Construction in Russia – Key Trends & Opportunities to 2022

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Construction activity in Russia was weak during the review period (2013–2017), as a result of depressed economic conditions, low oil prices and sanctions imposed by Western countries following Russia’s involvement in the Ukrainian crisis. Public expenditure cuts implemented by the government, coupled with weak investor confidence, led to reduced infrastructure construction activity.

The industry is expected to recover over the forecast period (2018–2022), however, and register positive growth supported by the government’s effort to revitalize economic growth through investments in residential, transport and energy infrastructure projects.

Preparations for the Fifa World Cup in Russia in June 2018 have helped to support the retail, and leisure and hospitality building categories. The government estimates that over 2.0 million tourists will visit the country during the event.

Downside risks to the forecast remain pertinent: the economy is vulnerable to fluctuations in oil prices and western sanctions are expected to remain in place for some time. Nevertheless, improving global and domestic economic conditions are expected to support the industry’s expansion.

In real terms, the industry’s output value is expected to post a forecast-period CAGR of 2.66% in 2022, compared to -3.06% during the review period.

Scope

This report provides a comprehensive analysis of the construction industry in Russia. It provides:

  • Historical (2013-2017) and forecast (2018-2022) valuations of the construction industry in Russia, featuring details of key growth drivers.
  • Segmentation by sector (commercial, industrial, infrastructure, energy and utilities, institutional and residential) and by sub-sector
  • Analysis of the mega-project pipeline, including breakdowns by development stage across all sectors, and projected spending on projects in the existing pipeline.
  • Listings of major projects, in addition to details of leading contractors and consultants

Key Highlights

  • GlobalData expects the infrastructure construction market output to record a forecast-period CAGR of 7.98% in nominal terms, supported by the government’s effort to develop the country’s transport infrastructure. In December 2017, Russian Railways (RZD) announced plans to invest RUB580.0 billion (US$9.7 billion) in 2018 to upgrade and expand the country’s rail network. Furthermore, RZD plans to allocate RUB672.9 billion (US$11.1 billion) and RUB591.2 billion (US$9.7 billion) for the development of various rail infrastructure projects in 2019 and 2020 respectively.
  • In September 2017, the government approved the strategy for the development of automotive exports until 2025. Under the new strategy, the government aims to increase the country’s automotive industry exports to RUB285.8 billion (US$4.9 billion) by 2025. This is expected to include the manufacturing of 240,000 cars every year until 2025 which in turn will support the industrial construction market over the forecast period.
  • GlobalData expects the residential construction market to retain its leading position over the forecast period, with a share of 37.4% of the industry’s total value in 2022. In December 2017, the government allocated RUB600.0 billion (US$10.3 billion) until 2022 as subsidized mortgage loans to young families. According to the projections of the Agency for Housing Mortgage Lending, the government’s initiative is expected to provide housing loans at low interest rates to over 600,000 families, which is in turn expected to drive the construction of new housing units on a 13.0 million m2 area by 2022.
  • In line with the increasing demand for electricity, in June 2017 the Government of the Krasnoyarsk region launched the Electric Power Industry Development Program. This involves a total investment of RUB8.2 billion (US$140.0 million) and includes the construction of five substations and the reconstruction of two substations, transmission lines facilities and power grid facilities in Krasnoyarsk. Upon its successful completion in 2022, this program will generate 40.0MW of energy.
  • The total construction project pipeline in Russia, as tracked by the Construction Intelligence Center (CIC), including all mega projects with a value above US$25 million, stands at RUB89.2 trillion (US$1.5 trillion). The pipeline, which includes all projects from pre-planning to execution, is skewed to late-stage projects, with 58.0% of the pipeline value being in projects in the pre-execution and execution stages as of April 2018.

Reasons to buy

  • Identify and evaluate market opportunities using GlobalData's standardized valuation and forecasting methodologies.
  • Assess market growth potential at a micro-level with over 600 time-series data forecasts.
  • Understand the latest industry and market trends.
  • Formulate and validate strategy using GlobalData's critical and actionable insight.
  • Assess business risks, including cost, regulatory and competitive pressures.
  • Evaluate competitive risk and success factors.

Table of Contents

1 Executive Summary

2 Construction Outlook: At-a-glance

3 Latest News and Indicators

4 Key Drivers and Risks

4.1 Economic Performance

4.2 Political Environment ...

1 Executive Summary

2 Construction Outlook: At-a-glance

3 Latest News and Indicators

4 Key Drivers and Risks

4.1 Economic Performance

4.2 Political Environment

4.3 Demographics

4.4 Risk Profile

5 Construction Outlook

5.1 All Construction

5.1.1 Outlook

5.1.2 Project analytics

5.2 Commercial Construction

5.2.1 Outlook

5.2.2 Project analytics

5.3 Industrial Construction

5.3.1 Outlook

5.3.2 Project analytics

5.4 Infrastructure Construction

5.4.1 Outlook

5.4.2 Project analytics

5.5 Energy and Utilities Construction

5.5.1 Outlook

5.5.2 Project analytics

5.6 Institutional Construction

5.6.1 Outlook

5.6.2 Project analytics

5.7 Residential Construction

5.7.1 Outlook

5.7.2 Project analytics

6 Key Industry Participants

6.1 Contractors

6.2 Consultants

7 Appendix

7.1 What is this Report About?

7.2 Definitions

7.3 About GlobalData

7.4 About CIC

7.5 Disclaimer

List of tables

Table 1: Russia, Key Economic Indicators

Table 2: Russia, Construction Output Value (nominal, RUB Billion)

