia (%), by leading regions, 2012
  • 15. Construction output in Russia (%), by leading regions, January-August 2013
  • 16. Number of construction entities in Russia ('000), 2001 and 2006-August 2013
  • 17. Average number of people employed in the construction industry in Russia ('000), 2006-2012
  • 18. Average nominal monthly wage in the construction industry in Russia (RUB) and nominal change (%, y-o-y), 2006-2012
  • 19. Producer price indices in construction in Russia (%, y-o-y), 2006-August 2013
  • 20. Business confidence index in the construction industry in Russia and EU countries (%), 2004-Q3 2013
  • 21. Average capacity use rate in the Russian construction industry (%), 2008-Q3 2013
  • 22. Main obstacles to doing business for Russian construction companies (% share of companies as a proportion of the total number), Q2 2012-Q3 2013
  • 23. Production and consumption of cement in Russia (million tonnes) and change (%, y-o-y), 2006-2013
  • 24. Construction output in Russia (RUB bn) and real change (%, y-o-y), 2009-2016
  • 25. Construction market breakdown in Russia (%), 2009-2016
  • 26. Fixed capital investment in environmental protection and sustainable use of natural resources in Russia (RUB bn), 2006-2012
  • 27. Distribution of spending on environmental protection-related fixed capital assets in Russia, by federal district (%), 2012
  • 28. Federal roads commissioned in Russia (km), 2002-2012
  • 29. Development of regional roads in Russia (km), 2002-2012
  • 30. Breakdown of regional road funds by type of projects (%), 2013
  • 31. Actual spending and needs according to regulatory requirements for regional road projects in Russia (RUB bn), 2012
  • 32. Spending on regional road projects in Russia (RUB bn), 2010-2013
  • 33. Roads operated by Avtodor, 2012
  • 34. Development of the M-1 Belarus highway in Russia (km), 2010-2020
  • 35. Infrastructure load and length of bottlenecks (km, as of 1 January of each year), 2005-2011
  • 36. Railway construction in Russia (km), 2005-2012
  • 37. Concept of the railway infrastructure development under preparation for the 2018 FIFA World Cup in Russia, including construction of high-speed routes
  • 38. Railway infrastructure, planned development in Russia, 2010-2030 78
  • 39. Planned construction of metro stations in Moscow (number of stations), 2009-2020
  • 40. Planned construction of metro lines in Moscow (km), 2009-2020
  • 41. Planned modernisation of metro stations in Moscow (number of stations), 2009-2020
  • 42. Air transport passenger traffic in Russia (million passengers), 2002-2012
  • 43. Completion of paved airport runways in Russia ('000 m2), 2002-2012
  • 44. Number of runways to be put into operation after reconstruction in Russia, 2013-2018
  • 45. Planned expansion of handling capacity of sea ports in Russia, cumulative result (million tonnes/year), 2011-2030
  • 46. Completion of seaport quays and offloading complexes in Russia (linear metres), 2003-2012
  • 47. Structure of installed capacity in Russia (%), by generation plants, August 2013
  • 48. Age structure of power generating facilities in Russia (%), 2012
  • 49. Age structure of the transmission and distribution infrastructure in Russia (%), 2012 93
  • 50. Electricity consumption in Russia within the UES of Russia (billion kWh), 2008-2019
  • 51. Breakdown of electricity consumption in Russian (%), by region, 2012 and 2019
  • 52. Generating capacities to be put into use within the UES of Russia (%), by company, 2013-2019
  • 53. Installed power generating capacity in Russia (GW), by type of power plant, 2012-2019
  • 54. Planned production of crude oil in Russia, 2012 and 2030
  • 55. Planned production of natural gas in Russia, 2012 and 2030
  • 56. Planned production of coal in Russia, 2012 and 2030
  • 57. Location of the 2018 World Cup host cities
  • 58. Civil engineering construction output in Russia (RUB bn) and real change (%, y-o-y), 2009-2016
  • 59. Breakdown of total commercial space commissioned in Russia (%), by federal districts, 2011
  • 60. Breakdown of total commercial space commissioned in Russia (%), by federal districts, 2012
  • 61. New supply of office space in Moscow ('000 m2), 2008-H1 2013
  • 62. New supply of office space in St. Petersburg ('000 m2), 2008-H1 2013
  • 63. Main obstacles to take-up of class-A space in new buildings and in those under construction in St. Petersburg, H1 2013
  • 64. Shopping centre GLA in Russia (million m2), in total and newly added, 2008-H1 2013
  • 65. Number and GLA ('000 m2) in shopping centres in Moscow, 2006-2012
  • 66. Number and GLA ('000 m2) of shopping centres in St. Petersburg, 2006-2012
  • 67. Take-up deals for warehouse space in Moscow (%), by type, 2011-H1 2013
  • 68. Take-up of warehouse space in Moscow (%), by business sectors, H1 2013
