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The Russian growth engine
REGIONAL REPORT: CIS
november 2013
international
construction
>
The Russian
growth engine
Solid growth is forecast for the Russian
construction market, but there are risks
as well as opportunities.
Helen Wright
reports.
R
ussia’s construction industry is a key driver of overall
growth in the country – the largest economy in the CIS.
Thanks to government spending and private projects in
the oil and gas, infrastructure and housing sectors, the country’s
construction market has been forecast to see up to +9% year-
on-year growth in 2013, reaching a value of RUB 6.6 trillion
(US$ 220 billion), according to research company PMR.
Longer-term forecasts also paint a solid picture – a report
from Global Construction Perspectives and Oxford Economics
estimates that Russia’s construction market will grow +5% a year
between now and 2025.
A sizeable chunk of the medium-term growth is down to
investment supporting upcoming international sporting events
– the 2014 Sochi Winter Olympics, 2016 World Hockey
Championship, and the 2018 FIFA World Cup.
RUB 664 billion (US$ 20.6 billion) is expected to be spent in
Russia over the next five years in preparation for the 2018 World
Cup alone, while estimates have put the total cost of the Sochi
Olympics as high as US$ 50 billion.
While all this investment and long-term potential represent a
clear opportunity for international construction community, it
does not come without risks. It is no secret that Russia can be a
difficult place to do business, for a range of reasons.
For instance, the country scored an average of four on this year’s
Transparency International Global Corruption Barometer, where
a score of one means not at all corrupt and five means extremely
corrupt.
Sochi overspend
In fact, Russian opposition politician Boris Nemtsov has alleged
that corruption among officials and businesses working on the
Sochi Winter Olympics has added US$ 30 billion to the cost of
constructing venues and infrastructure for the event.
He said the original budget was around US$ 12 billion, and the
estimated US$ 50 billion price tag as it now stands would make
A 750 tonne
capacity
Manitowoc
18000 installing
two 300 tonne
coker units at
an oil refinery
in southern
Siberia.
Vinci won the contract to construct the 27,000-seat Dynamo
Moscow stadium, 5 km northwest of central Moscow.
The
€
1.1 billion (US$ 1.5 billion) project is scheduled for
completion in 2017.
