Russian market remains stagnant

By Sarah Ann McCay15 April 2014

The Russian construction industry’s slowdown looks set to continue, according to findings from European market research firm PMR.

According to PMR, Russian construction output contracted by 1.5% year-on-year in 2013, after a 2.4% expansion achieved a year before.

PMR reported that the civil engineering construction output was projected to post a marginal decline (-0.2%) in 2014, after a 4.1% contraction in 2013.

PMR attributed the slowdown to poor performance in the civil engineering construction sector, as new developments continued to be postponed.

A large share of civil engineering construction output is generated by state-funded transport infrastructure construction projects, as well as by incentives rolled out by companies in the oil and gas, and mining and metallurgical sectors. In 2013, RUB596 billion (€14 billion) was disbursed on the implementation of the 2010 to 2020 Transport System Development Programme, which was 0.1% less than the amount allocated in 2012.

In 2013, 35 of Russia’s 83 administrative regions recorded a decline in construction activity, compared with only 25 in decline in 2012.

A programme published by the Ministry of Economy in the third quarter of 2013 forecasting the social and economic development of the Russian Federation during the period 2014 to 2016 envisages its spending 2.5% of GDP on transport infrastructure in 2013. This figure is to remain unchanged in 2014 and 2015, and to be reduced to 2.4% in 2016.

However, it is not all bad news. Russia’s residential construction sector saw the number of new homes completed in 2013 increase by 10.3% year-on-year to 912,100, the largest amount in more than 20 years. In terms of floor space put into use in 2013, there was an increase of 5.6% to 69.4 million m² - again the highest figure since 1989.

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