Russia under constructionA negative trend in construction growth rates in Russia was visible in 2018, which was largely due to the Fifa World Cup hosted by the country that year. The industry actively benefitted from governmental expenditure on infrastructural projects related to the sporting event, which resulted in the value of construction works increasing to 838 billion Russian rubles in 2018, up from 454 billion Russian rubles recorded in 2010.
When looking at the residential construction sector, a certain instability can be observed. However, in 2019, the total volume of construction area reached nearly 80 million square meters. These positive market dynamics were reflected in the profitability of construction enterprises as well. PIK Group, which mainly focuses on comfort-class housing projects primarily located in Moscow, was the largest Russian real estate developer by area under construction. The LSR Group, based in Saint Petersburg, ranked second with 3.8 million square meters of surface under development. By 2025, apartment commissioning volume in Russia is expected to exceed 84 million square meters.
Building costs and the coronavirus (COVID-19) impact on the industryThe average housing construction cost in Russia was marked at its highest in the Central federal district, reaching 61 thousand Russian rubles per square meter. Conversely, the North Caucasian federal district had the most affordable building tariffs as of 2018. As for the cost of construction materials, prices varied across federal districts. With an average construction cost of nearly 56 thousand Russian rubles per square meter, monolith was the most expensive material for construction in Russia.
The Russian construction sector has been hit hard by the COVID-19 outbreak. As a result, the industry is experiencing severe disruptions on construction sites. Many residential and non-residential projects, as well as major government projects like Arctic LNG 2 were put on hold. However, despite the negative impact of the pandemic on the sector, it is still expected to rebound in 2020.