Russian construction market to grow 9% in 2013

The construction market in Russia will grow 9% year-on-year in 2013 to reach output of RUB6.6 trillion (€162 billion), reflecting increasing government investment in infrastructure, according to Research company PMR.

PMR said the market in 2012 was expected to see 4.1% year-on-year growth to RUB5.6 trillion (€139 billion), up from total output of RUB5.1 trillion (€124 billion) in 2011.

PMR said, “The construction industry remains one of the key catalysts of economic growth in Russia. Its role is expected to strengthen in the years to come as the government aims to undertake multi-trillion rouble investments in order to modernise and expand the country’s infrastructure.”

During the first six months of 2012, according to PMR, Moscow maintained its leading position in terms of construction output value among Russia’s federal areas, with an 11.4% market share. The next two leading regions in terms of construction output were the Krasnodar Territory and St Petersburg.

PMR said that, throughout this year, the Russian construction sector had been kept going mostly by civil engineering projects supported by the public sector, with an additional boost provided by large-scale preparations for the 2014 Sochi Winter Olympics.

Civil engineering projects are responsible for more than 50% of the country’s construction output, and PMR said the road construction industry had been one of the major consumers of public investment in recent years.

Meanwhile, Russia’s non-residential construction market continues to gain ground. PMR said the most substantial increase during the first half of 2012 was seen in educational buildings – a sector which grew 40% year-on-year – followed by commercial and industrial projects, which saw 30% growth each.

On the residential side, 26.1 million m² of housing was initiated in the first six months of 2012, up 7% year-on-year. PMR said it was “highly unlikely” that the rate would lose steam in the second half of the year.

Regulation

The Russian government has also been concentrating on improving the environment for doing business in Russia, and PMR highlighted several legal initiatives it had approved in recent months in order to boost the construction industry.

In August 2012, the government approved the Construction Road Map plan, which reduces the number of procedures which will be needed to obtain a building permit from the current 51 to 15 by 2015, and to 11 by 2018. The period needed for all of these mandatory processes is also planned to be reduced from the current 423 days to 130 days by 2015, and to 53 by 2018.

In addition, the Residential Construction Support Fund plans, through tenders, to use its reserves to provide land, free-of-charge and for a fixed period, for the construction of economy class homes. Sites will be awarded to the company offering the lowest sale price for its proposed properties.