The construction industry in Russia is expected to grow at a compound annual growth rate (CAGR) of 2.52% from 2016 to 2020, indicating a recovery after shrinking by 2.19% during 2011-2015, according to a report by Timetric. The growth will be led partly by new investments in railway.
Titled ‘Construction in Russia – Key Trends and Opportunities to 2020‘, the report highlights how the construction industry will be impacted by investments in the railway sector, following recent decreases due to currency depreciation, Western sanctions, insufficient foreign investment, volatile global oil prices, and an unfavourable business environment.
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To improve and modernise the country’s infrastructure, the government has announced plans to expand high-speed railways. Major Russian cities including Moscow, St. Petersburg, Samara, Krasnodar, and Novosibirsk will be linked via the construction of 11,000km of lines by 2030. The projects will be implemented through public-private partnership (PPP).
In addition, the authorities plan on investing RUB11.6t ($364.4bn) to develop the rail, road, sea, and inland-water infrastructure, according to its Development of Transport System of Russia (2010-2020) programme. These infrastructure will also receive an impetus from the government under the Socio-Economic Development 2020 programme.
Russian authorities are also focusing on affordable housing, institutional construction and leisure areas, as well as the hospitality segment to boost the country’s construction industry.
However, the Timetric report cautions that the industry will shrink further by approximately 1% in 2016 before it starts to regain momentum. The protraction of adverse conditions may also dampen the expected recovery during the initial part of the forecast period.
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