The Russian construction market expects recovery in 2018
According to the preliminary Rosstat (Federal Service for State Statistics) figures reported by the agency PMR, in 2017 Russia’s construction output fell by 1.4% year on year (compared to -2.2% in 2016), confirming the negative trend that began in 2013. This contrasted with a growth in value from 102.77 billion euros in 2016 to 107.65 billion euros in 2017.
According to the latest report published by EECFA (Eastern European Construction Forecasting Association), a small recovery is expected in 2018 and 2019 (+0.1% and +1.8% respectively), largely due to large-scale projects in the civil engineering sector.
The new housing construction sector saw a further year-on-year contraction in 2017. The number of new houses dropped from 1,167,000 in 2016 to 1,111,400 in 2017. At the same time the housing construction volume dropped to 78.6 million sq.m compared to the 80.2 million sq.m of 2016.
According to figures published by the Russian Agency for Housing Mortgage Lending, the sector is expected to recover in 2018 with a housing construction volume of 88 million sq.m. By 2023 the volume of housing stock in Russia will reach 4.1 billion sq.m, 18% more than in 2017. The forecasts are also good for 2019, with continued growth in demand for housing fuelled by the higher purchasing power of households and the availability of subsidised mortgage loans. According to EECFA figures, the percentage of households capable of purchasing homes is set to increase from 35.6% in 2016 to 55.2% in 2019, pushing up the number of housing sales to 980,000 (compared to 620,000 in 2016).
Residential building in Moscow
The building market in the Moscow region will be dominated over the next few years by plans to renovate tens of thousands of Khrushchev-era housing blocks along with the New Moscow development project which will expand the city by around 1,500 square km. Around 12 million sq.m of housing has been built in New Moscow in the last five years for a total investment of around 11.2 billion euros. A further 7 million sq.m of housing volume is expected to be built between 2018 and 2020 for a further investment of more than 7 billion euros. The Moscow authorities’ development plans for the area around the capital include infrastructure investments aimed at building 5 new subway stations and 130 km of roads over the next three years.