Light at the end of tunnel for the Russian construction industry

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) October 30, 2009 --

According to the “Construction sector in Russia 2009 – Development forecasts for 2009-2012” report recently published by PMR , a research and consulting company, the situation on the Russian construction market began to deteriorate in the second half of 2008 and the slowdown deepened towards the end of the year. Yet thanks to healthy growth figures posted in H1, growth figures for the entire year remained strong. “Without the buffer of a strong first six months, 2009 has witnessed a fully fledged construction crisis, with output, employment and other key indicators for the industry falling sharply.”, according to Robert Obetkon, a Senior Construction Analyst at PMR and the author of the report. In rouble terms and at the time of publication, the Russian construction industry contracted by 18.4% in the first three quarters of 2009. In dollar terms, however, and due to the depreciation of the rouble, the value of the industry plummeted to just $81bn for the period Q1-Q3 2009 – down from $129bn in the same period one year earlier.

“While residential and non-residential construction activity will remain relatively subdued at least for the next year due to ongoing difficulties in securing financing, most construction contracts will be related to infrastructure development projects.”, says Robert Obetkon. These will serve to boost the overall level of construction activity in the country.

Increased capital expenditure on road and railway construction, as well as airport expansion, will be driven by the federal programme aimed at modernising the country's transport system between 2010 and 2015. This programme will require a total investment of $420bn, of which $147bn will be sourced from the federal coffers.

The projects that will provide a boost to the construction industry in the upcoming years include the first public-private partnership (PPP) projects, signed in 2009. These include the $1.5bn contract for the construction of the first section of a toll motorway between Moscow and St. Petersburg, and the $2.1bn contract for the upgrade of Pulkovo Airport.

Apart from transport infrastructure , substantial investment is also planned in the energy sector . The main projects include the $1.2bn reconstruction of the Sayano-Shushenskaya Hydroelectric Power Plant and the construction of several nuclear power plants. Other major infrastructure projects planned in Russia include the new spaceport, Vostochny Cosmodrome, the construction of which should commence in 2011 and is expected to cost $12.5bn.

Russia’s preparations for the Sochi 2014 Winter Olympics and the APEC Summit to be held in Vladivostok in 2012 are also serving to support the country’s construction industry.

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