Date: June 8-9, 2021 | Time: 10AM – 5PM
Venue: Five Star Hotel, Moscow

Market Scenario

RUSSIA's Building & Construction Market

Russia’s construction industry remains one of the key catalysts of economic growth in Russia. The industry is expected to grow further in the years to come as the government aims to undertake multi-billion-dollar investments in order to modernize and expand the country’s infrastructure. Alongside these government projects are private funded projects by organizations looking to profit from the many opportunities arising through the modernization of the country.

The Russian Ministry of Construction has released the draft Strategy for Developing the Construction Industry in Russia by 2030, which could lead to significant changes in the Russian building industry and the building and finishing materials and equipment market.

The strategy Developed by leading experts from a range of professional and governmental institutions, aims to promote the use of innovative materials and simplify the approval process for their use.

Vladimir Yakushev, Russian Minister of Construction and Housing and Communal Services, announced at the Time for Change residential real estate conference on 21 October, that multi-unit housing of about 44-46 million square meter is set to be commissioned by the end of 2019. Similar housing and non-residential projects are on the way projecting the demand till 2030.

Though Russia's construction industry has been severely affected by disruption caused by the COVID-19 pandemic, the industry will recover, however the industry will strongly recover with effect of the investments and developments projects for 2021-30 decade and expects an average annual growth of 2.6% between 2021-2024.

  • Annual Construction spending estimated around USD 1Tn
  • 20,000+ active Construction & Engineering projects
  • 4% Annual growth expected un 2021-30 decade.
  • 25000+ construction retail chains and distribution network

HVAC Market

Russian HVAC & Water supply market has always been interest to the international manufacturers and exporters because of the vast territories, huge population, and climate conditions requiring various types of equipment – from gas heating to solar panels and electric boilers, from air-conditioners to refrigeration systems, from industrial pipes to plumbing fittings.

The segments markets and demand are essentially connected with construction industry which impressive volume in residential sector has reached 3.2 billion sqm (93% are in private property). Building installation is accounted at 4 billion USD (2016) with stable 2.8% CAGR up to 2023. As a result, according to Ministry of Construction, in 2016, there were signed over 580 contracts on public utilities with total volume 1.1 billion USD.

HVAC industry and market are experiencing changes that promise great business growth opportunities. In 2016, total sales of equipment including its installation in Russia reached 6.3 billion USD with 56% of sales referring to imported products without considering local products made from imported parts and consumables

Impressive number of trade companies, including construction retail chains, provide targeted coverage by regions and products or sell the full HVAC product range in all Russian regions: over 5700 specialize in heating equipment, 2100 in water supply equipment, 1800 in plumbing equipment, 1600 sale pipes, 5000 – fittings and valves, 170 – HVAC & water supply automation systems, 200 – water treatment equipment, over 1200 companies are installers, 330 – engineering systems constructors.

There are 20 specialised major federal wholesalers such as Interma, Terem, Duym, Termoros, MasterWatt, Santeam, MTK Group (Moscow Heating Company), LaboratoriyaOtopleniya, Bautherm, Hogart, Heisskraft, Taym (TeploNet), Lunda, Elso and others. Over 5000 construction and real estate development companies operate in the market

Energy-efficient trend reflected in the changes of official standards in 2017: required resistance to heat transfer of external walls was raised from 1.75 up to 3.15 sqm x 0 С/W, automated individual heat point became obligatory (instead of heat distribution station), as well as mandatory automotive regulation of heat supply equipment by thermostat and heating metering systems

Electrical Products Market

Russia is among the largest producers of electricity and electrical items and also consumer of the electrical items which a good portion of its demand met through imports. In 2020, the electrical gadgets and machinery imports by the Russian Federation is equivalent to USD 30Bn and majority of the supply from China, followed by Vietnam, Germany, Korea, Belarus Italy, Malaysia etc. Indian share in the Russian electrical importation is hardly 1.5% in broad, however in specific and major electrical items Russian Federation source from India, Indian products share is roughly 1-2.5% in respective items.

The large chunk of the electrical items Russian Federation imports from India includes electrical water heaters, switches and circuits, boards, panels consoles cabinets, transformers and converters, wires and cables, generator sets motors and convertors, lights and lighting equipment’s etc. the total volumes of imports of these items by the Russian Federation is approx. USD 9.76Bn and India’s volume is less than USD 120Mn.

Interestingly among the top 25-30 electrical equipment’s or machines or products Russian federation imports from world over, and among the top items India exports to Russian Federation, many things are common as we can learn from the above and trade statistics. This implies India is an inevitable trade and sourcing partner for the Russian Federation for Electrical products and equipment’s including the major and less major items the federation imports. Indian production and exports in those product lines are also significant, so it’s interesting to learn that there could be trade improvements in those product lines as well along with the corer product lines which are shipped between India and Russia.

Market Drivers

  • The government is focusing on the construction of a high-speed rail network and plans to construct 11,000km of track to connect Moscow, St Petersburg, Samara, Krasnodar and Novosibirsk by 2030.
  • To provide housing to the country’s middle- and low-income group, the government is focusing on the construction of affordable houses across the country. Accordingly, under the Housing for Russian Family program, the government is building 500,000 two-room apartments annually with an investment of USD 400mn since 2017. Until 2016, the target reached 3lakh plus units annually with an average annual growth rate of 1% between 2014 and 2016.
  • Program for renovation of dilapidated housing in Moscow: by 2032 over 5000 old law-rise buildings will be replaced by the new ones boosting construction and equipping;
  • Under the Energy Strategy of Russia 2030, the government plans to increase the country’s installed power capacity by 52.7%, from 232.5GW in 2016 to 355–445GW by 2030. Accordingly, it plans to invest RUB9.8 trillion (US$255.4 billion) in new power plants.