Russia Construction Market Size, Trend Analysis by Sector, Competitive Landscape and Forecast to 2028

Following an annual growth of 7% in 2023, GlobalData expects the Russian construction industry to contract by 4.7% in real terms in 2024, owing to rising Western sanctions, coupled with rising material costs and interest rates, a growing budget deficit, falling government revenues and an exodus of skilled workers. Average construction material prices increased by 3% year-on-year (YoY) in 2023 according to Federal State Statistics Service (Rosstat). In addition, the price cap on Russian crude oil set by the Group of Seven Countries (G7) in December 2022, has plummeted the government’s oil and gas revenues 24% YoY in 2023, according to the Russian Ministry of Finance. But Russian oil and gas has been entering the global market, as intermediary countries are used to refine and produce crude oil and gas, meaning revenue to Russia has not been as negatively impacted by sanctions as intended. Similar methods are being used for the export coal, iron, steel and gold, while these methods are used for the import of military equipment, machinery, technologies and consumer goods. The falling government revenue is likely to impact the progress of certain public infrastructure projects. Additionally, under new federal budget plans for 2024-26 that got signed into law by the President in November 2023, the military spending for 2024 rose by 29% compared to 2023 to reach RUB12.8 trillion ($140 billion), thereby reflecting the continuation of the protracted war which can significantly dampen investor sentiment, hindering investment in the construction industry and stalling its growth.

Over the forecast period, GlobalData expects the Russian construction industry to register an annual average growth rate of 3.2% from 2025 to 2028, assuming political stability and continuation of investment flows into the construction industry, coupled with government investment in infrastructure, residential and renewable energy projects. In March 2024, the state-owned nuclear power company Rosatom, reported its target to have an installed capacity share of non-fossil fuel energy sources of 50% by 2030, and achieve net zero emissions by 2050 which will support renewable energy infrastructure. As part of the President’s pre-election promises, in February 2024, the President promised to invest RUB10 trillion ($109.9 billion) for the development of heavy infrastructure in the country by 2030. Of the total, RUB4.5 trillion ($51.2 billion) will be spent for improving public infrastructure and RUB250 billion ($2.8 billion) will be spent to develop airport infrastructure. Growth over the forecast period will also be supported by the government’s focus on investing RUB15.9 trillion ($224 billion) in the development of 4,000km of new roads, and expansion of another 3,000km of roads from two to four lanes by 2027. Of the total, RUB5.4 trillion ($88 billion) will be provided by the Russian Federal Road Fund, RUB7.2 trillion ($115 billion) by regional funds, with another RUB436 billion ($7 billion) to be provided by the Russian National Welfare Fund. Forecast period growth of the construction industry will also be supported by the RUB1 trillion ($11.8 billion) Tula Oblast Development Program which was launched by the government in January 2023 for the development of sports and educational infrastructure in Tula region by 2026.

GlobalData’s Construction in Russia – Key Trends and Opportunities to 2028 (Q1 2024) report provides detailed market analysis, information, and insights into the Russian construction industry, including –
– The Russian construction industry's growth prospects by market, project type, and construction activity
– Critical insight into the impact of industry trends and issues, as well as an analysis of key risks and opportunities in the Russian construction industry
– Analysis of the mega-project pipeline, focusing on development stages and participants, in addition to listings of major projects in the pipeline.

Russia Construction Market Segmentation by Sectors

Residential construction was the leading sector in the Russia construction market in 2022

The key sectors in the Russia construction market are commercial construction, industrial construction, infrastructure construction, energy and utilities construction, institutional construction, and residential construction. In 2022, the residential construction sector was followed by energy and utilities construction.

Residential construction: The project types in this sector include single-family housing and multi-family housing. The government’s focus on increasing investment to build affordable houses for middle- and low-income families will support the sector growth during the forecast period.
Infrastructure construction: The project types in this sector include rail infrastructure, road infrastructure, and other infrastructure projects. Investments in the construction of road and railway infrastructure projects during the forecast period will support the sector growth.

Energy and utilities construction: The project types in this sector include electricity and power, oil and gas, telecommunications, sewage infrastructure, and water infrastructure. Government investments in electricity, water, and telecommunication infrastructure projects will drive the sector growth between 2024 and 2027.

Commercial construction: The project types in this sector include leisure and hospitality buildings, office buildings, outdoor leisure facilities, retail buildings, and other commercial construction. Investment in logistic centers, theme parks, and hotels will provide support from 2025.

Industrial construction: The project types in this sector include chemical and pharmaceutical plants, manufacturing plants, metal and material production and processing plants, and waste processing plants. The sector will recover in 2025 assuming a stable political environment along with an increase in investments in the manufacturing and automotive sub-sectors.

Institutional construction: The project types in this sector include educational buildings, healthcare buildings, institutional buildings, research facilities, and religious buildings. Public and private sector investments in the expansion of the country’s education and healthcare capacity will fuel the growth of this sector in the coming years.

Russia Construction Market Analysis by Sectors, 2022 (%)

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Russia Construction Market - Competitive Landscape

China National Chemical Engineering Co Ltd emerged as the leading contractor and NIPIgazpererabotka as the leading consultant in the Russia construction market in 2022

A few of the leading contractors in the Russia construction market are:

• China National Chemical Engineering Co Ltd
• Ronesans Holding AS
• Maire Tecnimont SpA
• State Atomic Energy Corporation Rosatom
• Gazprom

Domestic contractors account for most of the project pipeline in the Russia construction market. Firms based in China are the dominant contractors.

Russia Construction Market Analysis by Contractors, 2022 (%)

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A few of the leading consultants in the Russia construction market are:

• NIPIgazpererabotka
• JGC Holdings Corp
• STC Pozhinzhiniring
• TechnipFMC Plc
• State Atomic Energy Corporation Rosatom

Consultants with headquarters in Russia are involved in most of the project pipeline by value. Firms based in the UK are involved in the majority of the project pipeline.

Russia Construction Market Analysis by Consultants, 2022 (%)

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Russia Construction Market – Latest Developments

• In August 2023, the President announced his plan to sign free trade agreements with North African countries, Algeria, Morocco, Tunisia, and Egypt. Despite Western economic sanctions, the government is focusing to construct a new 650km Moscow-St. Petersburg high-speed rail project with an estimated cost of RUB1.3 trillion ($18 billion) by 2027.
• In June 2023, the Duma – which is the lower house of the Russian parliament – approved draft laws on the creation of Free Economic Zones (FEZ) in the Donetsk, Luhansk, Kherson and Zaporozhye regions of Russia and will be operational until 2050.

Segments Covered in the Report

Russia Construction Sectors Outlook (Value, $ Billion, 2018-2027)

• Commercial Construction
• Industrial Construction
• Infrastructure Construction
• Energy and Utilities Construction
• Institutional Construction
• Residential Construction

Scope

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

• Historical (2019-2023) and forecast (2024-2028) 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

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.