  • 69. Number of collective accommodation facilities in major cities in Russia, February 2013
  • 70. Total capacity of collective accommodation facilities in major cities in Russia ('000 beds), February 2013
  • 71. Saturation level of the collective accommodation facilities stock in major cities in Russia (number of beds/1,000 inhabitants), February 2013
  • 72. Expansion of Russia's hospitality industry, by number of hospitality units and room stock ('000), 2005-2011
  • 73. Non-residential construction output in Russia (RUB bn) and real change (%, y-o-y), 2009-2016
  • 74. Total housing stock in Russia (million m2, e-o-p), 2005-2012
  • 75. Old and dilapidated housing in Russia (million m2), 1996-2012
  • 76. Capital repair of housing space in Russia (million m2), 2000-2011
  • 77. Total number of homes built in Russia ('000 units) and change (%, y-o-y), 2006-August 2013
  • 78. Total floor area of residential space commissioned in Russia (million m2) and change (%, y-o-y), 2006-August 2013
  • 79. Completed housing in Russia, by source of funding (%), 2011-2012
  • 80. Newly commissioned homes in Russia (%), by number of rooms, 2011-2012
  • 81. Average size of homes built in Russia (m2), 2000 and 2005-2012
  • 82. Construction of residential floor space in Russia (%), by leading regions, 2012
  • 83. Construction of residential floor space in Russia (%), by leading regions, January-August 2013
  • 84. Individual construction of housing space as a proportion of total housing space completed in Russia (%), 2006-August 2013
  • 85. Total number of detached houses built by individuals in Russia ('000 units) and change (%, y-o-y), 2006-2012
  • 86. Total floor space of detached houses completed by individuals in Russia (million m2) and change (%, y-o-y), 2006-2012
  • 87. Planned volume of new residential space in Russia under the Affordable and Comfort Housing Programme (million m2), 2013-2020
  • 88. Economy class housings share of total residential space put into use in Russia (%), 2013-2020
  • 89. Average housing prices in Russia (RUB '000/m2, e-o-p), 2006-Q2 2013
  • 90. House Price Index changes in Russia (%, y-o-y, e-o-p), 2005-H1 2013
  • 91. Number of mortgage loans ('000) granted in Russia and change (%, y-o-y), 2008-H1 2013
  • 92. Value of mortgages granted in Russia (RUB bn) and change (%, y-o-y), 2006-H1 2013
  • 93. Average rate for mortgages granted in Russia (%), 2006-H1 2013
  • 94. Mortgages to be granted in Russia under the Affordable and Comfort Housing Programme ('000), 2013-2020
  • 95. Change in the average mortgage rate granted in roubles in Russia in comparison with CPI (+/- percentage points), 2013-2020
  • 96. Total housing floor area (million m2) and number of dwellings ('000) to be commissioned in Russia, 2014-2016
  • 97. Residential construction output in Russia (RUB bn) and real change (%, y-o-y), 2009-2016
  • 98. Production and consumption of cement in Russia (million tonnes) and change (%, y-o-y), 2006-2013
  • 99. Production and consumption of ceramic tiles in Russia (million m2), 2006-2013
  • 100. Production of ceramic tiles in Russia (%), by company, 2012
  • 101. Production of ceramic bricks in Russia (million units), 2006-2013
  • 102. Production and consumption of plaster boards in Russia (million m2), 2006-2013

List of tables

  • 1. Total population, its change, natural increase and net migration in Russia, 2006-2017
  • 2. Construction output in federal subjects of the Russian Federation, 2011-August 2013
  • 3. Change in production of basic building materials in Russia (%, y-o-y), 2007-August 2013
  • 4. Prices of selected materials procured by contractors in Russia, August 2013
  • 5. Main social and economic indicators in Russia, 2012-2016
  • 6. Environmental protection facilities completed in Russia ('000 m3/day), 2006-2012
  • 7. Major environmental protection projects in Russia, 2014-2020
  • 8. Density of paved roads in selected countries, 2011
  • 9. Total length of motor roads in Russia ('000 km), 1992, 1995, 2000, 2005, 2008-2012
  • 10. Completion of bridges in Russia, by federal district, 2012
  • 11. Construction and reconstruction of major federal roads in Russia, H1 2013
  • 12. Construction and reconstruction of secondary federal roads in Russia within the FTP, H1 2013
  • 13. Financing of regional road projects in Russia (RUB bn), 2012
  • 14. Planned completion of roads in Russia ('000 km, cumulative result since 2011), 2011-2030
  • 15. Planned spending on federal road development projects managed by Rosavtodor, by volume (RUB bn) and segment, 2013-2015
  • 16. Development of roads under management of GK Avtodor, by route, 2010-2012
  • 17. PPP projects planned by Avtodor for reconstruction of M-4 Don highway with implementation of toll road segments in Russia, 2013-2017
  • 18. Major projects related to the M-4 Don highway expected to be tendered in Q4 2013-2015 in Russia
