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Russia’s construction market has been booming in recent years driven by the nation’s rapid rate of economic growth. The boom is being experienced across all areas of building and construction, including residential, industrial and commercial categories, and has been strongly boosted by both accelerating private demand and public policy pressure.
Considerable opportunities exist to establish a market presence and to work also with Russian companies across all aspects of the industry. Joint ventures as well as direct supply of technology, products and services across a range of market niches are worth exploration.
Housing: A National Priority
President Putin in his 2007 “state of the nation” address identified housing as one of four
With the ongoing construction boom, the Russian building industry is already stretched to capacity, and more resources from outside will be required. Australian building systems, whilst not widely known, would be well received, particularly if they can demonstrate improved productivity and cost efficiencies can be achieved.
As an indication of the magnitude of requirements in the housing section of the market, in 2006 there were 53 million households in Russia in a total population of around 142 million people. The total housing stock, however, was not quite 50 million units — a shortfall of at least 3 million units. Almost 79% of these households are concentrated in cities, where over 76% of people live in apartments.
In the commercial construction market the pace of development is at least as quick, with some of the world’s largest and most modern buildings either on the drawing boards or under construction. Moscow’s skyline is being transformed by some of the world’s most impressive structures.
The Federation Tower complex, currently under construction is designed to be both the tallest building in Europe and Europe’s first “supertall” building. It was designed by the German first NPS Tchoban Voss. It is scheduled for completion in 2008. Total construction costs are estimated at least US$530 m.
Another massive development is the Moscow Tower, designed by Sir Norman Foster, which is expected to stand at 618 meters. All are part of the Moscow International Business Centre complex.
The most successful development companies in the Moscow region include
Moscow represents a very competitive international market, and firms from as far a field as China and Turkey are active in the market. There are opportunities in other regions of Russia, such as the Russian Far East. However, it is recommended that you discuss any potential partners with Austrade, who can assist check their credentials.
In the Russian Far East, Austrade Vladivostok can be of particular assistance in advising of the many major construction activities now underway and in providing recommendations on the best ways to approach this market.
It should be noted that the Russian StateCommittee for Housing Construction and Utilities (Gosstroy) administers regulation and coordination within the building and construction sector nationwide. There are some 130,000 building and building materials organisations operating within this regulated system.
For further information on the Russian building market, see the following websites:
Building materials industry in Russia
The building materials market is one of the most dynamic in the Russian economy. The domestic industry has begun to recover in recent years and become more competitive compared with imported products. The domestic building materials sector contributes some 3% of Russia’s total industrial output and employs over 680,000 people. Implementation of imported technologies have made a big contribution to the industry, although there are a number of categories of finished goods, such as floor coverings, ceramic tiles and sanitary ware, where imports remain a major factor in the market.
With increased affluence the Russian consumer nevertheless has a preference for imported products and style and quality are particularly important in the key urban markets of Moscow and St Petersburg.
The need for quality raw materials
Reliable supply of quality raw materials is also of interest. Russian quarries, for example, have traditionally suffered from low levels of productivity. Investment in quarrying technology has lagged industry needs. Transfer of production skills and technology is still required on a large scale. This skill gap also potentially presents opportunities for Australian companies with the requisite expertise.
Industry priorities
Other sectors of potential interest include:
- air-conditioning, heating, ventilation and refrigeration technology and equipment
- bathroom products, plumbing and sanitary ware
- ceramics and stone
- textiles for upholstery and curtains
- flooring products — including carpets, tiles and vinyl flooring and natural fibres
- general construction tools and equipment.
For Australian companies, Russia presents significant opportunities in the building materials industry, particularly for the provision of modern production equipment, technology transfer and the development of joint ventures.
There are a number of major trade fairs and exhibitions in Russia and elsewhere in Europe that attract the attention of leading Russian companies.
Austrade Business Development Managers in Moscow and Vladivostok are ready to help you investigate the many opportunities of the Russian market.