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Russia construction market: Almost 10% CAGR growth between 2007-2012
Construction in Russia - Key Trends and Opportunities to 2017 - a new market research report on 2014-03-14 11:51:02
The Russian construction industry recorded a nominal CAGR of 9.68% during the review period (2007–2012). Realizing the importance of modernizing infrastructure to achieve long-term growth, the government has announced large-scale investment in road and rail infrastructure. Construction related to the 2014 Winter Olympic Games and the 2018 FIFA World Cup is anticipated to support growth in all construction markets.

In particular, infrastructure construction is projected to remain the fastest-growing construction market over the forecast period (2012–2017). The Russian government has signed decrees to improve the nations housing situation; measures include the controlling of mortgage rates, commissioning the construction of affordable housing and providing land to developers free of charge.

Key Highlights

• Russias real GDP growth moderated from 4.3% in 2011 to 3.4% in 2012. Excluding a 7.9% decline in 2009 on account of the global financial crisis, the rate of growth in 2012 was the slowest since 1999. Russias economy is expected to grow by 3.3% and 3.6% in 2013 and 2014 respectively. Private consumption growth, supported by rising real wage gains and low unemployment rates, is anticipated to remain the nations key economic driver.

• The Russian construction industry recorded a nominal CAGR of 9.68% during the review period (2007–2012).

• Infrastructure was the largest construction market in Russia in 2012. The market was subject to several decades of under investment and has been struggling to support its own rapid growth since the early 2000s. Excessive bureaucracy and widespread corruption discourage foreign companies from establishing construction projects in Russia.

• Infrastructure demand will be framed by Russias hosting of a number of major events, including the 2018 FIFA World Cup. There are 11 host cities for this event, implying a broad demand for stadia, transport infrastructure and accommodation.

• Consumer spending accounted for 52.1% of Russias GDP in 2011. Russia will depend on domestic demand to maintain growth, as the Eurozone debt crisis will continue to adversely affect exports.

• Russias industrial output growth has fallen as a slowing domestic economy and weakening exports hurt demand. Despite high inflation rates, Russias central bank indicated that it could decrease its central interest rate in an attempt to stimulate growth.

• The regained buoyancy in the housing property market was a due to buyers hurrying to invest in property, viewing real estate as a secure long-term investment and sellers wanting to offload property fearing devaluation. By mid-2012, Russian property price growth was among the fastest in the world.

• The number of retail outlets in Russia is increasing at a rapid rate, and while the retail buildings category attracted substantial levels of investment, the office buildings category is anticipated to record strong levels of growth over the forecast period.

• The Russian education system has been subject to continual under investment and a decline in education standards since the breakup of the Soviet Union. The government has announced investments totaling RUB28 trillion (US$1 trillion) for the period 2012–2020 in the education sector. Driven by increased levels of investment, educational buildings is projected to be the fastest-growing category in the institutional construction market over the forecast period.

Report Scope

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

• Historical (2008-2012) and forecast (2013-2017) valuations of the construction market in Russia using the construction output and value-add methods
• Segmentation by sector (commercial, industrial, infrastructure, institutional and residential) and by project type
• Breakdown of values within each project type, by type of activity (new construction, repair and maintenance, refurbishment and demolition) and by type of cost (materials, equipment and services)
• Analysis of key construction industry issues, including regulation, cost management, funding and pricing
• Assessment of the competitive environment using Porters Five Forces
• Detailed profiles of the leading construction companies in Russia

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