  • 19. Ongoing projects involving construction of M-11 Moscow-St. Petersburg expressway in Russia, 2013
  • 20. Major road projects in Russia, 2014-2021
  • 21. Current state of RzhD's infrastructure, 2012
  • 22. Major railway projects in Russia, 2013-2020
  • 23. Major airports in Russia, 2013
  • 24. Major airport infrastructure projects implemented within the FTP 2010-2020 in Russia, H1 2013
  • 25. Planned funding for civil aviation construction and repair projects within the Development of Russia's Transport System programme (new version, RUB m), 2013-2018
  • 26. Major airport projects in Russia, 2013-2020
  • 27. Handling capacity and utilisation of port complexes in Russia, 2012 89
  • 28. Major infrastructure projects in Russia's seaports, 2012
  • 29. Seaport construction and internal waterway projects in Russia (RUB m), 2012-2015
  • 30. Development of Russia's Unified Energy System, 2013-2019
  • 31. Grid infrastructure and facilities commissioned in Russia (MVA, km), 2010-2012
  • 32. FSK-UES investment programme, 2013-2017
  • 33. Breakdown of the FSK-UES 2013-2017 investment programme (RUB bn), by investment segment, 2013
  • 34. Key investment projects to be put into use by FSK-UES in 2013-2015
  • 35. Consolidated investment programme of Russian Grids (RUB m), 2012-2017
  • 36. Major heavy industry projects in Russia, 2013-2030
  • 37. Estimated cost of one seat in stadiums in Russia, 2013
  • 38. Estimated cost of one seat in stadiums which are to host matches of the 2014 World Cup in Brasil, 2013
  • 39. Federal budget spending on construction and reconstruction of training sites for the 2018 World Cup (RUB m), 2013-2018
  • 40. Non-residential buildings completed in Russia, 2008-H1 2013
  • 41. Basic indicators for the Moscow office property market, Q2 2013
  • 42. Quality office buildings commissioned in Moscow (m2), H1 2013
  • 43. Largest deals concluded for office properties in Moscow, H1 2013
  • 44. Planned major business centre launches in Moscow, 2013
  • 45. Basic indicators for St. Petersburg office property market, Q2 2013
  • 46. Major planned business centre launches in St. Petersburg, H2 2013
  • 47. Large office construction projects in Russia, 2013-2020
  • 48. Largest shopping centres launched in Russia, 2012-H1 2013
  • 49. Major shopping centres opened in Russia, Q1-Q3 2013
  • 50. Shopping centres planned to be opened in Russia, Q4 2013-early 2014
  • 51. Shopping centres commissioned in Moscow, Q1-Q3 2013
  • 52. Major shopping centres commissioned in St. Petersburg, Q1-Q3 2013
  • 53. Large shopping centre construction projects in Russia, 2013-2015
  • 54. Basic indicators for Moscow warehouse property market, H1 2013
  • 55. Major new warehouse properties commissioned in Moscow and Moscow Province, H1 2013
  • 56. Major new warehouse properties expected on the market in Moscow and Moscow Province, H2 2013
  • 57. Major transactions concluded on the warehouse property market in Moscow, 2012-H1 2013
  • 58. Basic indicators for St. Petersburg warehouse property market, H1 2013
  • 59. Major transactions concluded on the warehouse property market in St. Petersburg, 2012-H1 2013
  • 60. Major new warehouse properties expected to be put on the market in St. Petersburg by the end of 2013-2014
  • 61. Total area of high-quality warehouse space in Russia, excluding Moscow and St. Petersburg, June 2013
  • 62. Large warehouse construction projects in Russia, 2014-2016
  • 63. Hotel room supply in Russia, by city, 2013 138
  • 64. Basic indicators for Moscow 3-to-5-star hotel market, H1 2013
  • 65. Large hotel construction projects in Russia, 2014-2018
  • 66. Administrative regions in Russia, by housing space per capita (m2), 2011
  • 67. Breakdown of completed residential buildings in Russia, by number of floors and total space (% of total), 2012
  • 68. Goals of the Construction Road Map in Russia, 2012, 2015 and 2018
  • 69. Total floor space of housing units completed in subjects of the Russian Federation, 2011-August 2013
  • 70. Large residential projects in Russia, 2013-2020 1
  • 71. Key targets of the Affordable and Comfort Housing Programme in Russia, 2011 and 2013-2020
  • 72. Russian regions with the widest gaps between housing prices and housing construction costs, Q2 2013
  • 73. Financial data of top 20 contractors in Russia (RUB m), 2008-2011
  • 74. Major residential property developers in Russia, 2011-2012
  • 75. Financial results of companies active on the construction and property markets in Russia, H1 2013
  • 76. Financial results of companies active on the construction and property markets in Russia, H1 2012
  • 77. Financial results of companies active on the construction and property markets in Russia, 2012
  • 78. Major deals in real estate properties in Russia, 2012
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