Table 3: Russia, Construction Output Value (nominal, US$ Million)

Table ...

Table 1: Russia, Key Economic Indicators

Table 2: Russia, Construction Output Value (nominal, RUB Billion)

Table 3: Russia, Construction Output Value (nominal, US$ Million)

Table 4: Russia, Top Commercial Construction Projects by Value

Table 5: Russia, Top Industrial Construction Projects by Value

Table 6: Russia, Top Infrastructure Construction Projects by Value

Table 7: Russia, Top Energy and Utilities Construction Projects by Value

Table 8: Russia, Top Institutional Construction Projects by Value

Table 9: Russia, Top Residential and Mixed-Use Construction Projects by Value

Table 10: Russia, Key Contractors

Table 11: Russia, Key Consultants

Table 12: GlobalData Construction Market Definitions

Table 13: Construction Risk Index Ratings and Scores

List of figures

Figure 1: Key Markets, Construction Output Growth Matrix and Risk Matrix

Figure 2: Russia, Construction Projects Pipeline by Sector (RUB Billion)

Figure 3: Russia, Risk ...

Figure 1: Key Markets, Construction Output Growth Matrix and Risk Matrix

Figure 2: Russia, Construction Projects Pipeline by Sector (RUB Billion)

Figure 3: Russia, Risk Comparison, Q1 2018

Figure 4: Russia, Risk Comparison Review

Figure 5: Russia, Construction Output Value (Real, US$ billion, 2017 prices and exchange rate)

Figure 6: Russia, Construction Output Value, Growth Matrix

Figure 7: Russia, Construction Output Value, by Sector (RUB Million), 2013–2022

Figure 8: Russia, Construction Projects Pipeline, Projected Annual Spending by Stage (RUB Million), 2017–2022

Figure 9: Russia, Construction Projects Pipeline, Value by Stage (RUB Million)

Figure 10: Russia, Commercial Construction Output by Project Type (RUB Million), 2013–2022

Figure 11: Russia, Commercial Construction Projects Pipeline, Value by Stage (RUB Million)

Figure 12: Russia, Commercial Construction Projects Pipeline, Projected Annual Spending by Stage (RUB Million)

Figure 13: Russia, Industrial Construction Output by Project Type (RUB Million), 2013–2022

Figure 14: Russia, Industrial Construction Projects Pipeline, Value by Stage (RUB Million)

Figure 15: Russia, Industrial Construction Projects Pipeline, Projected Annual Spending by Stage (RUB Million)

Figure 16: Russia, Infrastructure Construction Output by Project Type (RUB Million), 2013–2022

Figure 17: Russia, Infrastructure Construction Projects Pipeline, Value by Stage (RUB Billion)

Figure 18: Russia, Infrastructure Construction Projects Pipeline, Projected Annual Spending by Stage (RUB Million)

Figure 19: Russia, Energy and Utilities Construction Output by Project Type (RUB Million), 2013–2022

Figure 20: Russia, Energy and Utilities Construction Projects Pipeline, Value by Stage (RUB Billion)

Figure 21: Russia, Energy and Utilities Construction Projects Pipeline, Projected Annual Spending by Stage (RUB Million)

Figure 22: Russia, Institutional Construction Output by Project Type (RUB Million), 2013–2022

Figure 23: Russia, Institutional Construction Projects Pipeline, Value by Stage (RUB Billion)

Figure 24: Russia, Institutional Construction Projects Pipeline, Projected Annual Spending by Stage (RUB Million)

Figure 25: Russia, Residential Construction Output by Project Type (RUB Million), 2013–2022

Figure 26: Russia, Residential Construction Projects Pipeline, Value by Stage (RUB Million)

Figure 27: Russia, Residential Construction Projects Pipeline, Projected Annual Spending by Stage (RUB Million)

Figure 28: Russia, Headquarters of Key Contractors (% of Total Project Pipeline)

Figure 29: Russia, Headquarters of Foreign Contractors (% of Project Pipeline with Foreign Contractor)

Figure 30: Russia, Headquarters of Key Consultants (% of Total Project Pipeline)

Figure 31: Russia, Headquarters of Foreign Consultants (% of Project Pipeline with Foreign Consultants)

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